Everything you need to know about professional indemnity insurance as an independent professional

One small mistake in your work. It can have major financial consequences both for your client and for you as an independent professional. Fortunately, you can protect yourself against those risks with professional indemnity insurance (BAV). But when is such insurance really necessary? And is it compulsory? We explain that and more in this article.

What is professional indemnity insurance?

Professional indemnity insurance (BAV) protects you if you make a professional error that causes financial loss to your client. This could include errors in advice, wrong calculations or a wrong decision that leads to extra costs. Unlike business liability insurance, which covers property damage and personal injury, a BAV focuses on pure property damage: damage that is directly monetised.

Especially in sectors where advice, calculations or designs play an important role, such as consultancy, engineering or financial services, a small professional error can have major financial consequences. A BAV ensures that you do not pay for those costs yourself.

What is a professional misconduct?

A professional misconduct is a mistake you make while doing your job that causes your client financial loss. What such an error looks like varies by industry. Some examples:

• Consultants & advisers: An incorrect advice that causes your client to lose income.
• Healthcare: A medical error leading to additional costs or injury.
• Technical professions: A miscalculation in a design, resulting in repair costs.

The risk is often in the smallest details. And one miscalculation can result in big financial claims.

What is and is not insured with an indemnity insurance policy?

A BAV compensates financial losses caused by professional misconduct, such as:

• Errors in advice or calculations.
• Wrong decisions during your work.
• Errors made by employees, trainees or temporary workers under your responsibility.
• Legal costs in the event of a liability claim.

Note: a BAV also has limits. This is not covered:

• Damage caused by criminal offences (for example: fraud).
• Intentionally caused damage.
• Damage caused by investment advice or asset management.
• Infringement of intellectual property rights.

Is professional indemnity insurance compulsory?

For zzp'ers and freelancers, a BAV is not required by law. Yet many clients in sectors such as finance, legal services, healthcare and technology do ask for a BAV before you can start at all.

Even if it is not compulsory, it is wise to be properly insured. One small mistake in an advice or design can easily turn into a claim costing tens of thousands of euros. Without a limited liability insurance policy, you bear that risk entirely yourself, which can seriously affect your business and private assets. With a limited liability insurance policy, you also show that you operate professionally and responsibly. A certainty that clients appreciate.

Doing business with certainty

At Striive, we believe that you as an independent professional should be able to do business without worries. Therefore, through our platform you can not only find challenging assignments, but also make use of our Striive Professionals Services. With these services you can tick off in one go all the practical matters that you would like to have taken care of. Appropriate and flexible for your assignment. Just like you.

Want to know more about how you, as a zzp'er, can be properly insured on your way? Feel free to contact us or check out our services.