Paying for professional misconduct? This insurance prevents that

Suppose you give wrong advice that gets your client into trouble. As an entrepreneur, you have to pay for the damages of such a professional error. Learn how professional indemnity insurance can help you avoid big financial problems.

Professional indemnity insurance

With professional indemnity insurance (BAV), you and your staff are covered for damages caused by professional errors. Think, for example, of wrong advice or a miscalculation. BAV is often a complement to business liability insurance (AVB).

When is a BAV necessary?

Are you a lawyer, doctor, architect, or accountant? Then professional indemnity insurance is mandatory. For other professions, taking out third-party liability insurance is also wise. For example, for ICT professionals, translators, advertisers, consultants, or advisers. If you make a professional error, this can cause your client high financial losses. The BAV covers this risk.

Practical examples

In these examples, professional indemnity insurance covers damages:

  • Chris is an architect and made a mistake in calculating the width of a building's garage door. Cars cannot enter the garage.

Consequence: The contractor holds Chris liable. Chris has to pay the cost of adjusting the garage door. In addition, he must pay the damages of a shop in the building. Because their customers could not park in the garage, they lost turnover.

  • Laurie is a surgeon. Due to a professional error during an operation, her patient is unable to work for several months.

Consequence: The patient holds Laurie liable. Laurie must pay for the income lost by the patient.

  • Jamila is an accountant and does the bookkeeping for her clients. She makes a mistake in a client's tax return. As a result, her client must pay more tax and makes less profit.

Consequence: The client holds Jamila liable for the damage caused by the wrong tax return.

Video: Mastering business risks

Vinsent Hooimeijer, account manager at Interpolis, explains how to limit your liability as a self-employed professional without staff.

On top of business risks (Bedrijfsrisico’s de baas)

Costs of professional indemnity insurance

The amount of the premium depends on your profession and the turnover of your business. A financial adviser without staff pays an average of 150 euros per month for a BAV. Do you have staff? Then your risk is higher and so is your premium. Insurers often require you to limit your liability with general terms and conditions.

Premium is deductible

The premium you pay for your business insurance can be deducted from your income tax return or profit declaration. Also include these costs in the calculation of your hourly rate.

SBI code and insurances

The KVK Business Register states what activities you perform and what your SBI code is. Make sure your SBI code matches what you do as a zzp’er. Insurers use your SBI code to calculate your premium. If you incur damage that does not match the activities you carry out according to your SBI code, the insurance will not cover it.

Do you often carry out different activities? Report this to the KVK and to your insurer. KVK will then also register your other activities. The insurer can adjust your premium accordingly. This way, you can be sure that damage is covered for all your activities.