The courts have recently been granted a large number of new measures aimed at resolving disputes between neighbours and neighbourhood conflicts. Conflicts of this nature also affect policyholders who want to take out insurance cover for this purpose. Robert Bernard, Senior Advisor at Vanbreda Risk & Benefits, explains.
Only 1 in 3 consultants has professional indemnity insurance
IT and business consultants form the fastest growing professional group in Belgium, but only one third of them are actually insured against contractual claims for damages. However, taking out professional indemnity insurance helps to give peace of mind to both consultants and clients.
In Belgium, there are already more than 125,000 IT and business consultants, and this number increases by some 4% every year. However, only 35% of all consultants have professional indemnity insurance.
Under Belgian legislation, professional indemnity is defined as follows:
Liability in connection with intellectual services delivered on behalf of third parties, whether in return for payment of fees or not, without this being connected to any implementation of a construction or supply of a product by the insured party.
Expert in professional indemnity and Senior Account Manager Chris De Beckker: “In practice, this means that any damage caused to third parties that results from a professional intellectual error during the exercise of a professional activity is covered by professional indemnity insurance”.
The benefits of professional indemnity insurance
Professional indemnity insurance has several benefits. Here we look at the three main ones:
1. The insurance is a signal to your client that you conduct your work in a professional manner. You cover the risks to which you and the client are exposed.
2. Assignments often involve a certain amount of pressure, and professional indemnity insurance provides peace of mind, knowing that any errors in implementation are insurable.
3. The financial consequences of claims under a contract are covered.
A survey of various insurers showed the following examples of situations where professional indemnity insurance stepped in. Please note: these cases are examples. Each case is different and is reviewed and assessed individually by the relevant experts.
- An IT consultant develops and markets a customised software application for telephony applications to a market research firm. The client of the policyholder offers services to companies by conducting telephone surveys. A software upgrade appears to have resulted in the client suffering a large number of interrupted phone connections. The damage suffered by the customer, based on the time employees and interviewers lost due to the defective software, was compensated.
- A translation agency makes an error in the translation of a manual from English to Dutch. The claim is covered.
- A financial intermediary provides incorrect advice concerning an investment product.
Complementary to civil liability
The civil code states that you must pay compensation for damage caused to third parties by an error on your part. For example, you knock over a vase at a customer’s premises. This falls under civil liability and is of an non-contractual nature. Professional indemnity relates to contractual risks.
Do you need professional indemnity insurance?
Curious about your possible premium? you can calculate your premium here and look at the advantages of a professional liability insurance.
As an insurance broker, Vanbreda Risk & Benefits is happy to offer advice on how you can arrange this. Are you a consultant and you do not yet have professional indemnity insurance to protect you against contractual claims? Contact us.