BAV protection
The professional indemnity insurancealso called BAV, is an indispensable insurance for all advising professions, from brokers and consultants to lawyers and coaches. Especially the self-employed and other small self-employed can benefit from taking out a professional indemnity insurance. In this blog you can read what the use of a BAV is and why it protects especially small companies.
Risk for the self-employed and SMEs
A ZZP'er is strong in his or her shoes but very vulnerable at the same time. Because you are your company. You are an expert in your field, so the risk of something happening is small. But anyone can make a mistake and if that mistake has major financial consequences for your client, he or she will make a claim against you. Small companies (unlike large companies) usually do not have reserves to cover claims. So they pose a direct threat to the progress of your business. The trend is that there is an increase in the number of legal proceedings, so as a ZZP'er or SME you run more and more risks in practising your profession.
Small mistake, big consequences
As an example of such a threat, Anita, office assistant at insurance specialist Cheapp, mentioned the accountant who had made a mistake in a customer's tax return. This client was faced with a tax assessment that was recovered from the accountant. Without BAV, the accountant would have gone bankrupt due to this incident. Also the ICT employee who designed a program for a webshop with a small mistake in it, got a claim for lost income. These examples show that a wrong action or a flawed advice can quickly have large consequences.
Insurance for consultancy losses
With a BAV, you are insured against property damage resulting from wrong advice, wrong actions, incorrect or incomplete information or violation of intellectual property rights.
The advantage of the BAV is:
- The claim for compensation
- Less chance of reputational damage
- No threat to the progress of the company
- Business relationship with customer is not disrupted
In addition, good insurance gives your company a professional image. Some clients consider a BAV a condition for awarding you the contract. It is therefore advisable to mention this in your offer. Especially since the General Terms and Conditions do not always offer sufficient protection.
Professional groups BAV
The professional indemnity insurance (BAV) should not be confused with the corporate liability insurance. The latter insurance pays out for material damage. The third-party liability insurance is meant for companies that do not make things but give advice. The following professional groups fall under this category:
- Advocacy
- Accountancy
- Secondment
- Recruitment
- ICT
- Marketing and PR
- Training and coaching
- Architects
- Brokers
- Consultancy companies
Directors' Liability Insurance
Therefore, being a good director cannot always prevent directors' liability. Fortunately, however, you can insure yourself for this. Take out a good directors' and officers' liability insurance. This provides protection against claims and usually also covers legal costs. A directors' and officers' liability insurance ensures that your private assets will not be affected by claims for damages resulting from decisions you made as director of your organisation.
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