Run-Off Cover for Tradies: Why You Need It After You Stop Working

So, you’re thinking about packing it in. Maybe you’re retiring, selling the ute, or moving into a different line of work. Or perhaps you’ve just had a gutful of early mornings on cold sites and want to take it easy. Good on you, mate. You’ve earned it.

But here’s the thing: just because you stop working doesn’t mean the risk stops. That bathroom you waterproofed three years ago? The retaining wall you built last summer? If something goes wrong with it down the track—water damage, a collapse, a trip hazard—someone could still come knocking on your door, even if you’ve hung up your tools for good.

A lot of tradies don’t realise this. They think, “I’m not working anymore, so I don’t need insurance.” But that’s a dangerous way to think. What you need is something called run-off cover. It’s a type of insurance that protects you after you’ve stopped trading, covering claims that come in for work you did while you were still active.

In this article, I’ll walk you through what run-off cover is, why you need it, what it costs, and how to get it sorted. I’ll also cover what each state requires, because the rules aren’t the same everywhere in Australia. By the end, you’ll know exactly what to do to protect your retirement—and your savings.

What Is Run-Off Cover and Why Should You Care?

Run-off cover is basically a safety net for after you stop trading. It extends your existing public liability or professional indemnity insurance for a set period—usually three to seven years—after you’ve shut down your business or retired. During that time, if a client sues you for work you did while you were still operating, your insurer will cover the legal costs and any payouts (up to your policy limit).

Think of it like this: you’ve just finished a big renovation job. You hand over the keys, get paid, and move on. But five years later, the owner discovers a leak behind the shower wall because the waterproofing wasn’t done properly. They can still make a claim against you, even if you’re no longer in business. Without run-off cover, you’re paying for that out of your own pocket—and legal fees alone can run into tens of thousands of dollars.

Why does this matter? Because in Australia, there’s no statute of limitations on some types of construction defects. In New South Wales, for example, homeowners can bring claims for up to 10 years after completion for structural defects, and six years for non-structural ones. In Victoria, it’s similar. So even if you retire today, you could be exposed to a claim a decade from now.

I’ve seen blokes lose their house, their savings, even their super because they didn’t have run-off cover. Don’t let that be you.

Who Needs Run-Off Cover? (Spoiler: Most Tradies Do)

Not every tradie needs run-off cover, but the majority do. Here’s a quick checklist to help you figure out if you’re in the “must-have” group.

  • You do any design or consultative work – If you’re a builder, architect, engineer, or even a sparky who gives advice on electrical layouts, you’re at risk of professional indemnity claims. These can come in years later.
  • You work on residential properties – Homeowners are more likely to sue than commercial clients, especially for defects that affect livability (like leaks, cracks, or fire hazards).
  • You subcontract to other tradies – If you’re a plumber, electrician, or carpenter who works under a head contractor, you’re still liable for your own work. The head contractor’s insurance won’t cover you.
  • You’re retiring or closing your business – This is the obvious one. If you stop trading, you lose your current policy. Run-off cover bridges the gap.
  • You’re changing trades or moving into a different industry – If you’re switching to something unrelated to your trade, you still need cover for past work.

On the flip side, if you only ever did cash-in-hand jobs with no contracts, no paperwork, and no clients who could trace you, you might think you’re safe. But honestly, that’s a risky game. Even cash jobs can come back to bite you if the client tracks you down through social media or word of mouth.

How Long Does Run-Off Cover Last? And What Does It Cost?

The length of run-off cover depends on your trade, your state, and the type of work you do. Most policies offer between three and seven years of coverage, but some go longer. For high-risk trades like builders or engineers, you might need up to 10 years.

Here’s a general breakdown by state based on 2026 regulations:

  • New South Wales (NSW) – Homeowners can claim for up to 10 years for structural defects under the Home Building Act. So if you’re a builder in NSW, you’ll want at least 6–10 years of run-off cover.
  • Victoria (VIC) – The Domestic Building Contracts Act allows claims up to 10 years for structural defects and 6 years for non-structural. Similar to NSW.
  • Queensland (QLD) – The Queensland Building and Construction Commission Act gives homeowners 6 years and 3 months to make claims for defective work. So 7 years of run-off cover is standard.
  • Western Australia (WA) – Under the Building Services (Complaint Resolution and Administration) Act, the limit is 6 years for most defects. 6–7 years of cover is recommended.
  • South Australia (SA) – The Building Work Contractors Act allows claims up to 5 years for non-structural and 10 years for structural defects. Go for 7–10 years if you do structural work.
  • Tasmania (TAS) – Claims can be made up to 6 years from the date of completion for most defects. 6–7 years of cover is typical.
  • Australian Capital Territory (ACT) – Similar to NSW, with 10 years for structural defects. 7–10 years recommended.
  • Northern Territory (NT) – The Building Act allows claims up to 6 years for most defects. 6–7 years is standard.

Costs (2026 data): Run-off cover isn’t cheap, but it’s a lot cheaper than fighting a lawsuit without it. Expect to pay between $800 and $2,500 per year, depending on your trade, turnover, and the length of cover you choose. For a sparky or plumber with a turnover under $100,000, it might be on the lower end. For a builder doing $500,000+ in work, it’ll be higher.

Some insurers offer a one-off premium for the full run-off period, which can save you money compared to paying annually. Others let you pay yearly. If you’re on a tight budget, ask about a payment plan.

