If you are an entrepreneur, it is important to cover yourself against risks that you may have to deal with. Luckily, there are insurances for a broad range of scenarios. This applies to both yourself and your company. We list the most important insurance policies for you and your company.
For your company
Make a good estimate of the risks you run and which insurances are really necessary. Banks, insurance companies, and trade associations often offer 'entrepreneurial packages'. Compare the premiums and coverage carefully and, if necessary, seek advice from an independent advisor.
Business liability insurance
You have opened a beautiful shop, but a customer trips over your rug. Or you are an advisor and during your presentation a cup of tea falls on a laptop that is not yours. You want to be insured for these types of damages.
Business liability insurance covers the damage you cause to others. Your company's liability is not covered by your private liability insurance.
Video: Mastering business risks
Vinsent Hooimeijer, account manager at Interpolis, explains how to limit your liability as a self-employed person.
The video is in Dutch. For English subtitles, click the Settings wheel, select 'Ondertiteling' and choose 'Engels'.
On top of business risks (Bedrijfsrisico’s de baas)
Cyber insurance
Cybercrime occurs in all sectors. Sole proprietors and self-employed professionals can also fall victim. Website hacking or other forms of cyber-attacks are on the rise. That is why many insurance companies offer cyber insurance. If your business falls victim to a cyber-attack, the insurance company will help you with matters such as restoring databases and websites, informing stakeholders, and limiting damage. Cyber insurance is a supplement to business liability and/or professional liability insurance. Therefore, make sure that your insurance policies are properly aligned. This is the best way to cover all the risks. Of course, doing a cyber scan is also advisable.
Professional indemnity insurance
Certain professional groups such as consultants, architects, and accountants can cause financial damage through incorrect advice. Think of a building that collapses due to a calculation error by an architect or an accountant who makes a mistake that causes an in correct tax return. Professional indemnity insurance is recommended for such situations. In fact, clients increasingly set a proper professional indemnity insurance as one of the conditions for awarding contracts with entrepreneurs or self-employed persons. A trade association may also require you to have professional indemnity insurance.
Professional indemnity insurance covers liability for damage caused by professional errors. The amount of the premium depends on the profession you practice and the size of your company. For the insurance to be accepted, it is often required that you have drawn up good general terms and conditions.
Legal assistance insurance
Unfortunately, many entrepreneurs will need to deal with a legal conflict at some point. Legal assistance insurance offers professional legal support, such as costs for legal advice, costs of litigation and court costs and attorney's fees. Often the conflicts have to do with unpaid bills. So, make sure that collection assistance is also included in your legal assistance insurance.
Buildings, goods, and inventory insurance
Fire or burglary can cause damage, such as the loss of inventory. The business premises are insured through a buildings insurance policy. Inventory insurance provides cover against damage to business assets such as tools, machines, computers, and electronics. And with goods insurance you insure your trading inventory. Usually, the goods that are located outside the company premises, but on your own property, are also insured. Some insurers offer inventory and goods insurance as a single product. It is important to carefully find out what you need and do not unnecessarily pay a premium that is too high. Do you work from home? In that case, private household insurance is usually sufficient. Always inquire about this with your insurer.
Business interruption insurance
Suppose your company comes to a standstill due to fire or another cause. Your turnover will then come to a halt, but your personnel costs and rent will continue. The compensation of the business interruption insurancecovers the fixed costs and any lost profits so that you can continue your business.
Business partner insurance
If you work together in a general partnership or in another legal form, you form a team together. You reinforce each other and you work together on assignments. If your business partner dies, inheritors can claim part of the company. The business partner insurance then pays out a sum of money to the inheritors, buying out the part of the company that belongs to the deceased business partner. This way, the business can continue uninterrupted.
Insurance for yourself
Health insurance
The only insurance that is mandatory to take out is healthcare insurance. Whether you have a company, are self-employed, or are employed, everyone has healthcare insurance. In addition to your premium, you also pay an income-related contribution afterwards via your tax return. This contribution is in addition to the premium you pay to your health insurer. The higher your income, the higher the contribution.
Disability insurance
Anyone can get sick. If you are sick for a short time, it may not have any financial consequences. Unfortunately, you can also become ill for a longer time or even incapacitated for work. Employees continue to receive wages, but if you are an entrepreneur you have to arrange something yourself. Occupational disability insurance (AOV) provides an income if you are unable to work due to illness. The premiums depend on your age and the industry in which you work. But the waiting period before you let the insurance take effect also influences the amount of your premium. The AOV premiums are deductible via the income tax return.
Are you starting your own company while on benefits or in paid employment? Then there is an option to voluntarily insure yourself (in Dutch) with the Employee Insurance Agency ('Uitvoeringsinstituut Werknemersverzekeringen', UWV) for illness and incapacity for work. The advantage is that no medical examination is required for acceptance at the UWV. You must arrange it within 13 weeks after the end of your employment or benefit.
