Professional indemnity insurance (BAV) for a VvE management company
A management firm is rarely held liable over maintenance. The claims are about a meeting that was not in order, a policy that was not renewed and a reserve fund that turned out to be too low.
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In brief
A VvE (Dutch owners' association) manager carries out what the general meeting decides and advises on what should be decided. If something goes wrong there, the association's loss is financial: a tender run twice, a missed insurance payment, an assessment with a fine, a resolution that turns out to be invalid. That kind of loss is called pure financial loss and is exactly what professional indemnity insurance exists for; how such a policy is put together is set out on the hub page on the BAV.
The most underestimated risk lies in decision-making. The notice, the period, the quorum and the majorities are laid down in law and in the deed of division. If a meeting is not convened correctly or the required quorum is missing, a resolution can be set aside under Article 5:130 of the Dutch Civil Code. If a resolution conflicts with the law or with the regulations, it may even be void. If a major renovation is based on such a resolution, unwinding it is the loss, and you are the one who organised the meeting.
There is also the maintenance planning and the reserve fund. Article 5:126 of the Dutch Civil Code requires a VvE to hold a reserve fund for maintenance that does not recur annually, with an annual contribution based on a long-term maintenance plan (MJOP) or on a statutory minimum percentage. If you advise a contribution that is demonstrably too low, or leave an MJOP without updating for years, the association bears the consequences later. That is an advice error and not a maintenance defect.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
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Four points for a management organisation
Subjects on which cover for a VvE manager runs aground.
Managing insurance is a risk in itself
Many managers arrange the association's buildings, liability and glass insurance. A policy that has not been renewed, a rebuild value that has not been indexed for years or a claim reported too late leads to a lower payment. Where a claim is reported late, the insurer can rely on Article 7:941 of the Dutch Civil Code. The loss then lands with the VvE, and the VvE turns to you.
Directors' liability is a different product
The association's board members are themselves liable for improper management under Article 2:9 of the Dutch Civil Code. That risk belongs on a directors' and officers' liability insurance for the VvE and not on your BAV. If your organisation is itself appointed as a board member, you are working in a different capacity; report that in advance, because otherwise that role falls outside your cover.
Damage to the building belongs elsewhere
A leak, a fire, storm damage or a facade coming away is damage to property and does not fall under professional indemnity. That is the territory of the association's buildings insurance and, where a defective building causes injury, of the possessor's liability under Article 6:174 of the Dutch Civil Code. For that there is the liability insurance for the VvE.
Misappropriation and fines are excluded
If you manage the association's bank account, loss through misappropriation or fraud is not covered; Article 7:952 of the Dutch Civil Code excludes loss caused by intent. Additional tax assessments, administrative fines and penalty payments imposed on the association, for example in fire safety enforcement, are not an insured loss either. Work with separate accounts for each VvE and a recorded authorisation procedure for payments.
What does your premium depend on?
- Number of VvEs under management: determines how many files can be affected at once
- Number of apartment rights: a better measure than the number of associations alone
- Size of the budgets managed: service charges, reserve funds and maintenance projects
- Range of tasks: administrative, technical or full management
- Involvement in insurance: arranging cover or merely passing information on makes a difference
- Retroactive date: from which date earlier financial years are included
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| The service charge statement turns out to have been apportioned incorrectly for years and owners claim the difference back | No | Yes |
| A buyer claims for loss because your statement of the VvE contributions at the transfer was incorrect | No | Yes |
| A contractor is engaged twice because the same maintenance order went out in duplicate | No | Yes |
| Your employee damages the lift installation during an inspection | Yes | No |
| The records containing all the owners' data are taken in a hack | No | No |
| The association demands the return of three years' management fees | No | No |
What the association loses financially through your work is on the right. What your people break on site is on the left.
Frequently asked questions
This is what people ask us most.
We only carry out what the meeting decides. Do we still run a risk?
Yes. A professional manager is expected to flag it when a proposed resolution conflicts with the deed of division, when a contribution to the reserve fund is too low or when maintenance can no longer wait. Carrying out the work without warning is itself a failure. Record your advice and the meeting's response in the minutes. That is your defence when a claim arises.
A resolution has been set aside. Is the loss from that covered?
That depends on the cause. If the annulment is down to a defect in the notice, the period or the quorum, that concerns your performance and it can be a covered professional error. If it is down to a substantive choice by the owners themselves, it is not. An application to set a resolution aside must be made within the period in Article 5:130 of the Dutch Civil Code, so the discussion arises shortly after the meeting.
Are our employees co-insured?
Usually yes, provided they fall within the class of insured persons. Watch out for surveyors hired in, administrative staff on secondment and self-employed people who chair meetings under your name. Towards the VvE you are liable for their acts under Article 6:76 of the Dutch Civil Code, even where the mistake is not made by an employee of your own. Have the definition of insured person match that.
Do we also need public and employers' liability insurance (AVB)?
Yes, as soon as you have staff or visit buildings. Injury to an employee, damage during an inspection or a damaged installation is injury or property damage and falls outside the BAV. That is what the public and employers' liability insurance is for, with the employers' liability section that matches the duty of care in Article 7:658 of the Dutch Civil Code.
Every situation is different. For these situations we have a separate page.
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