Understanding the ins and outs of professional liability insurance can be challenging, especially for freelancers who wear many hats. This blog post, developed in partnership with Van Dessel Insurance Brokers, breaks down the essentials of professional liability insurance and its value for freelancers. With questions contributed by members of Freelancers in Belgium, we’ve created a resource that addresses your most pressing concerns about protecting your business and personal assets. Whether you’re new to freelancing or aiming to strengthen your knowledge, this post will help you navigate your insurance options with confidence.
The article includes:
What Is Professional Liability Insurance?
Explanation of coverage and why it’s crucial for freelancers.
Professional vs. Civil Liability
Key differences between these types of insurance.
Industries and Professions That Require Insurance
Overview of mandatory and optional insurance needs by profession.
How to Choose the Right Coverage
Factors to consider, including risks, client demands, and industry standards.
Costs, Premiums, and Special Offers
Insights into pricing, optional coverages, and exclusive deals for freelancers.
What is Professional Liability Insurance?
Professional Liability insurance covers damages caused to clients or third parties due to unintentional professional errors made by you as a self-employed. Professional liability insurance protects against financial repercussions from professional errors, such as incorrect advice or mistakes during work.
| Aspect | Professional Liability (in Dutch: Beroepsaansprakelijkheid, in French: assurance responsabilité civile professionnelle) |
Private, Personal, Civil or Family Liability (in Dutch: Privéaansprakelijkheid Burgerlijke aansprakelijkheid (BA), Familiale aansprakelijkheid, in French: Responsabilité civile privée, Responsabilité civile (RC), Assurance familiale |
| Context | Professional activities and services | Personal, non-professional life activities |
| Coverage | Errors, omissions, negligence in work-related actions | Accidental harm or damage caused in private life |
| Target Group | Businesses, professionals, and freelancers | Individuals and families |
| Legal Requirement | Recommended for self-employed. Mandatory for certain professions | Optional but widely recommended |
| Example Claims | A freelance graphic designer is hired to create a logo for a client. Due to an oversight, the logo design closely resembles a trademarked logo owned by another company. The client is sued for trademark infringement and demands compensation from the designer for damages and legal fees. | Your child breaks a neighbour’s window |
Sole Proprietorship vs. Company Director
- Sole Proprietors: Personal assets are at risk; liability insurance is critical.
- Company Directors: Liability stays with the company, but personal protection (like Director Insurance may still be needed.)
Industries Requiring Insurance
- Mandatory: Lawyers, accountants, doctors, architects. In most of these professions the mandatory insurance is often handled by the federation of the profession.
- Optional: Low-risk professions like writers or graphic designers.
Examples of Potential Damages for Freelancers
- Giving incorrect advice
- Calculation errors
- Mistakes during client treatments
- Causing damage to property of the client or company you work in as a freelancer – for example: you drop a laptop of the client while working for them and the laptop crashes because of it.
Difference Between Professional and Civil Liability
- Professional Liability: Covers damages related to professional activities.
- Civil Liability: Covers non-professional damages, like breaking a vase during a home visit.
How to Determine the Right Coverage
While many freelancers opt for coverage ranging from €250,000 to €1 million, consider:
- Nature of Services: High-risk professions may need more coverage.
- Client Requirements: Check for specific minimum coverage in contracts.
- Industry Standards: Research what is typical for your field.
- Financial Risk: Match coverage to the financial loss potential of your work.
- Budget: Balance costs with realistic risk.
It’s advisable to consult an insurance advisor to tailor coverage to your specific needs.
Costs and Factors Affecting Premiums
How Much Does It Cost?
Costs vary by activities, turnover and provider, but an example is:
- Coverage Amount: €500,000
- Premium Cost: €525/year (including taxes) for a turnover between €50,001 and €150,000.
- Please note that this is an example. The coverage depends also on your activities, provider and potentially other factors.
Optional Coverages
- Legal Assistance (€25,000): €30/year
- CyberClear (€100,000): €229/year (deductible €1,000 per claim)
- U.S./Canada Claims (€500,000): €150/year (deductible €15,000 per claim)
A deductible (in Dutch: eigen risico, in French: franchise) is the amount you pay out of pocket before the insurance covers the rest.
