What is Liability Insurance?
Quick Summary
Liability insurance (Haftpflichtversicherung) is the most important insurance for private individuals in Germany. It protects you from the financial consequences of causing damage to others - whether personal injury, property damage, or financial loss. Without this protection, you are liable with your entire assets.
Definition in Detail
Liability insurance is based on the principle of German tort law (§ 823 BGB): Anyone who negligently causes damage to another must pay for it - in the worst case with their entire assets, for life.
The insurance performs two essential functions:
- Claim settlement: Payment of justified compensation claims
- Legal protection: Defense against unjustified claims (passive legal protection)
Important: Without liability insurance, a single accident can lead to financial catastrophe. For severe personal injuries, claims of several million euros are possible.
Types of Damage Covered
Personal Injury
- • Medical costs
- • Pain and suffering
- • Loss of earnings
- • Care costs
- • Disability pension
Property Damage
- • Repair costs
- • Replacement value
- • Depreciation
- • Rental loss
- • Loss of use
Financial Loss
- • Lost profits
- • Financial losses
- • Key loss damage
- • Data loss
- • Legal/court costs
Costs and Coverage Amounts
| Plan | Coverage | Annual Premium | Recommendation |
|---|---|---|---|
| Basic | EUR 3 million | EUR 30-50 | Not recommended |
| Standard | EUR 10 million | EUR 50-80 | Good |
| Premium | EUR 50 million | EUR 80-120 | Recommended |
| Family | EUR 50 million | EUR 100-150 | Optimal |
Expert recommendation: Choose at least EUR 10 million coverage. The surcharge for higher amounts is minimal (approx. EUR 10-20/year), but the protection is significantly better.
Types of Liability Insurance
Private Liability (Privathaftpflicht)
For private individuals and families. Covers everyday accidents like knocked-over vases, damaged rental apartments, or sports injuries.
Car Liability (Kfz-Haftpflicht) - Mandatory
Legally required for all motor vehicles. Minimum coverage: EUR 7.5 million for personal injury, EUR 1.22 million property damage, EUR 50,000 financial loss.
Professional Liability (Berufshaftpflicht)
For self-employed and freelance activities. Mandatory for certain professions like doctors, lawyers, architects, and tax advisors.
Pet Owner Liability (Tierhalterhaftpflicht)
For dogs and horses. Mandatory for dog owners in many German federal states. Not to be confused with pet surgery insurance.
Practical Example: Why Liability Insurance is Essential
Scenario: Bicycle Accident with Pedestrian
You are cycling and accidentally hit a pedestrian who is seriously injured:
- • Hospital stay: EUR 25,000
- • Rehabilitation: EUR 15,000
- • Pain and suffering: EUR 50,000
- • Loss of earnings (6 months): EUR 30,000
- • Permanent disability (pension): EUR 500,000+
Total damage: Over EUR 620,000 - without insurance you would have to pay this out of pocket, possibly for the rest of your life.
With liability insurance: The insurance covers all justified claims and defends against unjustified ones. Your premium: approx. EUR 60-100 per year.
Frequently Asked Questions
Is liability insurance mandatory in Germany?
Private liability insurance is not legally required but strongly recommended by experts. Mandatory liability insurance exists for specific areas like car insurance (Kfz-Haftpflicht), professional liability for certain professions, and dog owner liability in some federal states.
How much does good liability insurance cost?
Private liability insurance costs about EUR 40-80 per year for individuals, EUR 60-120 for families. Premium tariffs with coverage of EUR 10 million or more typically cost EUR 80-150 annually.
What damages are not covered by liability insurance?
Not covered: Intentionally caused damage, damage to your own property, damage caused by motor vehicles (separate car insurance needed), professional activities (professional liability), and damage caused by certain dog breeds without additional coverage.
Do children need their own liability insurance?
Children are covered under their parents family policy as long as they are unmarried and in their first education - often until age 25 or 27. After that, they need their own policy.
What is the difference between liability and contents insurance?
Liability insurance covers damage you cause to others. Contents insurance (Hausratversicherung) protects your own belongings (furniture, electronics) against burglary, fire, or water damage. Both complement each other but do not replace one another.
Legal Notice
Liability insurance is regulated in the Insurance Contract Act (VVG). The legal basis for compensation claims is found in § 823 of the German Civil Code (BGB). Minimum coverage amounts for car liability are set in the Motor Vehicle Compulsory Insurance Ordinance. Status: February 2026.