One careless moment – and you are liable with your entire assets. Personal liability insurance pays justified claims and fends off unjustified ones. When comparing, look for a high sum insured (at least €10m) and important add-ons such as default cover and lost keys.
Why personal liability insurance is the most important insurance
Anyone who causes damage to another person is liable for it in unlimited amounts – with all their assets, for life if necessary. A brief moment of carelessness (a bicycle knocked over, a cyclist falling, water damage at the neighbour's) can trigger six-figure claims. Personal liability insurance (Privathaftpflichtversicherung) pays justified claims and fends off unjustified ones.
What to look out for when comparing
- Sum insured – at least €10m, preferably €20–50m (it costs hardly any more).
- Default cover (Ausfalldeckung) – pays if someone without their own liability insurance causes you damage.
- Lost keys – replacing a locking system can be expensive; this should be included.
- Damage caused while doing favours & damage to rented property – important for helping out in everyday life and for your rented flat.
- Best-benefit guarantee – the insurer pays if a competitor's plan would offer more.
Single, couple or family?
The premium mainly depends on who is covered. Family plans include partners and children and are usually only a few euros more expensive than a single plan. Unmarried children are usually covered until the end of their first vocational training or first degree – the exact limits are set out in the policy terms. When moving in together, check whether one joint policy is enough (avoid double insurance).
When you are liable: the legal basis
Liability for damage follows from the German Civil Code (BGB). Under section 823 BGB anyone who intentionally or negligently injures the life, body, health, property or another right of someone else must pay compensation. The extent is governed by section 249 BGB: the injured party must be put in the position they would have been in had the damage not occurred. This includes treatment costs, loss of earnings, compensation for pain and suffering and, in the case of permanent damage, often lifelong annuity payments.
Under section 276 BGB, a person acts negligently if they fail to exercise the care required in everyday dealings. A moment of inattention is enough. Children are liable only from a certain age: under seven they are not responsible, in road traffic this applies up to ten, and after that until they come of age section 828 BGB looks at their capacity to understand. Parents are liable under section 832 BGB only if they have breached their duty of supervision.
Once established, a claim for damages can stay with you for a long time. A court judgment remains enforceable for up to 30 years under section 197 BGB, and claims arising from personal injury do not become time-barred until after 30 years. The attachment exemption thresholds in the German Code of Civil Procedure protect only a small part of your income, so with high claims even a normal salary can be garnished for decades.
What is covered and what is not
Personal liability insurance has two tasks: it checks whether the claim is justified and, if necessary, defends unjustified claims in court. It pays justified claims within the sum insured. These obligations are described in section 100 of the Insurance Contract Act (VVG). Damage in private everyday life is covered, for instance through cycling, playing, housework, travel or visiting acquaintances.
Damage that you cause intentionally is not covered, because section 103 VVG excludes payment for intentionally caused damage. Professional and commercial activities, for which occupational or business liability insurance is needed, and damage caused by motor vehicles, which falls under motor liability insurance, are also outside the scope. Personal liability insurance also does not pay for your own losses; contents, accident or other insurance is responsible for those.
Handling damage to rented property is particularly important in rented flats. Good policies cover damage to rented living space, for instance through water, fire or broken glass. Damage to borrowed or rented movable items is often covered only up to a limit or not at all. Also check whether acts of kindness, such as helping friends move, are expressly included.
Worked example: why a high sum insured makes sense
A worked example using freely chosen sample values that does not describe a real case: a cyclist overlooks a pedestrian when turning, who falls and requires permanent care. Treatment and care costs, loss of earnings and compensation for pain and suffering can then run into the millions. A sum insured of €5 million might not be enough in such a case; a sum from €10 million offers considerably more room.
The difference in premium is usually small. In many plans, raising cover from €10 million to €50 million costs only a few euros a year. The ratio of extra premium to the risk covered is therefore very favourable. Anyone who prefers to be on the safe side chooses the higher sum, especially if they have a family or spend a lot of time on a bicycle, e-bike or in road traffic.
Other plan features also have a big effect in an emergency. Cover for uncollectable claims pays if the party at fault is uninsured and cannot pay. A best-performance guarantee ensures that you are not left worse off if market standards improve later. Both components cost very little but can be worth a great deal when a claim arises.
Handling a claim correctly
If damage occurs, you must report it to the insurer without delay under section 104 VVG. This also applies if you merely receive a demand or a lawsuit. Give it all documents, photos and correspondence. Never admit a claim hastily and do not agree a settlement without consulting the insurer, because under section 105 VVG an admission made without the insurer's consent is ineffective against it, and it may then be unable to pay.
The insurer examines the question of liability and decides whether to settle or reject the claim. This is an advantage over going it alone, as many claims are inflated or unjustified. If you disagree with the decision, you can turn to the insurance ombudsman, who mediates for consumers free of charge.
After an insured event, either side may cancel the contract under section 111 VVG. Switching is therefore not a risk, but new contracts often begin with a check of prior damage. When moving in together or when the family grows, make sure all persons are covered in the contract, and avoid double insurance, as it only costs you extra money.