What is business liability insurance?
Business liability insurance (Bedrijfsaansprakelijkheidsverzekering or AVB in Dutch) is a type of insurance that protects your business against damage caused by your work, products, and in other situations. Any business that comes into contact with others can cause damage and be liable for it. The value of this liability can be a small sum, but it can also be substantial, putting your business at risk.
For example, if you knock over a cup of coffee, damaging your customer’s laptop. Or if your employee stumbles and breaks a valuable vase at a customer's house. But also if the floor in your shop is slippery and someone falls and breaks a leg.
An accident can easily happen, and because the number of liability claims increases every year, it is sensible to take out business liability insurance. More than 90% of businesses in the Netherlands do this, including freelancers and SMEs.
Is business liability insurance mandatory?
Business liability insurance is not generally mandatory. However, there are situations in which you do need to take out business liability insurance. A client or supplier can ask for it. Or your trade or industry association can demand it.
What is covered by business liability insurance?
A typical bedrijfsaansprakelijkheidsverzekering policy in the Netherlands can include but is not limited to:
damage caused by work carried out by you or an employee
damage caused by your products
damage to an employee's belongings
damage to equipment that you rent or borrow
damage to buildings
What is not usually covered by business liability insurance?
The following situations are not covered:
giving the wrong advice. You need professional indemnity insurance for this;
damage to yourself or your business;
damage or costs you incur to redeliver your service or product;
environmental damage on a business premises;
damage caused by intent and recklessness;
damage caused by a motor vehicle, vessel, or drone.
What is the difference between Professional indemnity and Business liability?
Business liability involves any damage you or your employees, company, products or services cause to others. With professional indemnity, the damage is always directly related to your profession. You make a professional error that causes financial damage. For example, if you are a tax consultant giving wrong advice.
Check if you are insured in case of a recall
Do you offer a consumer product on the European market? Then it may be wise to take out extra insurance against loss of income due to a recall. For example, because your product is unsafe for consumers. Supervising authorities may determine that you must then take a product from the market, a recall.
A recall can cost you a lot of money. These costs are usually not covered by your business liability insurance. You may be able to extend this insurance with a recall clause. Check this with your insurer. You can also take out a recall insurance. Some insurers only pay out if the Netherlands Food and Consumer Product Safety Authority, NVWA has ordered the recall. In that case there is a "governmental recall" clause in the terms and conditions.
