Financial loss and immaterial damage

Although the Dutch Civil Code does not give a definition of damage, the law makes a distinction between financial loss (also called material damage) and other losses (also called immaterial damage).

Property damage and purely financial loss

In practice, a distinction is made between property damage and purely financial loss, e.g. medical expenses, loss of income, lost financial support, and funeral expenses. Immaterial damage also falls under personal injury. Immaterial damage is only eligible for compensation in certain cases. Examples of immaterial damage are bodily injury and reputational damage.

Examples of property damage

Property damage includes the damage as a result of damage to or loss of an item. Here you can think of the costs of repair and replacement.

Examples of purely financial loss

Purely financial loss is the damage that does not have its origin in injury, death or damage to an item. An example of this is consequential damage: damage suffered as result of the provision of incorrect investment advice or because a civil-law notary has made a mistake. Another example is loss due to delay. Here you can think of, for example, lost interest resulting from late payment.

Costs that are eligible for compensation

Reasonable costs incurred to prevent or limit the damage resulting from the event that gives rise to the liability are also eligible for compensation. Think of the costs for (temporary) rental of a replacement machine, so the production of goods can go ahead. The same applies for the reasonable costs incurred to establish the damage and liability. For example, if it is not clear what the damage is, what the extent of the damage is, and who can be held liable for the damage. Finding this out may entail costs, and these costs are eligible for compensation insofar as they are in reasonable proportion to the damage.

Reimbursement of lawyer’s fee or collection costs

In addition, reasonable costs incurred to obtain an out-of-court settlement may be eligible for compensation, e.g. when it is necessary to engage a lawyer or a collection agency.