Article 2:9 of the Dutch Civil Code · private assets · decisions
Directors' and officers' liability in property
A property BV is managed through decisions on purchase, financing, letting and maintenance. If such a decision goes wrong, it is not the building that is pursued but your private assets.
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In brief
This insurance pays the defence costs and the financial loss where someone holds you personally at fault over the way you managed the property BV. Internally that runs through Article 2:9 of the Dutch Civil Code (improper performance of duties towards the company itself), externally through Article 6:162 of the Dutch Civil Code where a tenant, financier or fellow shareholder claims that you acted unlawfully, and after a bankruptcy through the insolvency administrator.
What distinguishes it from the rest of your property policies is the connecting factor. Damage to or caused by the building itself runs through the buildings and liability cover of the property owner, where Article 6:174 of the Dutch Civil Code holds the possessor of a defective structure liable. Here it is solely a matter of a decision: a valuation you adopted without checking, a lease you signed when the tenant's solvency was already known, a distribution to the holding company while the maintenance obligation was still outstanding.
Property decisions have a long tail. A purchase from 2019 may only lead to a complaint on refinancing or sale. That is why this policy turns on the notification period and not on the year in which you made the mistake.
What does directors' and officers' liability cover in property?
The structure of the cover in three parts, with an overview per situation below.
The basics
Liability
AVB for property damage and injury, BAV for professional errors.
Damage to third parties
Employers' liability
Care, custody and control as an extension
Your business
Assets and continuity
Business contents, goods and lost turnover during downtime.
Business contents at replacement value as new
Goods at cost price
Business interruption or additional costs
If you employ people
Staff
Sickness absence, accidents and the traffic risk.
Continued pay for 104 weeks
Group personal accident
WEGAS for traffic risks
What is covered
Situation
AVB
BAV
Cyber
Injury to a visitor or customer
Yes
No
No
Damage to a client's property
Sometimes
No
No
Financial loss caused by an advisory or calculation error
No
Yes
No
Downtime after a ransomware attack
No
No
Yes
Data breach involving personal data
No
Sometimes
Yes
Damage to property in your care
No
No
No
This overview is general in nature and is not personal advice. What is actually covered, including exclusions, limits and the excess, is set out in the policy conditions and the insurance card (verzekeringskaart) of the insurer; you receive both before you take out cover. Taking out cover without advice? Then read what execution only means for you.
Where things go wrong in practice
Four points that make the difference between a policy that pays out and one that does not.
The complaint concerns a decision, not a defect
If a roof tile falls from your building onto a car, that is a matter for the possessor's liability. This policy only comes into play if someone claims that you as a director should have intervened: that the maintenance budget was deliberately scrapped, that an inspection report was left in a drawer or that you allowed the BV to take on obligations it could not carry. The evidence is then a decision or a line in the minutes, not a loss adjuster's report.
Joint and several liability within a property structure
Property is rarely held in one BV. If you manage a holding company with property BVs beneath it, you are in principle held liable for the management of every company of which you are a director, and jointly and severally with your fellow directors for each company. Anyone who forgets to declare one BV discovers it only when a claim comes in. So supply the full structure, including intermediate holding companies, management BVs and the companies in which an asset is temporarily held.
Retroactive and run-off periods determine whether the policy ever pays
A directors' and officers' liability policy works on the basis of the claim: what is covered is the claim notified during the term, whenever the decision was taken. Without retroactive cover all your earlier years as a director remain uninsured, and without run-off cover you are unprotected after resignation or after the sale of the company for claims that still come in afterwards. Arrange the run-off at the moment of transfer. It cannot be bought afterwards.
What this policy does not pay
Falling outside the cover are intent and wilful recklessness, in line with Article 7:952 of the Dutch Civil Code. Administrative fines and additional tax assessments imposed personally by law are not insurable either, nor are circumstances you already knew about when taking out the policy but did not disclose. That touches on the duty of disclosure in Article 7:928 of the Dutch Civil Code. Repairs to the building, deferred maintenance and lost rent are losses of the company and do not belong here.
What does your premium depend on?
Balance sheet total and portfolio size. The value of the property managed determines the size of the interests you decide on.
Number of companies and directors. Every BV to be insured and every director increases the number of possible claims.
Developing or only managing. Property development involves decisions with a much greater financial swing than long-term letting.
Financing structure. Bank credit, mezzanine finance and shareholder loans each bring different parties who can hold you liable.
External investors or participants. Third parties investing alongside you increase the chance of a complaint about returns, information or valuation.
Retroactive and run-off period requested. The further back and forward you want cover, the longer the period over which the insurer carries the risk.
Insurers weigh these details differently. That is where your saving is.
How we arrange it
You request a quoteWe take stock of your activities, turnover and wishes.
We compareseveral insurers, on premium as well as conditions.
You receive a proposalWith an explanation of the differences and the exclusions.
We arrange the switchIncluding cancellation, so there is no gap in cover.
Customers rate our service on four aspects: personal service, service delivery, availability and the outcome. The reviews are collected and published by NH1816 and come from customers who have actually taken out a policy with Finass Advies B.V. or reported a claim.
Do I need this if I am the sole director and sole shareholder?
Yes. Internal liability towards your own BV then hardly arises, but the insolvency administrator and outside parties remain. With a property BV with bank financing and tenants in particular, a claim from outside is the realistic scenario. If the company goes bankrupt, the insolvency administrator investigates the decisions of the preceding years, and you conduct that investigation with your own resources if there is no policy.
Does this insurance cover damage to the building itself?
No. Fire, storm, leaks and glass breakage belong with the buildings insurance, and injury caused by a defect in the building with the property owner's liability cover. This policy pays for financial loss resulting from your conduct as a director, plus the cost of defence. Repair costs for the building do not fall under it, even where a management decision contributed to the loss.
I am selling my property BV. What do I arrange for my period as a director?
Agree a run-off period on transfer and record who pays the premium for it. After completion, the buyer decides what happens to the existing policy, and he has no interest in cover for your years. Run-off cover set out in the sale agreement and taken out before the transfer date keeps your period as a director insured for claims arising later.
Is an indemnity from the company not enough?
An indemnity only works as long as the company can pay. In precisely the scenario in which directors are held liable, bankruptcy, it cannot, and an indemnity against the insolvency administrator himself does not stand up. What is more, an indemnity does not cover the defence costs you incur from the first letter onwards. The insurance fills those two gaps and stands apart from the BV's financial position.
Finass Verzekert is a trading name of Finass Advies B.V. We advise on and arrange non-life insurance on the basis of an objective analysis of several insurers, and receive commission for this from the insurer, which is included in the premium. You pay no separate advice fee. Before you take out cover, we establish your wishes and needs.
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