What drivers need to know about third-party liability insurance in Germany
- By law, every car needs liability insurance when it is on the road.
- Liability insurance compensates the victim of an accident and covers personal injury, vehicle damage and other property damage.
- Damage to your own car is covered by partial or fully comprehensive insurance, which is voluntary.
- Liability insurance is the simplest type of policy.
Liability insurance is a must for every vehicle on the road
Driving a car without liability insurance is a criminal offence in Germany. When you register your car, you have to prove you hold liability insurance. Because of this it is possible to take out basic liability insurance even if you have low or no credit score. Insurers are subject to the “obligation to contract”: Insurers must generally accept your application for liability insurance. They may only refuse to cover you under certain conditions.
Benefits of liability insurance
|Personal injury||Vehicle damages||Other property damage||Financial losses|
|Medical expenses||Towing costs||Damage to buildings||Financial loss, e.g. “parking” prevents someone from using a service that had already been paid for|
|Loss of earnings||Expert costs||Transport facilities|
|Compensation for pain/suffering||Repair costs||Field damages|
|Retirement||Loss of use|
|Funeral expenses||Rental car costs|
|Survivor benefit||Depreciation in value|
|Reintegration costs||Replacement value in case of total loss|
|Registration and deregistration costs|
Who can make claims to liability insurance?
- Health insurance company
- Accident & pension insurance
How much does the insurer pay out?
- Personal injury: up to 7.5 million Euro
- Property damage: up to 1.22 million Euro
- Financial losses: up to 50,000 Euro
These are the lowest amounts an insurer can offer. A sum of 100 million Euros is advantageous for liability insurance.
When does liability insurance not pay?
Breach of obligations
Insured persons must comply with certain obligations. If they violate these obligations as an insured person, the insurance company may refuse protection in whole or in part.
Violations of obligations are, for example:
- Hit and run
- Participation in illegal car races
In the case of damage caused by negligence, the insurer has the right not to pay out, or only pay partially.
Gross negligence, for example:
- Running through red traffic lights
- Using a phone while driving
- Accidents that occur under the influence of alcohol or drugs are not covered by car insurance.
If an accident occurs as a result of gross negligence, the insurer will usually pay for the damage for the time being in order to protect injured third parties. The insurance company effectively pays in advance and can then demand the money back from the insured person. In legal terms, the insurance company takes the person into recourse.
Claims of recourse are legally limited to 5,000 Euro per infringement.