Selection · auxiliaries ·. The boundary with directors' liability
Professional indemnity insurance (BAV) for an interim management firm
An agency that places interim managers is held to account for two things: the choice of candidate and what that candidate does at the client.
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Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een interim-managementbureau.
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.
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A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
Your risk has two faces. The first is selection: a candidate who on paper has experience and authorisations that he turns out not to have. If it becomes clear that references were not checked or that a stated qualification is wrong, the criticism is aimed at your own service. The second is trim level: the professional you place takes decisions at the client with financial consequences. If something goes wrong there, the claim comes to your agency, because you are the contracting party.
That knock-on effect is anchored in law. Article 6:76 of the Dutch Civil Code attributes the conduct of auxiliaries to you, and for employees Article 6:170 of the Dutch Civil Codeapplies. If you work with self-employed professionals, ask each of them for a current policy schedule with the professional capacity, the sum insured and the policy period, and set out in the cooperation agreement that the cover is maintained during and after the engagement. Without those documents your insurer pays and recovery becomes a second exercise in which the professional's limitation of liability may hold up.
There is one line you must draw in advance. If one of your professionals is appointed statutory director at the client, or takes on a comparable formal position, liability shifts to company law: Article 2:9 of the Dutch Civil Code towards the company and Article 2:248 of the Dutch Civil Code in an insolvency. That liability does not belong on this policy but on directors' and officers' liability insurance. For the individual side, see professional liability for interim managers.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
What to look out for
Four subjects that come together on one policy at an agency that both places and delivers.
Selection is a service in its own right
When a placement fails, the question returns of how you assessed the candidate. Record for each assignment which references you checked, which documents you saw and which profile the client supplied. Without that file the conversation soon shifts to the conclusion that you did not investigate enough, and that is a professional error in its own right alongside the professional's mistake.
Your engagement terms determine the extent
If you include an obligation to achieve a result in your agreement, for instance about meeting a reorganisation target or an implementation date, you leave the standard in Article 7:401 of the Dutch Civil Code. Liability arising from promises that go beyond the professional standard is excluded. Limit your liability by contract to a level that matches your sum insured and hand over your terms in good time.
Formal roles at the client
Registration as a director, being given a power of attorney or signing on the client's behalf changes the nature of the liability. Agree that such a role is only accepted with your prior consent and that the client includes the professional in question as an insured person on its own directors' and officers' liability insurance.
What the policy excludes
Excluded are, among others directors' and officers' liability, fines and penalty payments, the carrying out the engagement again and refunding the fee or hourly rate, and liability arising from warranties. Claims from employment disputes with your own staff also fall outside. What a professional causes intentionally or recklessly is not paid by the insurer; Article 7:952 of the Dutch Civil Code provides the basis for that.
What does your premium depend on?
- The agency's annual turnover: placement fees and hours charged on together
- Number of professionals placed: determines how many people fall under the policy
- Clients' sectors: healthcare, government and financial services weigh more heavily
- Level of the engagements: board and programme roles carry greater loss potential
- Knock-on effect to their own policies: whether the self-employed professionals engaged are insured themselves
- Retroactive and run-off periods: for completed and current assignments
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| A candidate turns out never to have had the authorisation stated on his CV and the client has to do the assignment again | No | Yes |
| A self-employed professional you engaged makes the mistake, his own policy turns out to have lapsed and the client claims against your agency | No | Yes |
| Your professional signs a contract under a power of attorney that exceeds the mandate agreed | No | Provided that |
| A seconded professional falls down the stairs at the client and brings a claim against your agency | Yes | No |
| Your account manager knocks over a cup onto the client's server equipment during a progress meeting | Yes | No |
| The client demands the placement fee back because the placement failed after six weeks | No | No |
For your cover it matters less who made the mistake than whether the loss is financial or physical.
Frequently asked questions
This is what people ask us most.
The interim manager made the mistake. Why does the claim come to the agency?
Because you concluded the agreement with the client, not the professional. Article 6:76 of the Dutch Civil Code attributes the conduct of auxiliaries to the contractor. Your insurer handles the claim and then seeks recovery from the professional or his insurer. Whether that succeeds depends on his policy and on the limitation of liability in his own terms.
Is a reorganisation that turns out badly an insured professional error?
Only if there is an identifiable mistake that a reasonably competent professional would not have made. A disappointing result, a wrong reading of the market or a decision the client took himself is not. The discussion then turns on who took which decision. So record decision-making in writing.
Our professional is becoming a statutory director. What do we arrange?
Arrange it before the appointment. Directors' liability is excluded on professional indemnity insurance and belongs on directors' and officers' liability insurance held by the company in which he is appointed. Have it confirmed in writing that he is included as an insured person and that the cover continues after he leaves, because claims from that period can come later.
Do injury and damage to property also fall under this policy?
No. This insurance covers only pure financial loss. If someone is injured or something is damaged, that belongs on public and employers' liability insurance. For seconded professionals there is also the duty of care in Article 7:658 of the Dutch Civil Code, which also applies to people carrying out work outside an employment contract. In a secondment arrangement, assess which party carries that duty of care.
Read more
Within Beroepsaansprakelijkheidsverzekering
- Beroepsaansprakelijkheidsverzekeringthe main page
- Beroepsaansprakelijkheidsverzekering interim manager zzp
- Beroepsaansprakelijkheidsverzekering architectenbureau
- Beroepsaansprakelijkheidsverzekering legal counsel zzp
- Beroepsaansprakelijkheidsverzekering energieadviesbureau
- Beroepsaansprakelijkheidsverzekering management consultant zzp
- Beroepsaansprakelijkheidsverzekering constructiebureau
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