Which of the following best describes the indemnity insurance position for Martina's claim?

Question

Delroy Campbell is a sole practitioner whose SRA-authorised firm in England has qualifying professional indemnity insurance on the SRA Minimum Terms and Conditions (MTC). He retires and closes the practice at the end of the policy period. No other firm takes over the practice, so there is no successor practice. Two years later a former client, Martina Kovač, discovers that Delroy made a negligent mistake in her property transaction shortly before he retired.

Accepted Answer

The insurer must provide run-off cover for six years after the period of insurance ends, so a claim two years after closure is covered.

Answer

A. There is no cover, because insurance under the MTC ends when the insured firm ceases to practise and no successor practice takes it over.

Answer

B. Martina's only remedy is an application to the SRA Compensation Fund, which replaces insurance once a firm closes without a successor.

Answer

C. Cover lasts only for the extended policy period and cessation period after closure, so a claim made two years later is not insured at all.

Answer

D. Delroy must buy a fresh annual policy each year after retirement to cover past work, or he will be personally liable without insurance.

Answer

E. The insurer must provide run-off cover for six years after the period of insurance ends, so a claim two years after closure is covered.

Closing a firm with no successor: six years' run-off cover under the SRA Minimum Terms