Business liability insurance (AVB)
Business liability insurance concerns coverage for legal accountability, for those people who cause damage whilst working for a company in a professional capacity. Liability for private individuals (AVP) only covers damage caused as a private individual, during free time, and away from professional activities. Business liability covers damages caused to other people and property by business.
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What you should know about a business liability insurance
You are covered with business liability insurance against any damage caused by you or your employees. If you damage the belongings of a client, you are liable, and it can become quite expensive to cover the damages. This is why it is always a good idea to make an inventory of the potential risks. As a SME or a self-employed person, you can find an insurance policy that covers you for business liability.
What is business liability insurance (AVB)?
Business liability insurance is a type of policy that covers damage caused to property and persons that has arisen during work. For example, a customer who falls on your site because you have not gritted the pavement when it is slippery outside, or an item that is knocked over by a member of staff and hits a customer, causing injury. As a company there are a whole multitude of things that you can be held liable for. Business liability insurance provides a solution.
Is business liability insurance mandatory?
It is not required by law, but there are certain instances where it might be deemed necessary, where clients or suppliers ask for it. The Trade Association can also purchase this insurance.
Why an AVB?
Business liability insurance covers you against damage caused by your own work or that of one of your employees. For example, the damage caused by your products is reimbursed, as is the damage to your employee’s belongings or equipment that you rent or borrow. Sometimes the costs of claims are high and could put the company at risk if you bear the costs yourself. This is why it is so important to have business liability insurance.
Who is the insurance for?
Any businessperson can take out business liability insurance for their company. Damage caused whilst you are at work is not covered by private liability insurance. With an AVB, not only the entrepreneur, but also his or her staff are insured.
Business liability for the self-employed
Business liability insurance is also available for the self-employed. This insurance for entrepreneurs insures against damage caused during work or an assignment. 47% of self-employed persons have this type of insurance. Professional liability insurance is also a necessity for a self-employed person, especially for those working in an advisory role, such as an engineer or an architect. It insures against financial damage caused by professional errors.
Liability insurance for self-employed persons →Is business liability insurance mandatory?
It is not required by law, but there are certain instances where it might be deemed necessary, where clients or suppliers ask for it. The Trade Association can also purchase this insurance.
Additional coverage
There are additional clauses that you can add to your business liability insurance to better protect against high claims for damages. You find these specific clauses added in industries such as construction or for SMEs in a wide range of sectors.
Why an AVB?
Business liability insurance covers you against damage caused by your own work or that of one of your employees. For example, the damage caused by your products is reimbursed, as is the damage to your employee’s belongings or equipment that you rent or borrow. Sometimes the costs of claims are high and could put the company at risk if you bear the costs yourself. This is why it is so important to have business liability insurance.
Oversight in the construction industry
Adding the cover ‘Supervision in the Construction sector’ you are insured against damages accidentally caused to rented items or items you have on loan. This cover is included as standard in business services, trade, catering, and external care. Within construction, this is a clause that must be requested as an additional insurance.
Employee damage
This type of coverage insures your employees for damage they incur in the event of an accident at work for which you are not liable as an employer, but that the court may find you have certain responsibility for. It is important to be properly insured for such an event, as the law states that you must behave as a good employer, which you may not be deemed to be if you do not have adequate insurance cover.
Pre-risk for SMEs in construction
Pre-risk is the period of time before the start date of an insurance policy. This period begins the moment you start your profession, company, or activities, and ends when the coverage starts. You are insured with this supplementary insurance if a person holds you liable for damage caused before the commencement date of the insurance policy. The risk is included as standard if you work in business services, trade, care and personal care. Those who work in construction can include this as an additional insurance. For self-employed persons without employees, the pre-risk is covered as standard.
Exclusions on the Business liability insurance (AVB)
There are a few instances that are not covered. For example, giving incorrect advice is not insured and requires professional liability insurance instead. Damage to yourself or your company is also not reimbursed. Neither is damage or costs you incur to deliver a product or service. Other exclusions include environmental damage on your company site, damage caused by a motor vehicle, vessel, or drone, and damage caused by intent or recklessness.
Overview of cover, exclusions and limitations with AVB
Every policy is different, and the exact coverage may differ between insurer and insured. Always discuss with the insurance company to examine precise policy detail, but below is an overview of what to expect:
Insured in the AVB
Damage caused to persons, movable property and immovable property
Damage as a result of product liability
Damage to employees, temporary workers, trainees and volunteers
Damage to employee property
Damage in the Netherlands and abroad, subject to exclusions*
Not insured in the AVB
Damage to your own company
Damage or costs to redeliver products
Damage caused by motor vehicles
All damage for which the entrepreneur or employer is not liable
Environmental damage **
*Most insurers have a broad territorial scope and also cover damage caused abroad, but there are often exclusions. These exclusions are mainly for countries that have so-called ‘punitive damages’, such as the United States of America.
**There are often major differences between the various insurance companies, particularly with regard to environmental damage. Certain forms of environmental damage are covered, for example in the event of sudden soil contamination at the work location. However, environmental damage at one’s own business location or slowly occurring environmental damage is almost always excluded. In other words, when working with hazardous substances, it is important to discuss the details with the insurer in advance.
Frequently asked questions about business liability insurances
Are failing products insured with this insurance?
Yes, if your products cause damage to third parties, this is covered by the business liability insurance. Product liability is also insured. Damage to the belongings of others is also covered by the insurance.
Do I need business liability insurance?
Prevention is indeed better than cure. It is highly recommended to avoid risks. Nobody can rule out every risk on the basis of prevention though, and anyone can hold the company liable for a whole host of issues. This could jeopardise the survival of the company, making business liability insurance a crucial part of your company.
Isn’t the business liability insurance double with the liability insurance for private individuals?
No, liability insurance for private individuals, as the name implies, is exclusively intended for private individuals alone. This is why most insurers exclude liability from the company. Ordinary private insurance is not sufficient.
Have you ceased your business and has the insurance been terminated?
You may still receive a liability claim afterwards for damage that was caused whilst the insurance was valid. We call this the run-out risk, and you can insure yourself against this upon termination of the insurance.
What do we mean by run-in risk and run-out risk?
If damage is discovered after the start date of the insurance, but the work has been carried out prior to the start date, this may fall under the run-in risk. With some insurance companies, the run-in risk is included free of charge.
What does ‘supervision cover’ mean?
Supervision damage is the damage you cause to the belongings of others that you have stored in the company for processing or storage. Tools and materials on loan are also included.