What is liability insurance? What is insured?


Lerato Khumalo

Most Germans have private liability insurance, but that doesn’t mean they are adequately protected. What pitfalls lie in wait.

All it takes is one careless moment: an adult walking into the street engrossed in their smartphone, a truck swerving in time but hitting three parked cars – and the pedestrian would have to pay for tens of thousands of euros in damages, if not more.

It’s no wonder that only a few Germans want to take this risk. Most are protected against such financial consequences with private liability insurance. This covers them if the insured person causes damage to others (more on this here). But that alone does not guarantee that you are well positioned.

“Any liability insurance that is older than five years is, in all probability, no longer up to date,” says Kai Fürderer from the quality assurance company t-online. The company assesses, among other things, the quality of financial advice – for example on insurance. One example of where insurance is often out of date is the level of cover.

“Today you can get liability insurance with a coverage of up to 50 million euros for less than 10 euros a month,” says Fürderer. “But many people don’t know that the level of cover for existing customers doesn’t automatically increase. You have to take out a new contract to benefit from the increased coverage.” A short phone call to your insurer or agent is often enough to make the switch.

The same applies if you want to expand the catalogue of insured damages. For example, it is often forgotten to insure items that you borrow from third parties. Even if you help friends move and something breaks, you are liable yourself under many policies. Fürderer recommends insuring moving and neighbourly help as well as borrowed items. Because: “The price only changes by a few euros a month.”

When taking out a private liability insurance policy, very few people think about the so-called default cover. This means that your insurance will pay out even if the person who caused you damage does not have liability insurance. And that is not that rare, says Fürderer.

“Younger people in particular think they are safe because they were co-insured through their parents for a long time. But as soon as they move out of home and are no longer in training or studying, they have to take care of themselves,” explains the expert. Even after a separation, it can happen that one of the former partners suddenly finds himself without liability insurance because the previous family tariff no longer applies.

However, when it comes to loss cover, please note that many insurers only apply it if the damage has exceeded a certain amount, the so-called minimum damage amount. The insurance company usually also requires a deductible.

In Germany, private liability insurance – unlike motor vehicle liability insurance – is not required by law. However, there are holiday countries where the rules are different. For example, winter sports enthusiasts in Italy have needed private liability insurance since 2022 in order to be allowed to use the slopes. Violations can result in fines of up to 150 euros and the withdrawal of the ski pass.

One scam that Fürderer does not explicitly warn against, but which you should be aware of, is the sale of insurance packages. “The insurance agent does not earn anything from liability insurance alone. So he will always try to get more out of it.” This often means that you also get home contents or legal expenses insurance.

However, if you already have these insurance policies, you should pay attention to two things: First, check whether the home contents or legal protection insurance included in the package really does offer better conditions. If this is the case, such updated protection can certainly make sense, according to Fürderer. But then also remember to cancel your current policy so that you are not doubly insured.