Chubb liability for businesses
As soon as a business consists of several companies, the discussion is no longer about the description of the cover but about who exactly is named as an insured on the policy.
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In brief
In a business of any size, the the range of insured persons is the first test. The policy schedule states which legal entities are covered, and that does not take care of itself: a newly formed operating company, a company acquired or a foreign subsidiary is not automatically included. Ask for a provision covering entities acquired or formed during the year, with a notification period. Without that provision, part of your group goes about uninsured.
As a rule, directors and employees are also covered in that capacity, as is liability for subordinates under Article 6:170 of the Dutch Civil Code. The personal The liability of a director towards the company or towards a trustee in bankruptcy is separate from that and belongs on directors' and officers' liability insurance. A second point to note is liability between insured persons: loss one group company causes to another is excluded on many policies, because there is then no third party.
Also pay attention to the annual maximum. The sum insured applies per claim, but usually also has a maximum per insurance year for all insured parties together. So in a group with several operating companies, those entities share one pot. Anyone who sets that aggregate too low only discovers it at the second large loss in the same year. The basic cover itself is described under public and employers' liability insurance.
This page deals with one situation. The full overview is on Compare personal liability insurance (AVP).
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What to look out for
Four points that weigh more heavily than the premium for a group or a larger business.
New and acquired companies
An acquisition brings a past with it. The new subsidiary can bring claims from the period before the acquisition, and those rarely fall under your current policy. Arrange the notification period for new entities, have the date from which cover applies recorded and check whether the seller has arranged run-off cover on their own policy.
Loss between group companies
If one operating company damages another's plant, there is no third party's loss. Many policies exclude that, or cover it only where liability between insured persons is expressly included. With a structure that has a separate property company and a separate operating company, that is a real scenario and not theory.
Clients' purchasing terms
Large customers impose wide indemnities, penalty clauses and guarantees. Liability that follows solely from such a contractual extension and goes beyond the law is usually excluded. Have the liability clauses in framework agreements set against the policy in advance; once signed, nothing can be repaired.
What falls outside the cover
Excluded are pure financial loss, damage to property in your care, custody and control, the cost of the supplying or repairing your own product or work again, and fines and penalty payments. Intent and wilful recklessness are excluded under Article 7:952 of the Dutch Civil Code. Gradual soil or groundwater contamination calls for environmental damage insurance.
What does your premium depend on?
- Number and nature of the companies: each entity brings its own activities
- Consolidated turnover: the usual basis for a group
- Total wage bill: decisive for the employers' section
- Sum insured and aggregate: per claim and per year for all insured parties together
- Contract positions: indemnities and guarantees towards large customers
- Claims record over several years: for a group, frequency weighs more heavily than size
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | Public and employers' liability (AVB) | Directors' and officers' liability |
|---|---|---|
| A fitter from the operating company drops a section of scaffolding onto a visitor's car | Yes | No |
| A hired-in self-employed professional falls through an unguarded hatch on your project and is permanently unfit for work | Provided that | No |
| The trustee in bankruptcy holds the director personally liable after a subsidiary goes into liquidation | No | Yes |
| A visitor trips over a loose mat in the reception hall of the head office | Yes | No |
| A minority shareholder criticises the board for poorly preparing an acquisition | No | Yes |
| A driver from your own fleet damages a customer's facade while unloading | No | No |
The company and the person behind the company are protected on two different policies.
Frequently asked questions
This is what people ask us most.
Are all our companies on the policy?
Only the companies named on the policy schedule or in a schedule to it, plus the entities falling under an extension provision. Check that list at every change in the structure: a new holding company, a demerged operating company or a dormant company that takes up activities again. An entity that is not named is not an insured party and can be held liable in its own right.
What does an aggregate per insurance year mean?
It is the maximum the insurer pays in one year for all claims and all insured parties together. So the sum insured per claim says little until you know the annual maximum. If that aggregate is used up, you are uninsured for the rest of the year unless you have arranged reinstatement of the sum insured or have an excess layer.
Who reports a claim in a group?
The policyholder, usually the holding company, even where the claim is directed at an operating company. Make sure local management know where to report. Article 7:941 of the Dutch Civil Code requires notification as soon as you reasonably know. A claim that sits at a site for months can jeopardise the handling and with it the cover.
Does this policy cover our directors' liability?
Only for injury and property damage they cause to third parties in the performance of their duties. Complaints about improper performance of duties, incorrect annual accounts, a failed acquisition or an insolvency claim from a trustee in bankruptcy are pure financial loss and fall outside this policy. Directors' and officers' liability insurance exists for that, with its own group of insured parties and its own run-in and run-off arrangements.
Every situation is different. For these situations we have a separate page.