Professional liability

What we do

An organization or an individual acting in the exercise of their profession can be held liable when errors are made in the course of their professional activities. These errors can be made by owners, directors, and employees of an organization. Examples of professional errors include providing incorrect designs, advice, or plans. Conversely, a client may suffer damages because an incorrect design, advice, or plan is provided by a professional service provider. In both cases, it must be determined by a legal expert or lawyer whether the opposing party is liable. MKB Juristen is known for its pragmatic approach, ensuring that it is quickly clear which party is liable in a particular case.

We have the experience and expertise to assume diverse roles, from advisory services to dispute resolution. We have an experienced team of lawyers and legal experts in insurance law. Contact us to discuss the possibilities.

Professional liability in insurance law

Professional liability is pre-eminently a subject intersecting with insurance law. Virtually every professional held liable invokes their professional liability insurance. Consequently, the discussion quickly shifts from the question of whether a professional error was made to the question of whether the damages are covered under the policy. At MKB Juristen, we handle both sides: we assist the injured party seeking compensation for damages, and we assist the professional being sued or their insurer disputing liability or coverage. Because our lawyers and in-house counsel master liability law and insurance law in conjunction, we prevent a legitimate claim from failing due to a coverage dispute – or an unjustified claim from being paid out incorrectly.

When is a professional liable?

Regarding liability, the standard developed in case law applies: a professional must act as may be expected of a reasonably acting and reasonably competent peer in comparable circumstances. Not every unfortunate outcome constitutes professional negligence. The court assesses conduct based on the circumstances at the time and not with hindsight (hindsight bias), and suboptimal conduct is insufficient in itself – there must be clearly substandard performance. Legally, liability generally follows two tracks. If a contractual relationship exists, the basis is an attributable failure to perform the agreement (breach of contract) pursuant to Article 6:74 of the Dutch Civil Code, read in conjunction with the contractor's duty of care in Article 7:401 of the Dutch Civil Code. If an agreement is lacking, for example with a third party, the basis is the unlawful act of Article 6:162 of the Dutch Civil Code. In both cases, the injured party must assert and, if necessary, prove that an error was made, that he suffered damage, and that there is a causal link between the error and the damage.

Professional liability insurance (PLI)

Professional liability insurance covers pure financial loss suffered by a client or third party due to a professional error, such as incorrect advice, a faulty design, or a missed deadline. In addition to the compensation for which the insured is liable, the policy typically also reimburses defense costs and statutory interest – even if the claim subsequently proves to be unfounded. It is important to distinguish this from general business liability insurance (AVB): the latter specifically covers personal injury and property damage, whereas professional liability insurance is intended for the financial consequences of errors in the exercise of the profession. For a number of professions – including lawyers, accountants, notaries, and architects – professional liability insurance is legally or disciplinary mandatory. Most policies operate on the claims-madeprinciple: what is decisive is not when the error was made, but when the claim was reported during the term of the insurance. Consequently, agreements regarding retroactive coverage (previous errors) and retroactive coverage (after termination) are of great importance. We rigorously assess which policy applies and whether a claim falls within the coverage.

Coverage disputes with the insurer

In practice, many claims fail not due to liability, but due to coverage. Insurers, for example, rely on an exclusion for intent or fraud, on late notification, on exceeding the insured sum or the deductible, or on an exclusion of certain activities in the policy conditions. Moreover, a late or incomplete notification may allow the insurer to invoke Article 7:941 of the Dutch Civil Code, which regulates the duty to report upon the realization of the risk. We assess whether such a claim holds up and whether the insurer is justified in relying on an exclusion. If the coverage debate reaches an impasse, we provide support with coverage disputes, the interpretation of policy conditions , and broader liability disputes. Where necessary, we submit the case to the court or, for consumers, to the Kifid.

For whom we work

Our mixed teams of lawyers and in-house counsel assist both the professional facing the case and the injured party – from an international corporation to the baker around the corner. On the one hand, we advise and litigate for consultants, accountants, architects, real estate agents, IT service providers, financial advisors, and their insurers who are facing professional liability claims. On the other hand, we help entrepreneurs and private individuals who have suffered damage due to a professional error by another and who wish to recover damages. Because we understand both perspectives, we quickly and realistically assess the value of a case and choose the most pragmatic route: settlement where possible, litigation where necessary.

Frequently asked questions about professional liability

Is my professional error always covered by the professional liability insurance?

Not automatically. The policy covers financial loss caused by professional negligence, but includes exclusions (such as intent and fraud) and conditions, such as timely notification and an insured sum. Whether a specific claim is covered depends on the policy conditions and the facts; we will assess this for you.

What is the difference between professional liability insurance and business liability insurance?

Professional liability insurance covers pure financial loss resulting from errors in advice or work (such as incorrect advice). Business or general liability insurance (AVB), on the other hand, covers personal injury and property damage. Many businesses need both.

When is a lawyer or advisor liable for an error?

Only if he has failed to act as a reasonably acting and reasonably competent professional would, and that error has demonstrably led to damage. A disappointing outcome alone is insufficient; there must be clearly substandard conduct.

How long can I still claim compensation for professional negligence?

In principle, a legal claim for compensation lapses five years after you become aware of the damage and the liable party. In addition, the policy's claims-made principle determines when a claim must be reported to the insurer. Therefore, do not wait too long to have your case assessed.