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Priority 1 · Your liability and your defence

Professional indemnity and legal defence: who pays what?

This is the most common confusion. Remember this: Professional indemnity pays the compensation to your client if your liability is established. legal defence pays the lawyer who defends you, whether you are in the wrong or in the right.

Two policies, two roles
  • Professional indemnity
    It compensates your client, if your liability is established.
  • Legal defence
    It pays your lawyer and the expert opinion, even when you are in the right.
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Understanding it

Professional indemnity, the heart of a consultant's risk

You do not sell a product, you sell expertise and decisions. If one of them turns out to be wrong and costs your client money, they can claim compensation from you. Professional indemnity covers those consequences: error, negligence, unsuitable advice, delay, defective deliverable, data mishandled. These amounts often far exceed your assignment fee.

A real example
An IT consultant configures a data migration. A configuration error costs their client orders for 48 hours. The lost earnings and the repair work run into tens of thousands of euros.
  1. 01
    The claim

    A configuration error costs the client orders for 48 hours.

  2. 02
    The claim against you

    The client puts a figure on their lost earnings and the repair work, then turns against the consultant.

  3. 03
    Legal defence steps in

    It appoints and pays the lawyer who will argue liability and negotiate.

  4. 04
    Professional indemnity compensates

    If the consultant is held liable, it is the one that pays the client.

The lawyer on one side, the compensation on the other. Without both covers, one of the two bills stays with you.

Professional indemnity and public liability, not to be confused

The public liability covers non-contractual damage: harm you cause to a third party outside the contract, for instance material damage during an assignment. Professional indemnity covers faults linked to carrying out your assignment. For a consultant the public-liability risk is limited: that is why public liability is most often included cheaply, or even free, in the indemnity policy.

What is covered

What good consultant indemnity cover includes

Usually covered
  • ✓ Professional error, negligence or omission
  • ✓ Wrong advice or unsuitable recommendation
  • ✓ Non-material loss, your client's financial loss
  • ✓ Delay or failure in carrying out an assignment
  • ✓ Loss or damage to documents and data entrusted to you
  • ✓ Public liability, often included cheaply or free
Often excluded, worth checking
  • ✕ Intentional wrongdoing or fraud
  • ✕ Fines and criminal penalties
  • ✕ A plain dispute over the amount of your fees
  • ✕ Activities not declared to the insurer
  • ✕ Losses already known before the policy started
  • ✕ Some cyber risks, to be covered separately

Cover and exclusions vary from one insurer to another and according to your activity. Our job: read the general conditions and spare you nasty surprises on the day of a claim.

The essential complement

Legal defence, or how to fund your defence

Often called legal expenses cover, it takes on your defence when your liability is contested: analysis of the file, choice and fees of the lawyer, expert costs, court costs. It steps in even when you are in the right, because someone still has to prove it.

In defence

It protects you when a third party claims against you.

In recovery

It helps you claim compensation from a third party responsible for loss you have suffered, for instance a client who does not pay.

  • ✓
    Costs covered

    Lawyer, expert opinion and proceedings, within the policy limits.

  • ✓
    Free choice of lawyer

    As soon as proceedings begin, you choose your lawyer. That is a right in Belgium.

  • ✓
    Advice up front

    Lawyers analyse the file and look for a settlement before any court case.

Legal expenses, a separate policy

What a specialist legal-expenses policy covers

The legal defence included in an indemnity policy is limited to disputes linked to that policy. A separate policy, with a specialist insurer, covers all your business disputes. First table: what each level includes. Second table: what is added as an option.

A point often misunderstood: debt recovery only applies to undisputed debts, between businesses. If your client contests the invoice, it is no longer debt recovery but a contractual dispute, covered by contractual recovery.

