Professional indemnity insurance (BAV) for a self-employed VvE manager
At small associations the manager is often asked to serve as a board member as well. That suits the VvE (Dutch owners' association), but it means you wear two hats that are covered by two different policies.
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In brief
As a self-employed VvE manager you usually serve a number of smaller associations: the bookkeeping, the service charge statement, the annual general meeting, arranging maintenance and contact with the owners. Mistakes in that work cause pure financial loss for the association, and that is what professional indemnity insurance is for. The general explanation is on the hub page on the BAV. The standard is the duty of care in Article 7:401 of the Dutch Civil Code: that of a reasonably competent and reasonably acting manager.
The point that sets you apart from a larger management firm is the dual role. If the general meeting appoints you as a board member of the VvE, you are no longer acting only as a contractor but as an officer of the association. Your liability then runs through Article 2:9 of the Dutch Civil Code on improper performance of duties, and that risk belongs on a directors' and officers' liability insurance for the VvE. Set out in your management agreement for each association which role you fill, and report an appointment to the board to your insurer before you accept it.
The second point is continuity. You are one person with signing authority on several accounts, with the records on your own systems and all the knowledge in your head. If you are out of action for a long period, premiums, tax assessments and contractors' invoices keep coming. Insurers ask on application how you have arranged cover and back-up. Record an arrangement with a colleague in writing and make sure the records for each association are accessible to the board.
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 cancel your old policy and align the start date, so you are never a day without cover.
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 a one-person management practice runs into
Four points that determine the cover for a self-employed VvE manager.
The association's money in your name
If you have signing authority on the VvE's account, separating the funds is essential. Loss through misappropriation or fraud is insured nowhere; Article 7:952 of the Dutch Civil Code keeps loss caused by intent outside the cover. Work with accounts in the association's name, have a board member countersign above an agreed limit and provide a quarterly reconciliation between the bank balance and the records.
The reserve fund and the long-term maintenance plan
Article 5:126 of the Dutch Civil Code requires the association to hold a reserve fund for maintenance that does not recur annually, funded on the basis of a long-term maintenance plan (MJOP) or a statutory minimum. If you advise a contribution that is demonstrably too low for years, or work with an outdated plan, that is an advice error. Update the plan periodically and record when the general meeting does not follow your advice.
Meeting formalities carry weight
The notice period, the agenda, the quorum and the required majority are laid down in law and in the deed of division. If the procedure is not correct, a resolution can be set aside under Article 5:130 of the Dutch Civil Code. At small associations without a professional board, you are the one who guards this. Work with a fixed checklist for each meeting and keep proof of dispatch of the notices.
Clients other than VvEs call for a different capacity
If you also manage properties for private landlords or investors, that is property management and not VvE management. Acting as an intermediary in insurance also falls under a regime of its own with a licence requirement. If that is not on your policy schedule, you are carrying out work outside your insured capacity and a claim about it can be refused. Have every service included in so many words.
What does your premium depend on?
- Number of associations you serve: and the number of apartment rights within them
- Size of the funds managed: service charges and reserve funds together
- Role at each association: management only, or board member as well
- Type of buildings: small residential VvEs or mixed buildings with commercial units
- Cover during absence: what is arranged if you are out of action
- Retroactive and run-off cover: how far earlier financial years and the period after termination are included
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| An association's policy lapses because the renewal invoice was left unpaid and a storage unit burns out | No | Yes |
| An owner pays too much for years because you applied the division ratio incorrectly | No | Yes |
| While unloading archive boxes you break the barrier of the car park | Yes | No |
| An owner claims his legal costs because his agenda item did not make it onto the agenda | No | Provided that |
| You are out of action for three months and the association hires an interim manager at a higher rate | No | No |
| Your own records are lost in a fire at your office | No | No |
As a one-person practice you carry the last two lines yourself. That is exactly what an arrangement for cover during absence is for.
Frequently asked questions
This is what people ask us most.
I am both manager and board member. Which policy applies?
Both, but for different allegations. Mistakes in carrying out the management assignment fall under your professional indemnity cover; allegations of improper performance of duties as a board member fall under Article 2:9 of the Dutch Civil Code and belong on a directors' and officers' liability policy. In reality both allegations are mixed together in a single letter. So report the claim to both insurers and let them draw the line.
What if a leak is not put right in time?
The damage to the building and to the flats is property damage and belongs on the association's buildings insurance; where a defect in the building causes injury, the possessor's liability in Article 6:174 of the Dutch Civil Code comes into play. Your professional indemnity cover only comes into view if you left a report unattended or failed to place a repair order, and the association incurred extra costs as a result.
For how long can a VvE come back to us about an old financial year?
For longer than the term of your contract. Under Article 3:310 of the Dutch Civil Code a claim becomes time-barred only five years after the association becomes aware of the loss and of the person liable. Because the BAV works on a claims-made basis, what counts is whether you are insured at the moment of the claim. If you hand over the management or stop, buy run-off cover before you end the policy.
Do I also need ordinary liability insurance?
If you visit the buildings yourself, yes. A damaged installation during an inspection or injury to a resident is property damage or injury and falls outside the BAV. For that there is the liability insurance for self-employed professionals. If the records containing owners' data are compromised, that belongs on a cyber insurance.
Every situation is different. For these situations we have a separate page.
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