My cover lapsed for a day. Are the clients I saw that day the ones at risk?

That is the occurrence-based way of thinking about it, and claims-made cover works differently. The exposure is not confined to work done during the gap: it is that any claim first made during the gap had no policy to be notified against, whenever the work was done.

How long should I hold run-off cover?

There is no general answer, and the figures quoted in online discussions vary wildly because they are answering different questions about different work. It depends on the limitation periods that apply and on the nature of the work, which is a matter for licensed advice.

Does this apply to public liability too?

Public liability is usually written on an occurrence basis, meaning it responds to events during the period rather than claims during it. That is why a gap in one is a different shape of problem from a gap in the other.

When claims-made cover lapses, switches or ends

In short

Claims-made cover responds to claims first made during the policy period, whatever date the work was done.
That means a gap, a cancellation or a retirement can leave completed work without a policy to notify against.
The retroactive date sets how far back cover reaches; run-off cover is the mechanism for work already finished.

Most business insurance responds to things that happen while the policy is running. Professional indemnity and several related covers do not: they respond to the claim arriving, not to the work being done.

That single structural difference is behind four situations that look unrelated and are actually the same: an accidental lapse, a switch between insurers, retirement, and closing a business.

The mechanism, stated plainly

On a claims-made policy, the policy that answers is the one in force on the day the claim is first made against you. Work done years earlier can be covered by today’s policy, and work done yesterday is not covered by a policy that expired this morning.

People instinctively reason the other way — that the policy running when the work was done is the one that responds — and that instinct is what makes a lapse feel less serious than it is.

[Claims-made basis](/terms/claims-made)

The retroactive date is the other half

A claims-made policy will only look back so far, and the retroactive date is where it stops. Work done before that date sits outside the cover even when the claim arrives while the policy is current.

Continuous cover is what keeps a retroactive date early. Letting cover lapse and starting fresh can reset it, which is why a new policy at a similar price is not necessarily the same protection.

[Retroactive date](/terms/retroactive-date)

Switching insurers without opening a hole

Switching is normal and is usually handled by the incoming insurer accepting the existing retroactive date. What creates the hole is a gap between the policies, or a new policy written with a retroactive date set at inception.

The question to settle before switching is not the price. It is what retroactive date the new policy carries, and whether anything already known needs to be notified to the outgoing insurer first.

Stopping work: retirement, closure and run-off

When a practitioner retires or a business closes, the work does not stop being capable of generating a complaint. Because the cover is claims-made, there needs to be a policy in force when that complaint arrives.

Run-off cover exists for exactly this, and it is bought deliberately. How long to hold it is a genuine judgement that depends on the work, the limitation periods that apply, and the person’s own circumstances — which makes it a conversation with somebody licensed to advise rather than a number to copy from a forum.

If cover has already lapsed

Backdating is generally not available, because it would mean insuring a period the insurer never held. What can usually be established is exactly when cover ceased and resumed, which defines the exposure rather than removing it.

Anything already known that might give rise to a claim is worth raising with the insurer that was on risk when it became known. Waiting to see whether a complaint materialises is the instinct, and it is the instinct that creates late-notification problems.

Questions

My cover lapsed for a day. Are the clients I saw that day the ones at risk?: That is the occurrence-based way of thinking about it, and claims-made cover works differently. The exposure is not confined to work done during the gap: it is that any claim first made during the gap had no policy to be notified against, whenever the work was done.
How long should I hold run-off cover?: There is no general answer, and the figures quoted in online discussions vary wildly because they are answering different questions about different work. It depends on the limitation periods that apply and on the nature of the work, which is a matter for licensed advice.
Does this apply to public liability too?: Public liability is usually written on an occurrence basis, meaning it responds to events during the period rather than claims during it. That is why a gap in one is a different shape of problem from a gap in the other.

Sources

Moneysmart (ASIC) — General guidance on business insurance from the regulator’s consumer site.
Insurance Contracts Act 1984 (Cth) — Federal Register of Legislation — The statute governing insurance contracts in Australia, including the duty owed when taking out cover.