1 What each level includes
  • ✓ Included in the level
  • - Not included
Area of law
Level 1
Basic
Level 2
Intermediate
Level 3
Extended
Civil liability defence Waiting period: none
Basic ✓
Intermediate ✓
Extended ✓
Contractual recovery Waiting period: none
Basic ✓
Intermediate ✓
Extended ✓
Recovery of undisputed debts, B2B only Waiting period: 3 to 6 months
Basic ✓
Intermediate ✓
Extended ✓
Criminal defence, excluding intentional wrongdoing Waiting period: none to 6 months
Basic ✓
Intermediate ✓
Extended ✓
Tax law Waiting period: 12 months
Basic -
Intermediate ✓
Extended ✓
Employment and social security law Waiting period: 6 to 12 months
Basic -
Intermediate ✓
Extended ✓
Commercial law: contractual disputes with clients and suppliers Waiting period: 6 to 12 months
Basic -
Intermediate -
Extended ✓
Personal data and GDPR Waiting period: 12 months
Basic -
Intermediate -
Extended ✓
Intellectual property Waiting period: 12 months
Basic -
Intermediate -
Extended ✓
All-risk cover, any dispute not excluded Waiting period: 12 months
Basic -
Intermediate -
Extended ✓
Indicative annual premium For a consultant, depending on their exact activity
Basic €150 to €350 a year
Intermediate €400 to €600 a year
Extended €500 to €900 a year
2 Optional cover to add

These appear in none of the three levels in the table above. They are added to the policy you choose, with their own premium, and the right-hand column shows the minimum level from which the insurer offers them.

Optional cover
Waiting period
From which level
Business vehicles: disputes and recovery
Period: none to 3 months
Level: Basic
Business property
Period: 6 to 12 months
Level: Basic
Costs linked to tax audits
Period: 12 months
Level: Basic
Private-life disputes, family extension
Period: 6 to 12 months
Level: Basic
Minimum threshold

Most policies only step in above a minimum dispute value, often in the range of €500 to €1,000. Below that, the costs stay with you.

Limit and excess

The limit per dispute often runs from €15,000 at basic level to €100,000 and more at extended level. Some insurers apply an excess, others a flat fee for the first consultation.

Geographical scope

Belgium only at basic level, the European Union at intermediate, and often worldwide for contractual disputes at extended level. Worth checking if you carry out assignments abroad.

Indicative summary. The areas covered, the waiting periods, the thresholds and the limits vary from one insurer to another and from one level to another. This table gives the orders of magnitude on the Belgian market: we check the general conditions of the chosen insurer before you sign.

Frequently asked questions

Professional indemnity and legal defence

  • Is professional indemnity compulsory for a consultant?

    It is only legally compulsory for certain regulated professions. For a consultant, it is mainly clients who require it in assignment contracts. In practice, it is often what makes the signature possible.

  • What is the difference between public liability and professional indemnity?

    Public liability covers non-contractual damage caused to a third party outside the contract, material damage during an assignment for instance. Professional indemnity covers faults linked to carrying out the assignment. For a consultant the public-liability risk is low, which is why it is often included cheaply, or free, in the indemnity policy.

  • Does the indemnity policy also pay my lawyer?

    No. Professional indemnity pays the compensation due to the third party if your liability is established. It is legal defence, often called legal expenses cover, that pays the lawyer and the court costs to defend you. The two are complementary and are taken out together.

  • Do I need professional indemnity if I work through a company (SRL)?

    Yes. The company answers for its work, and the director's own liability can also be pursued. Professional indemnity protects the business; depending on your situation, it combines with directors' liability cover.

  • And cyber insurance: is it useful for a consultant?

    For most consultants it remains secondary. But if you access your clients' IT systems or handle their data, a breach or a hack can expose you: GDPR notification costs, data restoration, legal defence. In those specific cases, cyber insurance usefully completes your indemnity cover.

The other 2 priorities

Complete your protection

  • Income protection

    Indemnity protects your clients; these policies protect you, when you can no longer invoice.

    Explore →

  • Supplementary pension

    Prepare the retirement your state pension will not fund, with a tax advantage every year.

    Explore →
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