Professional indemnity insurance (BAV) for a self-employed interim manager
An interim manager does not only advise, he decides. That difference determines whether a claim lands on this policy or somewhere else.
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In brief
An adviser writes a report. An interim manager carries it out. You purchase, dismiss, conclude contracts and steer projects. That uncouples the size of the possible detriment from your hourly rate: an implementation that gets stuck, a supplier agreement with an unfortunate clause or a personnel file that does not stand up costs the client a multiple of your fee. That loss is pure financial loss and therefore does not belong on a public and employers' liability insurance.
The most sensitive point is the description of business activity on your policy. If it says 'management consultancy' while you in fact run a site as its manager, an insurer can take the position that the claim falls outside the cover. Have it recorded that you carry out interim management engagements and managerial duties. Report changes too: if you move from project management to a board role, your risk profile changes and that is a circumstance the insurer must know about.
There is also a boundary that has to be clear in advance. If you are registered as a statutory director, Article 2:9 of the Dutch Civil Code towards the company and Article 2:248 of the Dutch Civil Code apply in an insolvency. That liability is excluded on this policy and belongs on the directors' and officers' liability insurance of the organisation in which you are appointed. If you work through an agency, also look at professional liability in interim management.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
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Help with claims
We report the claim and monitor how it is handled. In urgent cases you can reach us on the emergency line.
What to look out for
Four points that determine the position of a self-employed interim manager.
Who took the decision?
In a claim it is almost always about whether you took a decision yourself or advised it and had it ratified. So work with decision lists, mandate arrangements and minutes that the client confirms. If you acted within a mandate given to you and on the basis of the information you received, the criticism shifts to the organisation that gave the mandate.
Power of attorney and authority to sign
If you are given a power of attorney or sign contracts on the client's behalf, have it recorded in writing how far your authority extends. If you sign outside your authority, you can be held liable for the consequences yourself. When you apply, assess whether your policy covers or specifically excludes claims arising from acting without authority.
The client's terms usually take precedence
Large organisations' purchasing terms often contain unlimited liability and an insurance requirement with a minimum amount. Your own terms only work if you hand them over before or when the engagement is concluded; otherwise a limiting clause is voidable under Article 6:233(b) of the Dutch Civil Code. Assess this before you sign, not when the first invoice goes out.
What you are not insured for
Outside the cover are directors' and officers' liability, fines and penalty payments imposed on you, and refunding your own hourly rate or redoing your engagement. Liability arising from promises about a guaranteed result, saving or delivery date is also excluded. For loss you cause intentionally or recklessly, the exclusion in Article 7:952 of the Dutch Civil Code.
What does your premium depend on?
- Annual turnover: the turnover basis on which the premium is calculated
- Nature of the assignments: project management, line management or board-level work
- Size of the clients: a group brings greater loss potential than an SME
- Sector: healthcare, government and financial services weigh more heavily
- Requested sum insured: often prescribed in the engagement terms
- Retroactive date: from what moment earlier engagements are covered
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| A dismissal file you built up during a reorganisation does not stand up and the client pays higher compensation | No | Yes |
| A supplier agreement you concluded on the client's behalf turns out to be non-terminable for three years | No | Yes |
| You damage the company car the client gave you to use for the duration of the engagement | No | No |
| Your laptop bag falls onto an employee's screen in the meeting room | Yes | No |
| The client wants your hourly rate for the last two months back because the project is at a standstill | No | No |
| A claim about a completed engagement comes in when you are already back in employment | No | Provided that |
Property you are given to use by the client falls under the care, custody and control exclusion and calls for a separate arrangement.
Frequently asked questions
This is what people ask us most.
I am hired in and work under the direction of the board. Am I at risk?
Yes. Anyone contracting as a self-employed professional is a party to the agreement in their own right and can be sued directly. The protective rule for employees in Article 7:661 of the Dutch Civil Code does not simply apply to a contractor. Your position depends on your engagement agreement and on the mandate within which you acted. Record both in writing before you start.
What if the engagement is ended early?
Termination in itself is not an insured event. That is a contractual dispute. It becomes different as soon as the client asserts that loss has arisen through your conduct and claims it. Report such a situation to your insurer as soon as you can expect a claim, even if there is no formal demand yet.
My client requires a higher sum insured. Can that be done mid-term?
Often yes, but not always with retrospective effect and not without a fresh assessment. An insurer can only let an increase apply to claims that come in after the change. So arrange the increase before the engagement starts. If a dispute is already running, amendment is usually no longer possible for that file.
I am going back into employment. Do I have to arrange anything?
Yes. Claims about your interim engagements can still come in for years, while your claims-made policy stops as soon as you cancel. So apply for run-off cover before you end the insurance. The limitation period for a claim for damages follows from Article 3:310 of the Dutch Civil Code; match the run-off period to it as far as you can.
Every situation is different. For these situations we have a separate page.
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