Professional indemnity insurance (BAV) for an estate agency
At an agency the risk does not come from one difficult transaction, but from a way of working that repeats itself across hundreds of files. What goes wrong once usually goes wrong more often.
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In brief
An estate agency carries not only the risk of its own agents, but also that of assistants, interns and self-employed professionals working under the agency name. Towards the client you are liable for their conduct under Article 6:76 of the Dutch Civil Code, even where the mistake was not made by one of your partners. Make sure the class of insured persons on the policy really covers everyone who acts in your name, including valuers you hire in. How a BAV works in principle is set out on the hub page on this product.
A risk that arises specifically at agencies with a lettings arm is serving two masters. In agency work for residential accommodation, Article 7:417(4) of the Dutch Civil Code prohibits the agent from receiving a fee from the tenant when he also acts for the landlord. An agency that charges tenants agency fees while serving the landlord risks a series of claims for repayment. It is also a similar allegation across several files at once; so check how your policy counts related claims: as one claim or as many.
File discipline across the whole organisation also counts. A standard questionnaire for sellers, a measurement report in line with NEN 2580 for every property, a recorded check on zoning and permits, a procedure for client due diligence under the Wwft (the Dutch anti-money laundering act) and a key register. Insurers assess those processes in underwriting, and when a claim arises your own working instructions are the first document you are judged against.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
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Professional indemnity insurance (BAV)
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We report the claim and monitor how it is handled. In urgent cases you can reach us on the emergency line.
Four points for an agency with several staff
Subjects that lead to discussion at an estate agency more often than the level of the cover.
Series claims arising from one way of working
A badly worded clause in your standard agency agreement, a measurement method that departs from the standard systematically or an agency fee charged without justification affects not one client but your whole client base. Read the provision on related claims and the maximum per insurance year. That is where the pinch point lies for agencies, not in the amount per claim.
Management and lettings are additional professional capacities
If your agency also does rental management, service charge settlements or collecting rent for investors, you are doing work that goes beyond acting as an agent. Have that included on the policy schedule. If you work with client money in a separate account, bear in mind that loss of it through fraud or misappropriation is excluded on virtually every BAV; Article 7:952 of the Dutch Civil Code excludes loss caused by intent.
Your own portfolio and property development fall outside
If the agency buys or develops property itself, that is a business risk and not a service to a client. Loss arising from those activities is not insured on the BAV. fines and penalty payments are also excluded, whether they arise from the Wwft, from the obligation to have an energy label or from local authority enforcement. For the building and liability as owner there are separate products.
Taking over another agency
If you take over an agency or a portfolio, old files come with it. Because the BAV works on a claims-madebasis, what matters is whether cover is in force at the moment the claim comes in. Arrange retroactive cover for the acquired entity's past, or have the seller buy run-off cover, and record that in the purchase agreement before you sign.
What does your premium depend on?
- Office turnover: commission, valuation and management fees together
- Number of estate agents and valuers: determines the class of insured persons
- Split between sales, lettings and management: letting agency work carries liabilities of its own
- Type of property: homes, commercial premises, investments or agricultural
- Number of branches: more sites means more variation in working methods
- Claims history: earlier claims and the measures taken
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| An assistant sends out a purchase deed with the wrong plot boundary and the buyer loses part of the garden | No | Yes |
| A landlord loses months of rent because your agency skipped the screening of a tenant | No | Yes |
| Your management department leaves a leak unattended and a tenant's contents are damaged | No | Provided that |
| A valuation by a valuer you hired in turns out to be too high and the bank claims the shortfall | No | Provided that |
| A visitor to your open house trips over the cable of your camera tripod | Yes | No |
| The cost of reviewing two hundred files again after you discover the mistake | No | No |
Costs you incur to put your own work right are not a third party's loss and remain uninsured.
Frequently asked questions
This is what people ask us most.
May we charge a tenant agency fees?
Only if you are not acting for the landlord at the same time. Article 7:417(4) of the Dutch Civil Code provides that an agent in residential accommodation may not stipulate a fee from the tenant when he also has the landlord as a client. If your agency works with landlords and you nonetheless charge tenants, those amounts can be reclaimed. Record for each file who your client is.
Are self-employed estate agents working under our name co-insured?
Not automatically. Many policies name employees as insured persons, but not everyone working under a contract for services. Have the class of insured persons extended or require the self-employed professional to maintain their own cover and to prove it with a certificate of insurance. See also professional liability for a self-employed estate agent.
What if a member of staff lets client data leak?
A leak of personal data from your client management system is not a professional error within the meaning of the BAV. The cost of investigation, recovery and notification, and claims by the data subjects, belong on a cyber insurance. Administrative fines are excluded there too. In estate agency there is also the risk of false payment instructions in a purchase or sale. That risk also belongs with cyber.
Do we also need public and employers' liability insurance (AVB)?
Yes. The BAV covers financial loss arising from mistakes in your service. Injury to a visitor at your office, damage to the rented premises or injury to a member of staff fall outside it. For that, the public and employers' liability insurance is intended, including employer's liability matching 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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