Business risk
Run-off
Situation in which a policy ceases to cover new events but maintains cover for previous ones during an agreed period.
In practice
It is contracted when selling a company to protect outgoing directors, usually for six years. Negotiating it during the transaction costs a fraction of what it costs to seek it after closing.
Where it is addressed
This term is covered in Gobierno corporativo and applies when taking out Due Diligence.
