Legal expenses insurance (rechtsbijstandverzekering) for a construction company
For a construction business it is not the policy but the contract that decides where a dispute ends up: with the court, with an arbitrator, or nowhere because the deadline has passed.
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In brief
The first question for a construction business is not which module you choose, but who decides the dispute. Construction contracts often refer to the UAV or to sector conditions with an arbitration clause, so the case goes to an arbitration institute or a binding adviser instead of to the court. Not every legal expenses insurer handles proceedings of that kind, and the costs of arbitrators and experts are a separate item. Before taking out the policy, have it confirmed in writing that arbitration and binding advice fall under the cover and up to what amount. Without that confirmation you buy a policy that stops exactly where your most important contracts are.
The second point is the shift in liability after completion. Under the Dutch Building Quality Assurance Act, Article 7:758(4) of the Dutch Civil Code provides that the contractor remains liable for defects not discovered at completion, unless they are not attributable to him. So your defence consists of a file: the completion file, photographs of the work before it was closed up, inspection reports and the correspondence with the quality assurer. Related product information can be found at insurance for a building contractor and to the Construction all risks (CAR) insurance for contractors.
The third line is the chain. If you work with subcontractors and hired-in staff, you carry chain liability for payroll taxes and can be held to account for compliance with the collective agreement. If you work as a subcontractor yourself, the main contractor's terms apply with their deduction and set-off arrangements. Disputes about that fall under contracts. Discussions with self-employed people hired in about the nature of the working relationship fall under employment law. The loss you cause to a third party belongs on the liability insurance for a contracting business.
This page deals with one situation. The full overview is on Compare personal legal expenses insurance (rechtsbijstandverzekering).
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What to look out for
Four points that for a construction business are more often decisive than the sum insured you choose.
Arbitration is not automatically included
An arbitration clause in the contract for work takes your case away from the court. Some policies cover only proceedings before the state courts, others do handle arbitration but with a separate cost maximum. Check this for each form of contract you use and record the answer, because arguing afterwards about which body has jurisdiction costs you the case.
The Wkb and the completion file
Since quality assurance was introduced, it is no longer decisive whether the client could have seen a defect at completion. Under Article 7:758(4) of the Dutch Civil Code it is for you to show that the defect is not attributable to you. A complete consumer and completion file is therefore not an administrative obligation but your evidence.
Shutdown and enforcement
After an accident on the building site the labour inspectorate investigates and sometimes orders a shutdown. A local authority can impose a stop-work notice. An objection to that falls under administrative law and is a separate module. The fine, the penalty payment and the lost turnover during the shutdown stay at your expense. The employee's own injury claim runs through Article 7:658 of the Dutch Civil Code and the liability insurance.
Developing on your own account usually falls outside it
If you build premises or homes at your own risk to sell or let afterwards, you run into a standard exclusion: disputes about the acquisition, development, exploitation and sale of property are not covered on many policies, with only your own business premises as an exception. Report this activity separately if you carry it out alongside contracting.
What does your premium depend on?
- Payroll and number of employees: the basis for the employment law module
- Annual turnover: often in bands, with a limit above which a bespoke arrangement is needed
- Position in the chain: main contractor, subcontractor or working directly for private clients
- Type of client: consumers produce different files from professional parties
- Share of hired-in self-employed people: counts towards employment law discussions
- Modules chosen: contracts, employment, debt collection, administrative law, traffic
Insurers weigh these details differently. That is where your saving is.
What the lawyer handles
| Situation | Basic | Extended |
|---|---|---|
| A supplier delivers prefabricated elements weeks late and you incur a deduction | Yes | Yes |
| A carpenter challenges his summary dismissal after stealing materials | Yes | Yes |
| The network operator sends you the bill after your crane operator hit a cable | No | No |
| The local authority refuses the environmental permit for your own shed and workshop | No | Yes |
| Your company van is hit on site by someone else's crane lorry | No | Yes |
| The Belastingdienst (the Dutch tax authority) approaches you for the payroll taxes of a bankrupt subcontractor | No | Provided that |
The third row is liability and not legal expenses: your liability insurer handles that claim, including the defence.
Frequently asked questions
This is what people ask us most.
Are proceedings before an arbitration institute covered?
That differs per insurer. Some policies handle only disputes before the state courts, others cover arbitration and binding advice with a separate maximum for the costs of arbitrators and experts. Because construction contracts contain an arbitration clause as standard, this is the most important question when comparing. Ask for the answer in writing and keep it with your policy documents.
My client is withholding the final instalment because of snagging items. What can I do?
In building for a consumer there is a statutory right of retention under Article 7:768 of the Dutch Civil Code, under which part of the contract price can stay in escrow until the snagging items are put right. The lawyer assesses whether the amount withheld matches that and whether the snagging items are justified. Work through the list first and record its completion. That is usually quicker than litigating.
An employee has fallen from scaffolding. What does this policy do?
The employee's injury claim falls under Article 7:658 of the Dutch Civil Code and is handled by your liability insurer, including the defence. The legal expenses policy comes into play for the administrative part: an objection to a penalty report or to a shutdown, provided administrative law is included. The fine imposed itself always stays at your own expense.
A subcontractor is bankrupt and the work has stopped. Does the policy help?
The lawyer can assess whether you can cancel the agreement, what happens to retention of title and materials delivered to site, and how to lodge your claim with the trustee. Insurers may, however, stop a case if recovery is demonstrably pointless; in a bankruptcy that is often so. Your own bankruptcy or suspension of payments is excluded on almost every policy.
Every situation is different. For these situations we have a separate page.
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