Best efforts or results · the business case · mixing roles
Professional indemnity insurance (BAV) for a self-employed management consultant
An advisory project is rarely challenged because the analysis was wrong. It goes wrong when the promised saving does not materialise and the client reads your proposal afterwards as a promise.
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- 9.5 customer rating for a new policy
- AFM licence 12016589
- Personal 072 - 509 24 56, weekdays 9–17
Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een zelfstandige management consultant.
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.
Enter your details; you will receive a proposal within one working day.
- 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
As a self-employed management consultant you deliver analyses, scenarios, business cases and support for change. If the project ends badly, the client's loss is financial: a reorganisation that turns out more expensive, a system selection that has to be done again, an outsourcing contract that turns out not to work. That is pure financial loss, the territory of professional indemnity insurance. The outline is on the hub page on the BAV. The assessment is whether you acted as a reasonably competent professional, with the duty of care in Article 7:401 of the Dutch Civil Code as the standard.
The sharpest point in this profession is the distinction between an obligation to use best efforts and a obligation to achieve a specific result. Advice is by its nature an obligation to use best efforts: you are not liable because a forecast does not come true. But anyone who names a percentage saving, a lead time or a payback period in a quotation shifts that line without noticing. A warranty or promise about the result is liability accepted by contract and is excluded on virtually every BAV. So set out assumptions, preconditions and the client's responsibility expressly in the engagement confirmation.
Also watch out for mixing roles. Advising on a reorganisation is not the same as carrying that reorganisation out, and interim management is a professional capacity of its own again. If you take on line responsibility, sign contracts on the client's behalf or behave as a person effectively determining policy, the risk shifts to the law governing the legal entity: Article 2:9 of the Dutch Civil Code and, in an insolvency, directors' liability. That does not belong on the BAV but on directors' and officers' liability insurance.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
Four points that are decisive in an advisory claim
What matters for a self-employed management consultant as soon as a project is disputed.
Recording assumptions is your most important prevention
A business case rests on the client's figures. If those turn out to be wrong, the question is whether you should have checked them or were entitled to rely on them. Record for each report which data you received, from whom, and which assumptions you used in your calculations. Add an express note of assumptions. Without that record, your model is judged afterwards as though it were a promise.
Delay and cost overruns are often excluded
Many policies exclude liability for delay, budget overruns and failing to meet schedules, or limit it to a sub-limit. In implementation projects in particular, that is exactly what the client holds you to. Read that provision before you take on a project with a hard deadline, and agree who controls which dependency.
Refunding your fee is not an insured loss
Repayment of your fee, redoing an analysis and the hours you spend putting things right fall outside the cover. What is insured is the consequential loss suffered by the client: the cost of a new project, duplicated licences, buying out a contract. fines and penalty payments imposed on the client are also excluded, because they are a sanction and not compensation.
Large clients' purchasing terms
Corporates and public sector clients use terms with unlimited liability, broad indemnities or a penalty per breach. Your insurer does not follow what you accept there by contract on top of what the law imposes. Negotiate a cap and a time limit, and note that your own terms only apply if you hand them over in time in accordance with Article 6:233(b) and Article 6:234 of the Dutch Civil Code.
What does your premium depend on?
- Annual turnover from advice: the usual basis for calculation
- Nature of the assignments: strategy, process improvement or implementation support
- Size of the clients: larger organisations mean larger interests at stake
- Sector: financial services, healthcare and government are assessed more strictly
- Type of contract: your own terms or the client's purchasing terms
- Retroactive and run-off cover: how far the past and the period afterwards are included
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| The system you selected turns out to be unsuitable and the whole implementation has to be done again | No | Yes |
| A calculation error in your business case leads the client to close one site too many | No | Yes |
| You share the draft reorganisation plan with the works council by mistake before the board knew of it | No | Provided that |
| A member of the client's staff is injured when your flip chart falls over during a session | Yes | No |
| You spill coffee over the laptop the client made available to you for the engagement | Provided that | No |
| A fine from a regulator after the reorganisation you supported | No | No |
Fines and sanctions are not insurable, not even where they follow directly from your advice.
Frequently asked questions
This is what people ask us most.
Am I liable if my advice does not have the intended effect?
Not as a matter of course. Advice is an obligation to use best efforts: you must work carefully, not guarantee success. Liability only arises if you fell below the standard of a reasonably competent professional, for instance by not naming an essential risk or by calculating with figures you knew were wrong. That distinction does have to be apparent from your file.
What if I take on an interim role during the engagement?
Report it to your insurer. Interim management is a different professional capacity from advising, because you then take and carry out decisions yourself. If the policy schedule says only 'management consultant', work in a line role can fall outside the cover. On an application or an amendment, the duty of disclosure in Article 7:928 of the Dutch Civil Code applies; incomplete information can later lead to a reduction or refusal of payment.
How long does a completed project remain a risk?
Often for years. A claim is only time-barred under Article 3:310 of the Dutch Civil Code five years after the client becomes aware of the loss and of the liable party, with twenty years as the outer limit. Because the BAV works on a claims-made basis, what matters is whether you are insured at the moment of the claim. If you stop working for yourself, buy run-off cover before you end the policy.
If I advise on IT, do different risks apply?
Yes. In system selection and implementation, the functioning of the software plays a part alongside the advice, and that is a different risk from a professional error. If your advice touches the processing of personal data and a breach follows, the cost of investigation, recovery and notification belongs on a cyber insurance of the organisation that processes the data.
Read more
Within Beroepsaansprakelijkheidsverzekering
- Beroepsaansprakelijkheidsverzekeringthe main page
- Beroepsaansprakelijkheidsverzekering legal counsel zzp
- Beroepsaansprakelijkheidsverzekering bedrijfsadviseur zzp
- Beroepsaansprakelijkheidsverzekering architect zzp
- Beroepsaansprakelijkheidsverzekering interim manager zzp
- Beroepsaansprakelijkheidsverzekering vve beheerder zzp
- Beroepsaansprakelijkheidsverzekering makelaar zzp
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