Liability insurance – the most important insurance in Germany

The liability insurance is not a compulsory insurance, but it is one of the most, if not the most important insurance there is. It secures your financial existence.

In Germany you’re obligated to pay for damages you caused. This is regulated in § 823 of the German Civil Code. This means that you are obligated to pay if you harm someone else or their property, whether unintentionally or negligently. If you don’t have liability insurance, you have to pay out of your own pocket. Even if it’s millions and you’re paying this debt off your whole life. If you have liability insurance, they will cover you.

This seems like an easy enough law, but to make it complicated, you have to diversify when the damage happened, what you were doing at that time and whether it was really you and not, let’s say, your dog. This leads to a variety of possible liability insurances.

    The most well-known and relevant is private liability insurance. It covers you when you harm someone or their property in private life – that is non-working, not building a house, and not hunting deer etc.

But there are also special liability risks for many other areas, e. g.:

    motor vehicle liability (mandatory) for everybody owning a car
    liability insurance for civil servants
    self-employed persons in consulting activities
    dog and horse owners
    builders
    house and land owners
    oil tank owners
    hunters
    pilots
    and sports aircraft owners

and many more.

Do I really need liability insurance?

Probably the most common misconception people have is: “I’m always careful, I don’t need this.”

But even the most careful person has a careless moment. Imagine you’re walking through the city, your smartphone in your hand, and you cross a street. I have also caught myself in exactly this situation.

Let’s assume you overlook a cyclist.

She has to swerve and falls badly. Besides the badly damaged bike and a few bruises, her right wrist is broken. The cyclist is a surgeon and has just had her first day of vacation. Now she has to go to the hospital herself and undergo surgery. Afterwards she can’t do her job for several months, and has to do a lot of treatments and therapies.

Woman at doctor with wrist injury

You have to pay redemption for personal, property, and financial damage | Photo by Tom Claes on Unsplash

Since you were clearly responsible for the accident, you have to pay for the damage you caused. But to what extent and what costs can arise?

Basically, a distinction is made between personal injury, property damage and financial loss.

Personal injury includes the injured person’s costs for treatment and hospitalization, loss of earnings, compensation for pain and suffering or, in the worst case, even occupational or disability pensions.

The property damage refers to the cost of your bicycle and any damaged clothing or objects. Either the repair, the replacement or a compensation for depreciation and possibly even the loss of use will be paid.

Furthermore, pecuniary damages are also paid. Our cyclist had her first day of vacation and only wanted to do a few purchases for the summer vacation, which is now canceled. Cancellation fees occur and she won’t get the whole refund.

All this is covered by your liability insurance. But what happens, if you don’t have one?

Where there is no money, there is nothing to get, right?

Wrong. You are liable not only with your current, but also with your future assets. So even if the money is only available over the course of the coming years, you still have to pay the damage. No matter how long it takes.

People have found themselves confronted with a bill they won’t be able to pay off in a lifetime, but they still had to try. Everything they earn is confiscated – except for a minimum amount they need to live. So no matter how well-paid the job is, they live on a very small budget. No inheritance. No donations from friends. All because of a tiny moment.

Liability insurances are super affordable

If you look at it in the light of day, there is no real reason why liability insurance is not mandatory. Especially when you factor in the price: Truly everybody can afford it. It costs between 15 and maybe 40 cents a day.

Again: 15 to 40 cents will save your a**. And that might just mean nothing less than having a life that’s worth the name. Because if all you can keep for yourself is the bare minimum, you can’t go on vacation, to the movies, or have a drink with friends. And you sure as hell can’t take care of your old age and build up savings.

But even if it is not the big accident that threatens your financial existence, but simply the glass of red wine on the expensive carpet of a friend or the loss of your handbag including the keys of your apartment – all this is covered and saves you a potentially big headache.

People cheering with red wine

Celebrate with your friends, your liability insurance will take care of any mishappenings | Photo by Kelsey Knight on Unsplash

You want to know more? Contact us to find out what kind(s) of liability insurance you need!

Main picture: Photo by John Tuesday on Unsplash

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