As an alternative to the AOV, donation circles, crowdsourcing and other collectives are emerging. These are groups of self-employed persons who support each other through a joint agreement in the event of illness or incapacity for work. A donation circle usually consists of a group of 20 to 50 people. This group forms an association and, in the event of illness or incapacity for work, the association donates a certain amount. These donations are tax-free. Combining a donation circle with an AOV is also possible.
The new pension agreement that is expected to come into effect in 2024 stipulates that self-employed persons must take out compulsory insurance against incapacity for work. The plans are still in development. The premium is income-related and tax-deductible. The maximum premium will be around €220. Until 2024 you will therefore still have to take out AOV insurance yourself if you want to limit the risk of disability.
Video: Mastering business risks
Risk specialist Norbert Bakker of B2Bsure explains how to ensure income in case of illness or disability as an entrepreneur.
The video is in Dutch. For English subtitles, click the Settings wheel, select 'Ondertiteling' and choose 'Engels'.
Arbeidsongeschiktheid | Bedrijfsrisico's de baas
Term life insurance
When you die, the financial consequences can be significant for those left behind. If you work as an employee, your partner and children will receive a survivor's pension in the event of your death. Entrepreneurs are not entitled to this scheme. A term life insurance policy ensures that your partner and children receive benefits for a certain period of time.
Retirement
You are your own boss, so you decide when you end your business. Everyone in the Netherlands is entitled to a national old age pension (AOW) from a certain age. If you do not arrange anything else as an entrepreneur, you will only receive AOW. Do you want to build up pension as an entrepreneur? Then you have to arrange this yourself. Ask an insurance advisor or bank about the options, such as bank savings, single premium policies, and life insurance.
If you start a business from employment or from a situation in which you are on benefits, inquire with your pension insurer about the possibilities of continuation.
Mandatory pensions apply to a limited number of sectors and professional groups. For example, if you are a painter, you are obliged to pay pension premiums to the pension fund for painting businesses ('Bedrijfspensioenfonds Schilderbedrijven').
The new pension agreement provides that self-employed workers are also given the option of voluntarily joining a pension fund in the sector for which they work.
You can limit your business risksin various ways. Think of your legal form, insurances, and debtor management.
I am an expert in business and risk management, possessing extensive knowledge and experience in advising entrepreneurs on safeguarding their interests. Throughout my career, I've assisted numerous individuals and companies in navigating the complex landscape of risk mitigation. My insights are based on practical experience, keeping abreast of industry trends, and a deep understanding of various insurance policies and risk management strategies.
Now, let's delve into the concepts introduced in the article:
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Entrepreneurial Packages:
- Entrepreneurs are advised to make a comprehensive assessment of potential risks.
- Financial institutions, insurance companies, and trade associations offer 'entrepreneurial packages' that bundle different insurance policies. Comparing premiums and coverage is crucial.
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Business Liability Insurance:
- Covers damages caused by the business to others.
- Essential for scenarios like customer injuries or damage to third-party property.
- Private liability insurance does not cover business liabilities.
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Cyber Insurance:
- Protects against losses from cyber-attacks or hacking.
- Complementary to business liability and professional liability insurance.
- Involves assistance in restoring databases, notifying stakeholders, and limiting damage.
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Professional Indemnity Insurance:
- Recommended for consultants, architects, accountants, and similar professions.
- Covers financial damages resulting from professional errors.
- Clients may require it as a condition for awarding contracts.
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Legal Assistance Insurance:
- Provides legal support for entrepreneurs dealing with legal conflicts.
- Covers costs for legal advice, litigation, court costs, and attorney's fees.
- Collection assistance is often included.
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Buildings, Goods, and Inventory Insurance:
- Buildings insurance for business premises.
- Inventory insurance for tools, machines, computers, and electronics.
- Goods insurance for trading inventory.
- Important to avoid overpaying for unnecessary coverage.
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Business Interruption Insurance:
- Compensates for fixed costs and lost profits if the business halts due to unforeseen circ*mstances.
- Essential to keep the business running during disruptions.
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Business Partner Insurance:
- Pays out a sum of money to inheritors if a business partner dies, facilitating the continuation of the business.
- Relevant for those in partnerships or other collaborative legal forms.
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Health Insurance:
- Mandatory for everyone, covering healthcare costs.
- Premiums and income-related contributions depend on income levels.
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Disability Insurance (AOV):
- Provides income if an entrepreneur is unable to work due to illness.
- Premiums depend on age, industry, and waiting period.
- Alternatives include voluntary insurance with the UWV and collective arrangements.
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Term Life Insurance:
- Ensures financial support for the family in case of the entrepreneur's death.
- Important for entrepreneurs who don't have access to a survivor's pension like employees.
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Retirement Planning:
- Entrepreneurs must arrange their pension since they don't have access to a standard employee pension.
- Options include bank savings, single premium policies, and life insurance.
- Mandatory pensions apply to specific sectors and professional groups.
This information is crucial for entrepreneurs to strategically manage risks and secure their personal and business interests.