See the special offer exclusive to Freelancers in Belgium members for professional liability insurance here: Van Dessel liability insurance offer
Does Business Location Impact Premiums?
For freelancers in Belgium, location usually has minimal impact. Premiums depend more on turnover, industry and risk profile.
Are Premiums Tax-Deductible?
Yes, liability insurance premiums are generally considered tax-deductible business expenses.
Coverage Details
What Is Covered?
- Negligence: Errors, omissions, or failure to provide services.
- Misrepresentation: Providing misleading advice.
- Breach of Contract (if included): Failure to meet contract terms.
- Personal Injury of Third Parties: Libel or defamation claims related to professional services.
What Is Not Covered?
- Bodily injury or property damage (covered under general liability).
- Intentional misconduct or fraud.
- Legal Defense Costs: Defending against covered claims. (unless covered by a separate policy).
- Cybersecurity breaches – see this link for more information by Van Dessel Insurance Brokers.
- Punitive damages, fines, acts of war, or terrorism.
What to Check in the Small Print?
- Coverage Scope: Risks and services covered or excluded.
- Policy Limits: Per-claim and aggregate limits.
- Deductibles: Amounts payable before coverage kicks in.
- Retroactive Coverage: Date specifying coverage for past incidents.
- Third-Party Claims: Verify coverage for client-related claims.
Additional Protection Measures
Contracts
Sound contracts help protect you from liability risks and disputes.
Directors’ Liability Insurance
Directors may face personal liability for management errors. This requires separate directors’ liability coverage. See this link for more information by Van Dessel Insurance Brokers:
What Happens if Damages Exceed Coverage?
If damages exceed your policy limit, you’re responsible for the remaining costs, which could strain your finances or lead to legal action.
Protecting Personal Assets
- Use clear contracts to limit liability.
- Obtain a declaration of non-seizability (verklaring van onbeslagbaarheid) for your primary residence in Belgium. See more information via this Notaris.be link (in Dutch)
Obtaining Liability Insurance
Steps to Get Insurance
- Assess your needs based on your industry and risk profile.
- Research providers, like Van Dessel Insurance Brokers.
- Request quotes and compare coverage.
- Apply and provide necessary details.
- Review policy terms before finalizing.
How to Get the Best Deal
- Bundle policies for discounts.
- Shop around for quotes.
- Adjust coverage to fit your realistic risks.
- Maintain a clean record to avoid higher premiums.
Why Some Clients Require It
Clients may require insurance to mitigate financial risks, comply with internal policies, and ensure professional standards. While they rarely check it, having insurance protects you in unexpected situations.
Does My Contract Affect My Insurance?
Yes, your contract with your client can affect your liability insurance.
- Scope of Coverage: Work outside agreed terms might not be covered.
- Indemnity Clauses: Not always included unless specified in your policy.
- Client Requirements: Ensure your insurance aligns with client demands.
Review contracts and insurance policies carefully to avoid gaps in coverage.
Directors’ Liability Insurance
When Do You Need It?
If you act as a board member and director in a company, you may be personally liable for management errors.
- Why It’s Needed: Claims arising from management errors are not covered by professional liability insurance.
- Solution: Directors’ liability insurance protects against these risks.
Liability Insurance Providers and Comparisons
Direct vs. Broker
- Direct: May be cheaper but offers limited options and advice. It might be more difficult to bundle offers.
- Broker: Provides tailored options and guidance for your specific needs and assists in case of a claim.
How to Compare Providers
- Coverage
- Cost
- Exclusions
- Advice and customer service
- Additional Benefits
Filing and Managing Claims
How to File a Claim
- Assess the situation and document evidence.
- Notify your insurer promptly.
- Complete claim forms and provide supporting documents.
- Cooperate with the claims adjuster.
How Long Does It Take?
- Simple Claims: A few weeks
- Moderate Claims: Several months
- Complex Claims: Up to a year or more
This article is sponsored by Van Dessel Insurance Brokers, offering an exclusive professional liability insurance deal for Freelancers in Belgium members. Learn more about the offer here: Van Dessel liability insurance offer.
Disclaimer: We strive to ensure the accuracy of this information. If you have any doubts, please consult an insurance broker and let us know if updates are needed.