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Stand:updated on 19.12.2022 | Topic Consumer protection Motor vehicle insurance

In Germany, motor vehicles cannot be registered without motor vehicle third-party liability insurance (Kfz-Haftpflichtversicherung). This insurance provides coverage when the insured vehicle causes damage to others. In contrast, partially and fully comprehensive insurance, sometimes also referred to as casco insurance, are not mandatory. This kind of insurance covers damage to the policyholder’s own vehicle. Partially comprehensive motor vehicle insurance (Teilkaskoversicherung) provides cover against theft, hailstorm damage and broken glass, for example, whilst fully comprehensive motor vehicle insurance (Vollkaskoversicherung) also provides coverage for accidents that are the policyholder’s own fault, and for damage as a result of vandalism.

What kinds of motor vehicle insurance are there?

If you are the owner or registered keeper of a vehicle, you must take out motor vehicle third-party liability insurance. Without this insurance, you cannot register the vehicle in Germany. This rule is to ensure that anyone who is injured or incurs losses due to a motor vehicle accident can at least expect to be indemnified. Motor vehicle third-party liability insurance will provide coverage when an insured vehicle causes death or injury to persons, damages or destroys property, or causes financial losses. It also serves as a deterrent against unfounded claims.

Partially and fully comprehensive motor vehicle insurance are not obligatory. For this reason, there is no statutory minimum scope of insurance. This kind of insurance covers damage to the policyholder’s own vehicle. A distinction is drawn here between partially and fully comprehensive cover. Partially comprehensive motor vehicle insurance normally provides protection against losses resulting from fire, explosion, theft, storms, hail, lightning, flooding, broken glass and short circuit. Fully comprehensive motor vehicle insurance additionally provides coverage in the event of accidents that are the policyholder’s own fault, in addition to coverage for damage as a result of deliberate and malicious actions by third parties (vandalism).

A roadside assistance contract provides help in the event of breakdown (for example towing, delivery of replacement parts, but not repair costs), accident (for example rental car or hotel costs) or illness (return transport).

Motor vehicle accident insurance provides cover when the occupants of the policyholder’s own vehicle are injured in an accident.

Telematics policies can also be added to motor vehicle insurance. With this addition, data on the customer’s driving style are recorded by a telematics box or app. Customers that drive carefully are then given discounts, for example in the form of reduced insurance premiums. The discounts and the amounts available depend on various factors.

Who needs motor vehicle third-party liability insurance?

Anyone who wants to register a vehicle must first take out motor vehicle third-party liability insurance. Under German law, this insurance obligation applies to everyone who owns a vehicle or trailer that is normally based in Germany.

Equally, insurers are, as a general rule, required to accept applications for motor vehicle third-party liability insurance. Insurers can only reject such applications in specific individual cases.

What problems might arise?

  • Intentional damage: If you intentionally use your vehicle to cause harm, you will not be covered by your car insurance. In this case, you will have to take responsibility for the damage yourself.
  • Breach of obligations: Suppose you left your car unlocked overnight with the key in the ignition on a company’s premises, where it was used without your permission, resulting in an accident. Or perhaps you were driving without a license when an accident happened, or you were under the influence of alcohol. In these cases, you would be in breach of your obligations when operating your vehicle. This would also be the case if you failed to inform your insurer of damage within the contractually agreed period.
    If you are in breach of your obligations and this breach is also the cause of damage, the insurer may – depending on the degree of fault – demand that a portion of the benefits be returned from the policyholder or co-insured person (for example the driver). In this case, the insurer can demand reimbursement up to a set upper limit, which cannot exceed €5000. Most insurers make full use of the legal limit provided for. The victims of traffic accidents are protected by motor vehicle liability insurance since the insurer is obliged to reimburse the losses they incur.
  • Fault: Motor vehicle third-party liability insurance will not provide cover if you, as the driver of a vehicle, are responsible for an accident and are injured as a result. Any passengers in the vehicle, however, are protected by third-party insurance. In the event of an accident caused by a third party, all victims are covered by the responsible party’s motor vehicle third-party liability insurance.

