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Running Down Clause (Marine)

Whereby the whole and not three quarter of the damages would be payable by the Insurers. This clause does not include an indemnity for liability in respect of death of or bodily injury to third parties, or for damage to harbors or other such structures. Running down clause is that portion of a Marine Policy that protects against damages due to collision with another ship.

Running Down Clause (the Collision Clause)

An International Hull Clause, officially called 3/4ths Collision Liability. It extends the policy to cover threefourths of the shipowner’s legal liability to damage to other vessels, freight and their cargo, and general average where the insured vessel has collided with another vessel. Up to 3/4ths of legal costs are also payable. Settlements are on a cross-liability basis. The remaining part and other risks (e.g. loss of life) are insured in Protection and Indemnity Clubs.

Running Off

Term applicable where an insurer has ceased to write an insurance or class of insurances but a liability remains under contracts already written which are said to be running off.

Runoff provision

A provision 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. 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). Although runoff provisions function in a manner that is identical to extended reporting period (ERP) provisions, there are several differences. First, ERPs are generally written for only 1-year terms, whereas runoff provisions normally encompass multi-year time spans, often as long as 5 years. Second, while ERPs are most frequently purchased when an insured changes from one claims-made insurer to another, runoff provisions are generally used when one insured is acquired by or merges with another. In such instances, the acquired company buys a runoff provision that covers claims associated with wrongful acts that took place prior to the acquisition but are made against the acquired company after it has been acquired.