Business legal expenses insurance

What is a business legal expenses insurance?

With a business legal expenses insurance you get legal help if you have a conflict with suppliers, employees, or customers. For example, if a customer or supplier does not honour an agreement. Or if you and an employee do not agree on their employment contract.

Sometimes you will also receive help with outstanding invoices or debt collection. Or you can seek advice on drawing up contracts to prevent disputes.

Different from liability insurance

Liability insurance covers you against the risk of damage you cause to another party. For example, due to a professional error or an accident at work. Legal expenses insurance does not compensate for damage, but helps you resolve disputes.

When is business legal expenses insurance useful?

Business legal expenses insurance is a sensible option if a business dispute could cost a lot of money. For example, if you:

• have staff. Think of disputes relating to dismissal, absenteeism, or performance.
• undertake large contracts. Think of disputes relating to payment, liability, and agreements.
• rely on suppliers. Think of disputes relating to delivery and agreements.

Legal expenses insurance is not mandatory.

What is usually covered by business legal expenses insurance?

Legal expenses insurance provides you with legal assistance in the event of a dispute. Your insurer will help you resolve the dispute. Exactly what is and is not covered depends on your insurer and the terms and conditions of your policy. Read the policy terms and conditions carefully or ask your insurer for advice.

Help in avoiding legal proceedings

Many legal expenses insurance policies also cover mediation, conciliation, and legal advice. This is because it is better for all parties to avoid legal proceedings or a court case. Examples include:

• advice on staff matters
• social security legislation
• the purchase, letting, and maintenance of business premises

Whether or not you can choose your own legal adviser

The way legal assistance is arranged varies from insurer to insurer. Consider:

• when the insurer provides the legal assistance and when you are allowed to choose your own legal adviser
• the maximum amount you will be reimbursed if you choose your own legal adviser, such as a solicitor
• whether an excess applies

Do you also want to be covered for disputes abroad?

You will usually need to take out additional cover for this. Check the countries and regions where you are covered.

What is usually not insured?

A number of situations are usually not covered by business legal insurance. For example, legal conflicts and disputes regarding:

• tax matters
• traffic violations
• bankruptcy
• between partners
• mergers or acquisitions
• disputes with parties abroad
• credits, subsidies, etc.
• trade names or trademark, patent right, copyright

Cost of business legal expenses insurance

The cost of the premium for business legal expenses insurance depends on your circumstances and what you do and do not include in the cover. For example, the insurer will consider:

• your business’s turnover
• the sector in which you operate
• the number of staff you employ
• the legal structure of your business

If your business situation changes, the insurer may adjust the premium. How and when this happens varies from insurer to insurer.

Premium is tax-deductible

The costs of business legal expenses insurance are business expenses and can be deducted from your profit for income tax purposes.

KVK Insurance check: insurance for your situation

You can take out several types of business insurance. Which ones are useful depends on the type of business you have and the risks that you run. Take the KVK Insurance Check to quickly find out which insurance policies are useful for your situation.