When you (accidentally) cause injury or damage to someone else, you are liable. The other person or party can reclaim his or her financial loss from you. With a liability insurance, the insurer will reimburse the ‘victim’ for the costs of the damage caused.
We strongly advise you to take out a third-party liability insurance to cover any accidental damage or harm you may cause to another person or property during your stay. This is not compulsory, but it is standard practice in the Netherlands. Liability insurance is reasonably priced and can be purchased, either before or after arrival, from Dutch insurance providers.