With professional indemnity insurance (BAV) there is no fixed formula for setting the premium. Insurers go to great lengths to estimate risks, and the professional group plays an important role in this, but in fact a new calculation with different estimates has to be made for every situation. Naturally, that makes this insurance a little less transparent, which means comparing pays off in any case. Still, there are other ways to save money on professional indemnity insurance. Below, we at WA.nl explain them. This page describes the situation in the Netherlands.
Making the right choices
Prospective policyholders often face a number of choices that have quite a big influence on the premium to be paid. This concerns, for example, whether or not to include prior acts risk in the cover, but also setting the excess. The higher this excess, the more you can save on professional indemnity insurance.
The sum insured of course also plays a role. Most professional indemnity insurers apply a maximum of €250,000, €500,000 or €1,000,000. The ideal maximum amount depends on the work, the type of clients, the risk of damage, the risk of claims and so on. Weigh things up carefully in advance and choose suitable cover. The insurer can help you with this.
Tailored specifically to the profession
In other words, there can be large differences in cover, and that can also have far-reaching consequences for the premium. Some cover is simply superfluous, especially if terms of delivery can also limit liability, and then the professional indemnity insurance is unnecessarily expensive as well. A good insurer tailors the professional indemnity insurance to the business. It often also has knowledge of the specific professional group and can estimate the risk much better, arriving at a well-considered premium. That is why we recommend choosing professional indemnity insurance that is tailored specifically to your profession. In terms of cover, too, this gives the most certainty.
Putting together a good application file
Insurers need to be able to estimate the risk, and the quality of the application file plays a major role in this. Give it the attention it needs. Things that can lead an insurer to estimate the risk as lower are:
- The relevant level of education of the directors
- The relevant work experience of the directors
- General terms and conditions drawn up by a lawyer
- Current contracts with clients
- Existing risk analyses of current projects
- And so on
Give the insurer all relevant information. Even if it does not immediately lead to a lower premium, the insurer can tailor the cover better to your needs, and everyone benefits from that.
Make use of commercial discounts
Many insurers offer all kinds of benefits that can still result in considerable savings. For example, there are sometimes special promotions in which start-ups get the first six months free. It can be a good idea to choose such an insurer, but do check whether this insurer really is cheaper in the long term. The same applies to other discounts, such as package discounts or discounts for paying the annual premium in one go. These discounts are sometimes quite high, but they do not always make the difference.
Comparing professional indemnity insurance
There can still be large price differences between insurers, and they cannot always be traced back to differences in cover. Above, we also pointed out that it is not wise to be guided only by such extras. We therefore recommend that you compare professional indemnity insurance thoroughly. Take the premium into account, but of course also the cover. In the end, the most important thing is to choose the cheapest and most suitable insurance, and that can only be done through a thorough comparison.
Frequently asked questions about professional indemnity insurance
What is the difference between professional indemnity insurance and business liability insurance?
Business liability insurance (AVB) is insurance that is meant to protect the business against all kinds of claims, for example because one of the employees makes a mistake. A number of things are not insured under it, such as damage to vehicles (car insurance covers this) and damage arising from advisory work. Business liability insurance is certainly important, because among other things it covers the office risk.
Professional indemnity insurance is additional insurance on top of business liability insurance that does cover a number of other things. This concerns, for example, damage caused by a tax adviser giving bad advice, or damage because an architect has made a calculation error. The risks in such professional groups are very high, so the premium is always calculated on a tailor-made basis.
Is professional indemnity insurance compulsory?
For most entrepreneurs, professional indemnity insurance is not compulsory, but for a number of professions it is. In those cases the insurance is compulsory mainly to protect their clients. This includes intermediaries in mortgage credit and intermediaries in health insurance, among others.
Who is professional indemnity insurance relevant for?
Professional indemnity insurance is mainly intended for members of the liberal professions who do intellectual work. Examples include consultants, HR managers, IT advisers and so on.
How high is the excess on professional indemnity insurance?
This is tailor-made and can vary widely. Some large companies can easily bear an excess of €2,500 per claim, while a self-employed professional (zzp'er) would rather have a very small excess. This should always be discussed with the insurer.
Are there any special points for my own general terms and conditions?
Insurers may require the insured to use general terms and conditions and to limit their own liability in them; not every insurer sets this requirement. Some insurers also offer help with drawing these up, for a fee. Also remember that contractually extending your own liability is always at your own expense. If you make agreements that are less favourable than the liability rules that follow from the law, you cannot then turn to the insurer. That is exactly why it is important to obtain legal advice as well.