Implementation · migration · loss from delay
Professional indemnity insurance (BAV) for an IT consultancy
In an implementation project the discussion is rarely about one mistake. It is about overrun, additional work and a system that does not do what the client thought it was buying.
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Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een IT-consultancybureau.
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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- We compare the offerings of several insurers
- 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
Professional indemnity insurance (BAV) covers pure financial loss that your client suffers through a mistake in advice, design or supervision. In consultancy work those are recognisable matters: a choice of package that does not fit the process, so that the project is abandoned halfway; a migration in which historical records are not carried over; an interface that fails silently so that invoices go unsent for weeks; or a configuration that lacks a statutory retention or invoicing requirement.
Two kinds of loss almost always fall outside. The first is loss from delay and penalties under a contractual clause: liability arising solely from a penalty clause, a warranty or an indemnity is excluded, and it is precisely those that appear in fixed-price projects with a hard delivery date. The second is your redoing your own work: remedial hours, additional work and refunding your fee are not insured losses.
Insurers ask expressly which terms you use. If you work with the industry terms for IT services, liability is limited by contract. If you accept a large client's purchasing terms with unlimited liability and broad indemnities, the part that goes beyond your liability in law is not covered. For injury and damage to property at the client you also still need public and employers' liability insurance needed.
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 between cover and no cover in implementation and migration projects.
Data loss during a migration
Data is not property in law, so loss or corruption is generally financial loss and belongs here. But note the condition about back-ups: various policies exclude loss that could have been prevented with a sound and tested back-up. Record who is responsible for the back-up and that it was verified before the conversion.
Delay and penalty clauses
A missed go-live date costs the client money, but a claim resting solely on a penalty clause falls outside the cover. Only loss for which you would also be liable in law without that clause qualifies. So assess delivery clauses before you sign, not after the project overruns.
Scope creep and putting your own work right
When a project goes off the rails, the client wants free rectification and a refund. That is your own performance and it is not insured. What is covered is the detriment the client suffers in addition. A scope recorded in writing, documented instructions for additional work and signed acceptance criteria are decisive here.
Subcontractors and seconded consultants
For mistakes by third parties you engage you are liable to your client under Article 6:76 of the Dutch Civil Code. Check whether subcontractors are included as co-insured or whether you require them to hold their own policy. If two firms work together on one engagement, you can be held liable for the whole under Article 7:407(2) of the Dutch Civil Code.
What does your premium depend on?
- Annual turnover: the usual basis for consultancy firms
- Share of implementation against advice: carrying the work out weighs more heavily than advising
- Conditions applied: your own industry terms or the client's purchasing terms
- Size of your largest project: the maximum exposure determines the sum insured
- Number of consultants and subcontractors: including seconded and hired-in staff
- Area of cover and retroactive period: foreign clients and old projects cost extra
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| During a migration two years of historical invoices are not carried over and the client has them reconstructed externally | No | Yes |
| An interface fails silently, so the client does not invoice for weeks and loses interest | No | Yes |
| A consultant from your subcontractor sets the authorisations too widely and your client's audit fails | No | Yes |
| Your consultant pulls a cable loose at the client's site so that a switch falls and breaks | Yes | No |
| The client claims the contractual penalty for every week the go-live overran | No | No |
| The client demands that you rebuild the interface free of charge | No | No |
What matters is whether the client has lost something in addition to your performance, or is only asking for that performance back.
Frequently asked questions
This is what people ask us most.
Is our client's business interruption covered?
If the interruption results from a professional error, the financial detriment falls within the cover in principle. If the claim rests solely on a penalty clause or an availability guarantee, it does not. Your own loss of turnover is not insured either. For that there is business interruption insurance for IT companies. So always first assess what the liability rests on contractually.
We also build bespoke software. Is that insured here?
Design, advice and supervision fall under this policy; supplying a product with a defect is more nuanced. Have it included in the description of your professional capacity that you also develop and implement. Damage to property and injury stay with public and employers' liability insurance. Additional cyber cover is sensible as soon as you manage clients' systems.
The client wants us to indemnify him in full. Is that possible?
Contractually it is; insured it is not. What you accept above your liability in law is at your own expense. Put indemnities, unlimited liability and different limitation periods that are put to you before your adviser before you sign. Insurers ask about these points when you apply and take the answer into account in underwriting.
When do we have to report a threatened claim?
As soon as you are reasonably aware of it; Article 7:941 of the Dutch Civil Code requires that. Under a claims-made policy, notifying a circumstance also fixes the insurance year, even if the claim only follows later. Admit no liability and promise no free rectification before the insurer has responded. That can damage your position.
Read more
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