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Business Liability Insurance (AVB) covers damage to third parties caused by employees, products, or business operations. A standard component of an SME insurance package. Premium: €30–€300/month depending on turnover, industry, and staff size. Distinction: AVB (general liability), product liability (damage caused by a product), and professional liability (erroneous advice). Virtually indispensable for most SME limited companies — a single claim can cost a year's turnover. Below: coverage, costs, and when Tessa's AVB claim actually pays out.
The short answer
- What: covers damage to third parties caused by an employee, product, or business operations.
- Premium: €30-€300/month depending on turnover, industry, and staff.
- Coverage: typically €1-€5 million per claim.
- Excluded: intent, contractual liability, own company damage.
- Difference between General Liability Insurance (AVB) and Professional Liability Insurance (professional liability):General Liability Insurance for material damage, Professional Liability for errors in advice.
What does the General Liability Insurance cover?
Three main categories of damage claims:
1. Employee liability
Damage caused by employees during work: cleaner breaks vase at customer's, technician causes water damage, IT employee loses customer data.
2. Product liability
Damage caused by products you sell — e.g. a light bulb causes a fire at a customer's, leather grease damages shoes. EU directive requires product insurance for manufacturers and major distributors.
3. Liability for establishments
Damage caused by business premises: customer trips in store, visitor slips on wet office floor.
What does the General Liability Insurance NOT cover?
- Intent: deliberately inflicted damage.
- Contractual liability: e.g. penalty clauses in a customer contract — requires separate product liability or professional liability.
- Own damage to the company: to own stock, building, or equipment (previously: fire/contents).
- Fines and penalties: not insurable.
- Cyber incidents:requires separate cyber insurance.
Premium and coverage
Premium depends on:
- Industry (construction/healthcare riskier than office).
- Revenue.
- Number of employees.
- International aspects.
- Previous claims history.
For SME BV:
- Small business (5 employees, €500,000 turnover): €50-€150/month.
- Medium (15 employees, €3 million turnover): €150-€350/month.
- High-risk sector (construction, healthcare): higher.
Coverage typically €1–€5 million per claim. Higher upon request.
Professional liability — separate
For service providers (lawyers, accountants, IT advisors, architects, consultants): General Liability Insurance does not cover damage caused by incorrect advice. That is what professional liability insurance is for — often mandated by professional organizations.
Tessa's liability claim
Tessa's wholesale business had an incident: an employee's delivery van caused damage to a customer during a delivery. Customer's car repair: €8,500. Plus indirect damage (lost customer revenue) €3,000.
- Liability insurance claim: honored for €11,000 (after €500 deductible).
- Tessa's insurer: paid out, premium increase upon renewal.
- Without general liability insurance: €11,000 from company cash — painful but not threatening bankruptcy.
In the case of major incidents (product recall, consequential damage to the customer due to production downtime): General Liability insurance amounts can run into the hundreds of thousands — coverage is indispensable for this.
What to look out for when choosing General Terms and Conditions
- Coverage limit:minimum €1 million per claim, higher for high-risk industries.
- Geographic area: only the Netherlands or international? Essential for export.
- Employee clause:coverage for employee claims against employer separately or included.
- Deductible: €100-€1,000 is common; lower with a good claims history.
- Exclusions: read industry-specific exclusions.
Honest recommendation
For every SME with customers, suppliers, or employees: General Liability Insurance is virtually mandatory. An investment of €30-€300/month is disproportionate to the risk of a single claim of €50,000-€500,000+. Compare at least 3 companies — premium differences of up to 40%. For service providers: combine General Liability Insurance with professional liability. For product sellers: pay extra attention to product liability.
For other topics: insurance for SMEs, D&O and legal assistance.
Frequently Asked Questions
Damage to third parties caused by employees, products, or business operations — three main categories: workers' liability, product liability, and facility liability. Standard coverage limit €1-€5 million.
Intentionally caused damage, contractual liability (e.g. penalty clauses), own business interruption losses, fines and penalties, and cyber incidents. For errors in advice: separate professional liability insurance.
€30-€300/month for SME limited liability companies. Small business: €50-€150. Medium: €150-€350. High-risk sector (construction, healthcare): higher. Depends on turnover, staff, and previous claims.
General liability insurance for material/bodily injury. Professional liability for damage caused by incorrect advice (lawyer, accountant, consultant). For service providers: usually both are required.
At least €1 million per claim for the average SME. For high-risk sectors (construction, healthcare, manufacturing): €2-€5 million. For exporters to the US (claim culture): often €5+ million.
Virtually all SME limited companies with customers, suppliers, or employees. Exception: small self-employed professionals without physical products or customer contact (only software development without risk of damage). When in doubt: costs are limited, but the risk is enormous if left uninsured.
Immediately after the damage incident: notify the insurance company, document the damage (photos, witnesses), fill out the claim form. Do not settle with the injured party without the insurer's agreement. The reporting period is usually 30 days.