Tip: Don’t just buy the cheapest policy. Make sure it covers your specific trade and the types of claims that are common in your state. A cheap policy that excludes water damage is useless if you’re a roofer.

How to Get Run-Off Cover Without the Headache

Getting run-off cover isn’t complicated, but you need to plan ahead. Here’s a step-by-step guide:

  1. Check your current policy – Many business insurance policies include a “run-off” option or an “extended reporting period” endorsement. If you’re still trading, ask your insurer if they offer it. Some will let you add it to your existing policy before you retire.
  2. Time it right – You usually need to purchase run-off cover before your current policy expires. If you let your policy lapse, you might not be able to get run-off cover at all, or it’ll be much more expensive.
  3. Shop around – Don’t just stick with your current insurer. Platforms like BizCover let you compare quotes from multiple insurers in minutes. You can see what different companies offer for run-off cover and pick the one that suits your needs and budget.
  4. Read the fine print – Look for exclusions. Some policies won’t cover claims related to asbestos, faulty materials, or work done outside Australia. Make sure the policy covers your specific trade and the types of claims that are common in your state.
  5. Keep your records – Even after you stop working, hold onto your contracts, invoices, photos, and any correspondence with clients. If a claim comes in, you’ll need evidence to defend yourself.

A word of caution: If you’ve had any claims or complaints in the last few years, some insurers might refuse to offer run-off cover, or they’ll charge a higher premium. Be upfront about your history. Lying on an insurance application can void your policy later.

What Happens If You Don’t Get Run-Off Cover?

Let’s be blunt: if you don’t get run-off cover and a claim comes in, you’re on your own. Here’s what that looks like in real life.

A mate of mine, a carpenter in Brisbane, retired at 65. He’d built decks, pergolas, and outdoor kitchens for 30 years. No complaints, no dramas. Six years later, a client from a job he did in 2018 sued him because a deck collapsed during a party. The client claimed the timber wasn’t properly treated and the joists were undersized. Legal fees alone cost my mate $40,000 before they settled out of court for another $60,000. He had to sell his caravan and part of his super to cover it.

If he’d had run-off cover, his insurer would have handled the legal costs and the settlement (up to the policy limit). He’d still be enjoying his retirement instead of stressing about money.

And it’s not just builders. Plumbers get sued for burst pipes. Electricians get sued for faulty wiring that causes a fire. Roofers get sued for leaks that cause mould. Even painters can get sued if the paint peels or contains lead. No trade is immune.

FAQ: Run-Off Cover for Tradies

How long after I stop working can someone make a claim against me?

It depends on your state and the type of defect. In most states, homeowners have between 6 and 10 years from the date of completion to make a claim for structural defects. For non-structural defects, it’s usually 6 years. Check your state’s building laws to be sure.

Can I get run-off cover if I’ve already retired and let my insurance lapse?

It’s possible, but it’s harder and more expensive. Some insurers offer “retroactive” run-off cover, but they’ll want to know why you let your policy lapse. If you’ve had no claims, you might be able to get a policy, but expect to pay a higher premium. It’s always better to buy it before you retire.

Does run-off cover protect me from claims made by employees?

No, run-off cover is for public liability and professional indemnity claims only. If you had employees, you need separate workers’ compensation run-off cover, which is a different thing. Check with your insurer if you had staff.

Is run-off cover tax-deductible?

Yes, in most cases. If you’re still trading when you buy it, the premium is a business expense. If you’ve already retired, it might not be deductible because you’re no longer earning income from the trade. Talk to your accountant to be sure.

Can I cancel my run-off cover early if I sell my business or move overseas?

You can cancel at any time, but you won’t get a refund for the unused portion unless your policy says so. Read the cancellation terms carefully. If you sell your business, the new owner might take over the liability for past work, but that’s a separate legal agreement.

What’s the difference between run-off cover and an extended reporting period?

They’re basically the same thing. “Run-off cover” is the common term in Australia. “Extended reporting period” is the technical term used in insurance contracts. Both mean you can report claims after your policy ends.

Do I need run-off cover if I’m only a sole trader with no employees?

Yes, absolutely. Sole traders are personally liable for their work. If you’re sued, your personal assets—your house, car, savings—are at risk. Run-off cover protects you even if you have no employees.

Can I get run-off cover for a specific trade, like roofing or plumbing?

Yes, most insurers offer policies tailored to specific trades. The cost and coverage will vary based on the risks associated with your trade. For example, a roofer might need cover for water damage, while a sparky needs cover for electrical fires. Make sure the policy lists your trade by name.

Final Word: Don’t Leave Your Retirement to Chance

Look, I get it. Insurance is boring. It’s a cost you pay every year and hope you never use. But run-off cover is different. It’s a one-off (or short-term) investment that protects everything you’ve built over your career. Without it, you could lose your retirement savings, your peace of mind, and even your home.

The good news is, it’s not hard to get. Talk to your current insurer, or use a comparison platform like BizCover to see what’s available. Make sure you understand the terms, the exclusions, and the length of cover. And do it before you retire, not after.

You’ve worked hard for decades. You’ve earned the right to put your feet up. Don’t let a claim from a job you did years ago take that away from you. Get run-off cover, sleep easy, and enjoy your retirement. You deserve it.