Third-party liability insurance
Everyone who is on the road with their own car or motorcycle needs a third-party liability insurance (Haftpflicht-Versicherung).
Germany requires liability insurance on every vehicle operated on its roads by law. You need to show proof of liability insurance when registering a car.
Third party liability insurance compensates the accident victims including the passengers up to an agreed or minimum insurance sum. In other words, the liability insurance covers personal injury and damage to property caused by a third party motorist.
Among other things, it covers for:
Damage to the third-party vehicle, e. g:
- Towing costs
- Expert costs
- Cost of repairs
- Car rental costs
- Replacement value in the event of total loss
- Registration and de-registration costs
- Lawyers' fees
Other material damage, e. g:
- Damage to buildings
- Transport facilities
Personal injury, e. g:
- Treatment costs
- Loss of earnings
- Compensation for pain and suffering
- Funeral expenses
- Survivor benefit
The statutory minimum cover for motor vehicle liability is up to 2.5 million euros for personal injury and up to 500,000 euros for property damage. There are also policies with flat-rate or unlimited cover.
With the closure of your first car insurance, you’ll start to earn a no-claims discount (Schadenfreheitsrabatt). There is an industry-wide categorisation called no-claims class (Schadenfreiheits-Klasse, short: SF Klasse). Usually, you’ll start with SF 0 and then go up one number for every year of accident-free driving. Every insurer will apply an SF class discount to the premium - the more years you are accident-free, the higher the discount.
Please note: Liability insurance does not cover your own damage, if the accident is your fault. In order to insure yourself in this case, fully comprehensive insurance is necessary.
Partially comprehensive insurance
While liability insurance is required by law, partially comprehensive insurance can be taken out on a voluntary basis.
Partially comprehensive insurance pays for damage to your own car that was not caused by other road users but by external influences, such as:
- Broken glass
- Vehicle theft / attempted break-in
- Theft / damage to accessories
- Hail / storm
- Fire and short circuit damage
Fully comprehensive insurance
While liability insurance is required by law, fully comprehensive insurance can be taken out on a voluntary basis. Fully comprehensive insurance includes more coverage compared to partially comprehensive insurance.
Fully comprehensive insurance is particularly recommended for owners of the following vehicle types:
- New cars (rule of thumb: <4 years old)
- Leasing vehicles (usually required)
Fully comprehensive insurance is the most comprehensive insurance cover for your vehicle, as it covers damage to your own car that you caused yourself or that was caused by intentional damage.
- Damage after vandalism
- Gross negligence
Fully comprehensive insurance has a separate SF class (SF Klasse). As the SF class is the number of accident-free driving years, the SF class for fully comprehensive insurance starts when you first take out fully comprehensive insurance. Example: You have driven three years accident free, but only took out fully comprehensive insurance one year ago. Your SF-class is SF 3 for liability and partially comprehensive insurance and SF 1 for full comprehensive insurance.