What is business legal expenses insurance?
Business legal expenses insurance provides legal help when you encounter a conflict related to your business. You can think of discussions about invoices, contract problems or liability issues. The insurance helps with advice, mediation and, if necessary, legal proceedings. You pay a fixed premium per month or per year. The government does not mandate this insurance but stresses that entrepreneurs are responsible for their own risks during assignments.
Why get legal expenses insurance as a self-employed person?
As a self-employed person, you run more contractual risks than employees. You make your own agreements with clients and are your own point of contact in case of conflicts. A conflict about payment or a mistake in an assignment can cost you immediate income. Legal expenses insurance ensures that you do not have to incur high costs for legal advice yourself. You get support in resolving conflicts so you can get on with your work faster. Insurance is especially useful if you regularly work with contracts or depend on one or a few clients.
What is insured with legal expenses insurance?
The coverage varies between insurers. Generally, you will get help with conflicts directly related to your work. Many policies include debt collection assistance and contractual disputes. Matters outside your work or deliberately caused by your actions are usually excluded.
Coverage overview
Well insured | Not insured |
Conflicts with customers over payments | Intentionally caused damage |
Assistance with negotiations and mediation | Private disputes unrelated to your business |
Legal proceedings in business disputes | Conflicts that existed before you took out the insurance |
Advice on contracts and general terms and conditions | Fines and damages you have to pay |
Collection assistance for unpaid invoices | Tax disputes unless you have additional modules |
This table quickly shows you what to expect approximately. Always read your insurer's terms and conditions as it will describe exactly what is and is not covered.
Is legal expenses insurance compulsory?
No. The government does not mandate business legal expenses insurance. You are, however, required to be able to meet your deductibles. Without insurance, you have to pay legal costs entirely on your own. These can add up quickly, especially when a lawyer is needed. Many self-employed people therefore opt for insurance to avoid unexpected expenses.
Difference between legal expenses insurance and liability insurance
Liability insurance and legal expenses are often mixed up but are completely different.
- At a liability insurance you are insured when you cause damage to another person. The insurance will then pay for the damage. You do not have legal help for your own conflicts.
- With legal expenses insurance, you get legal help when you yourself have a conflict. This could be about invoices, contracts, assignments or disputes with suppliers.
Both insurances complement each other. One covers claims, the other provides legal support. It is therefore normal for entrepreneurs to have both policies.
Cost of business legal expenses insurance for self-employed people
The premium depends on your work, turnover and chosen cover. On average, you will pay between €10 and €40 per month as a self-employed person. Some insurers offer modules such as employment law or debt collection that increase the premium. You compare insurers based on coverage, waiting time and costs. A low premium seems attractive but can mean limited coverage. Therefore, pay attention to the maximum compensation and whether there is a waiting period for new conflicts.
Frequently Asked Questions
What does legal expenses insurance for self-employed people cost?
Most self-employed people pay between €120 and €500 a year depending on industry and coverage. The premium increases when you add extra modules or have a high-risk sector.
What does business legal expenses insurance cover?
Basic cover includes help with debt collection, contractual disputes, legal proceedings and advice. Additional modules can provide cover for labour disputes, tax disputes or mediation.
Is business legal expenses insurance tax deductible?
Yes. The premium is business and deductible from your profit. You deduct the cost in your records which means you pay less tax.
