Business is risk. You may accidentally cause damage to a customer's belongings or someone may get injured while you are working. In such a case, the costs can mount up rapidly. With business liability insurance (AVB) you cover such risks. In this article, we explain what this insurance entails, for whom it is relevant and what it will cost you.
What is corporate liability insurance?
The AVB (originally Liability Insurance for Companies) ensures that you don't get into trouble if you or your employees accidentally cause damage. Imagine yourself: you drop coffee on a customer's laptop. Or you knock over a work of art, or someone trips over your tools. In all these cases, you as an entrepreneur can be held liable. If you are not insured, you have to pay for the damage yourself. But with an AVB, this is financially settled.
Who is this insurance relevant to?
An AVB is not compulsory but highly recommended for almost every entrepreneur. For example, do you work on site at customers' premises? Or do you do physical work such as odd jobs or installations, or do you supply products or services where things can go wrong? Then an AVB is indispensable. Even if you only give advice or work from your own office, you can be held liable. For example, if someone slips in your practice space.
What is covered - and what is not?
A standard business liability insurance policy covers:
- Personal injury: someone is injured by your actions
- Property damage: you break something belonging to someone else
- Consequential damage: for example, loss of sales to the customer due to your mistake
Not covered:
- Damage to your own equipment
- Mistakes in your professional work (there is professional liability insurance for that)
- Damage due to intentional or reckless conduct
Cost of business liability insurance
Business liability insurance is not free. In fact, you pay a monthly premium. The cost depends on several factors:
- The type of business and activities: For example, a carpenter is more at risk of damage than a copywriter (yes really).
- Annual turnover: The higher your turnover, the higher the insured risk and therefore often the premium.
- Sum insured: The higher the amount you are insured for, the more premium you pay.
- Excess: Do you opt for a higher excess? Then you usually pay less premium.
- Number of employees: A larger company with staff pays more than a sole trader.
The industry you operate in also plays a role. Entrepreneurs in industries with many claims often pay a higher premium.
For example, a construction company usually pays more premium than a graphic designer.
Premiums can vary greatly from one another. From a few tens per month, to more than a hundred euros. It depends entirely on the situation.
Is it mandatory?
An AVB is not required by law, but it is often required by contract. Some clients or industry associations want to make sure you are insured before you can start work. So always check the terms and conditions when working with a new client.
Why is it important?
One inattentive moment can cause thousands of euros in damages. If you pay that out of your own pocket, it can damage your business considerably. With an AVB you cover these risks and also show confidence to customers. It is part of professional entrepreneurship.
Conclusion
Business liability insurance is an easy and affordable way to protect yourself from unexpected claims. Especially if you do physical work or are often on site, it is almost a necessity. It is better to be well insured than to regret it later.
