Are you self-employed or an entrepreneur, giving advice, making plans or delivering work at risk? Then one mistake can be the last straw. Your client suffers damage and you are subsequently screwed. Fortunately, there is professional indemnity insurance (BAV). This insurance intervenes if you do something wrong and your client suffers a loss as a result. Such a nice idea.
Why is professional indemnity insurance important?
A small mistake can have a big impact. A wrong advice, a miscalculation or a mistake in your design, and your client is stuck with the damage. That damage can be very big and you will be liable. Without insurance, you pay for that damage yourself. But with professional liability insurance, you are not alone. Your insurer will help you with money and legal advice.
What is professional indemnity insurance?
A BAV (professional indemnity insurance) covers financial losses due to a mistake in your work. For example, wrong advice, a miscalculation or a design that is wrong. So it does not cover damage to property or people. For that, there is a corporate liability insurance. This is really about euros.
For whom is a BAV important?
Not every self-employed person or entrepreneur needs a BAV. Yet in many professions it is smart to have (and sometimes even mandatory). For example, in the case of:
- ICT professionals (such as programmers and system administrators)
- Consultants and coaches
- Financial advisers
- Legal advisers
- Architects and designers
- Engineers
Do you and your company work for large clients such as the government or through tenders? Then a BAV is often a hard requirement from that client.
What does professional liability insurance cover?
| What does it cover | What does it not cover? |
| Errors in advice or reporting | Fines or deliberate errors |
| Incorrect calculation or analysis | Hours you have to spend again yourself to put something right |
| Legal costs and defence of a claim | Property damage or injury (covered by corporate liability) |
| Lost revenue from client due to your mistake |
What does it cost?
The cost of professional indemnity insurance depends on a few things:
- What you do (and how risky it is)
- How much turnover your business makes
- How high your cover and deductible are
- Whether you add other insurances
As an entrepreneur, you pay on average:
- Between €20 and €50 per month
- More if you are in a profession with additional risk, such as legal or technical advice
Tip: Many insurers offer bundles. Do you combine BAV with, for example, company liability insurance? That way you are often cheaper and save money.
Is professional indemnity insurance mandatory?
For most self-employed people, a BAV is not required by law. Yet in practice, it is often necessary. Do you work for a large client, the government or through an intermediary agency, for example? Then you usually need to be insured before you can start. Some professional groups or industry associations also make it compulsory. No BAV? Then that means no contract.
Conclusion
A BAV is not a luxury, it's just smart to have. Because one mistake can cost you dearly (especially if you advise, design or analyse). With professional liability insurance, you have a safety net. It also provides you with less stress and less risk. For a few tens per month, you buy peace of mind, security and trust from your clients.
