Coverage 101 | Wondering how runoff insurance works? Read this.
Change happens. Good things don’t always last forever and that reality may have you wondering “How does runoff insurance work for a business in Canada?”
With bricks and mortar businesses relocating online, tough competition from multiple borders and tight bottom lines everywhere, retailers are making tough decisions.
From the closing of Eaton’s to Lowe’s, Canadian businesses are reevaluating how, when and where they are engaging with Canadian consumers. And when doors are being closed, runoff coverage can help protect the tail liability of a business for any/all claims made insurance policies such as directors & officers insurance and others.
This is why we’re here to help answer your questions with regards to “How does runoff insurance work for a business in Canada?”
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So you may be wondering…how exactly does runoff insurance work in Canada?
What differentiates a coverage trigger in an occurrence policy versus a claims-made policy is a key starting point when it comes to understanding how does runoff insurance work for a business in Canada.
And to get this rolling, the International Risk Management Institute (IRMI), specifically explains that a runoff provision is “in a claims-made policy stating that the insurer remains liable for claims caused by wrongful acts that took place under an expired or canceled policy, for a certain time period.”1
By way of further explanation…
- With a claims-made policy, the actual making of a claim triggers coverage. Coverage triggers serve to determine which liability policy in a series of policies covers a particular loss.
- With an occurrence policy, the specific occurrence of injury or damage is the trigger. Liability will be covered under that policy if the injury or damage occurred during the policy period.
Related Matters: Town Shoes brand and 38 stores in Canada closing by January
“For example, consider a policy written with a January 1, 2015-2016, term and a 5-year runoff provision. In this situation, coverage will apply under the runoff provision to all claims caused by wrongful acts committed during the January 1, 2015-2016, policy period that are made against the insured and reported to the insurer from January 1, 2016-2021 (i.e., the 5-year period immediately following the expiration of the January 1, 2015-2016, policy).”2
Related Matters: 2017 was a terrible year for Canadian retailers
Helping you understand available coverage options is what we excel at. Because we are exclusively focused on delivering commercial insurance to our clients across Canada we know how to align coverage options to address business risks.
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We are proud to support businesses across Canada. In addition to a national operations centre in Cambridge, Ontario, we have offices in Toronto, Ontario; Calgary, Alberta and Vancouver, BC.
We are 100% Canadian owned. And we’re proud to be a premiere insurance brokerage that currently serves more than 1,600 clients across this country. First and foremost, we believe that aligning insurance experts to business needs is one of the most important things an insurance broker can do to support their clients.
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Sources: 1,2 IRMI.com; CTVnews.ca – Lowe’s closing 31 Canadian properties, 20 stores in U.S. amid restructuring ; TheSpec.com – Town Shoes brand and 38 stores in Canada closing by January; Globalnews. ca – 2017 was a terrible year for Canadian retailers
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