Forecasts · acquisition advice · mixing roles
Professional indemnity insurance (BAV) for a business consultancy
Business consultancy ends in a report on which someone else bases an investment. If the outcome disappoints, your forecast is read afterwards as a promise.
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Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een bedrijfsadviesbureau.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert. nl or call 072 - 509 24 56 and we will take it from there.
Work out for yourself what it would cost.
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- An adviser checks whether the cover suits your activities
- We arrange the switch, including cancellation
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
A business consultant delivers analyses, valuations, business plans and implementation advice. The loss that follows from that is pure financial loss: an acquisition price that is too high, financing granted on incorrect assumptions, a reorganisation that costs more than budgeted or a grant that is reclaimed because a condition was missed. Nothing is broken and nobody is injured, but the amount is there in black and white.
At the heart of most disputes is the status of your figures. A forecast is an estimate based on assumptions. A client who is disappointed afterwards presents that same forecast as a promise. You are judged by Article 7:401 of the Dutch Civil Code, and therefore by whether your assumptions were traceable and supported. So state in every report the assumptions used, the sources, the reference date and what you expressly did not investigate.
Also consider who will ultimately read your report. If your valuation or business plan is used towards a bank, an investor or a buyer, a third party can argue that he relied on your document. Limit that with a restriction on use in the report itself. If you also advise on financing products or shareholdings, bear in mind the Wet op het financieel toezicht (the Dutch Financial Supervision Act): work for which the required licence is missing is excluded.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
What to look out for
Four points that make the difference in advisory work for entrepreneurs and financiers.
Forecasts are read as promises
Set out assumptions, scenarios and limitations expressly in the report and repeat them in the covering email. Avoid wording that suggests a result: liability arising solely from a a guarantee or undertaking is excluded on the policy, even if you left that guarantee in a quotation unintentionally.
Advising or helping to run the business
As soon as you act as interim director, supervisory board member or authorised representative, you no longer act as a contractor but as a director, with its own liability regime. That risk belongs on directors' and officers' liability insurance. State in your engagement letter that you advise and do not decide.
Third parties relying on your report
A bank or buyer using your document is not a client but can still bring a claim under Article 6:162 of the Dutch Civil Code. State in the report for whom and for what purpose it was prepared, and whether it may be provided to third parties. Declare it when you apply if you regularly work on financing projects.
What falls outside the cover
The policy pays nothing in cases of intent and wilful recklessness (Article 7:952 of the Dutch Civil Code). Also Fines, penalty payments and tax sanctions remain outside it, as do repaying your fee and redoing your own advice, and liability you took on only under purchasing conditions or an indemnity. Circumstances known when the policy was taken out also remain outside.
What does your premium depend on?
- Annual turnover: the standard basis for advisory work
- Type of assignments: strategy, valuation, financing or implementation
- Interim assignments: executive roles weigh more heavily than advice
- Size of your clients: larger companies mean larger interests
- Sum insured: per claim and per insurance year
- Retroactive date: advisory errors often come to light years later
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| An acquisition price is too high because a current lease was missing from your valuation | No | Yes |
| In a reorganisation you supervised, the request for advice to the works council was skipped and the dismissals are reversed | No | Yes |
| A software package you recommended turns out to be unable to handle the client's core processes | No | Yes |
| A consultant damages a glass wall at the client with his wheeled case | Yes | No |
| A member of staff is signed off with burnout after months on site at a client | Provided that | No |
| A staff list belonging to your client is captured from you through a phishing email | No | No |
If your mistake only becomes visible in the client's figures, you are on the right. If something is damaged or someone is hurt, you are on the left.
Frequently asked questions
This is what people ask us most.
What is the difference from directors' and officers' liability insurance?
This policy covers mistakes you make as a contractor for a client. Directors' and officers' liability insurance covers the personal blame attached to someone holding a board or supervisory position, for example for improper performance of duties. If you take an interim board seat, you need both; one policy does not automatically fill the gap in the other.
The client only half implemented our advice. Are we still liable?
Not for the consequences of choices the client made himself, provided you identified the risks of departing from the advice. If you do not record that, it becomes your word against his. Confirm important warnings in writing. Where responsibility is shared, Article 6:101 of the Dutch Civil Code apportions the loss between you and your client.
A client insists that we accept his purchasing conditions. What is the risk?
Purchasing conditions often contain an unlimited indemnity, a penalty clause or a guarantee of the result. What you take on beyond your liability in law is therefore not insured. Negotiate a limit that matches your sum insured, or have the clause assessed before you sign.
When do we have to report a threatened claim?
As soon as there is a concrete indication that a client will hold you liable, even without an amount or a lawyer. Article 7:941 of the Dutch Civil Code requires prompt notification, and under a claims made policy a notification of circumstances keeps the current insurance year open. Do not admit liability, make no offer and consult the insurer before you respond on the substance.
Read more
Within Beroepsaansprakelijkheidsverzekering
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