What do I have to do in the event of a car accident?

If you cannot rule out the possibility that you were at least partially responsible for the accident, you are normally required to report the accident to your insurer within one week. You must also inform your insurer without delay if the police or public prosecuting authorities are investigating due to the accident.

As a general principle, in the event of damage, you should not acknowledge the aggrieved party’s claim against you. Talk to your insurer first.

As an aggrieved party in a traffic accident, you can request financial compensation either from the responsible party or directly from their motor vehicle third-party liability insurer.

Normally, claims are made directly with the responsible party’s insurer. The Central Service Centre for Motor Vehicle Insurers (Zentralruf der Autoversicherer) can give you details of the other party’s insurer if you state their license plate number. You must submit a notice of claim to the other party’s insurer in writing within two weeks. It is advisable to first report the damage to the insurer by phone. They will be able to tell you what evidence has to be submitted (for example inspection reports, cost estimates, invoices for repairs).

Where can I take out motor vehicle insurance?

You can take out motor vehicle insurance with an insurance company directly (for example in a branch or online). Alternatively, you can take out a policy via an insurance broker or insurance agent.

What do I need to bear in mind when taking out motor vehicle insurance?

The insurance companies authorised in Germany offer a range of different products, with some considerable differences in the scope of cover offered.

For example, some motor vehicle third-party liability insurance policies only offer the statutory minimum cover. The legal minimum coverage is €7.5 million for personal injury, €1.22 million for damage to property, and €50,000 for pure economic loss. Certain situations could result in very high losses, such as a collision between a car and a fully occupied bus. You should make sure the insured sum is high enough that you are protected in such extreme cases. Otherwise, as the owner or driver of the vehicle, you may have to pay for any damage that exceeds the minimum insurance coverage.

There are also products that include additional coverage in the form of driver protection insurance that is combined with motor vehicle third-party liability insurance. These products provide compensation for the economic consequences of personal injury in the event of a traffic accident if a third party cannot be held liable or the insurance coverage is limited.

Policyholders should determine what insurance they want and, on basis of the documents provided by the insurer (insurance conditions, certificate of insurance, advertising materials etc.) carefully check the scope of cover offered. It may be advisable to ask one or more insurers directly about certain products.

How much does motor vehicle insurance cost?

The prices for motor vehicle insurance policies in Germany vary. If you intend to take out this kind of insurance, you should bear in mind that different criteria play a role in the calculation of your premiums. These criteria include classifications of vehicle type, regional classifications and various premium rates depending on the policyholder’s no-claims bonus.

Other factors that affect premiums include the age of the policyholder or driver, the annual mileage and – for comprehensive insurance – the amount of the agreed excess.

The premium is usually reviewed and, if necessary, recalculated by the insurer on an annual basis. The premium charged depends on various factors, including developments with regard to claims and costs in the relevant insurance rate class. Changes in personal characteristics can also affect the premium. This can include changes in mileage, drivers and place of residence. Being placed in a different no-claims category can also have an impact on premiums.

The costs of premiums for motor vehicle third-party liability insurance (but not comprehensive insurance!) may be tax-deductible.

What information is the insurer required to provide?

Like all other insurance companies, motor vehicle insurers must comply with statutory information requirements. The insurer must provide the following information:

  • Insurance product information document: this contains the most important information about your policy in a compact format and includes, for example, details of your insurance protection, premiums and termination periods.
  • Customer information: You must receive information about the insurer, the services provided, the contract and available legal protections.
  • General conditions for motor vehicle insurance (Allgemeine Versicherungsbedingungen für die Kfz-Versicherung – AKB)

What do I need to bear in mind when terminating an insurance policy?

As a motor vehicle insurance policyholder, you have the following options for cancelling your policy:

  • Termination on the expiry date of the policy: Most motor vehicle insurance policies expire at the end of the year. In this case, your insurer must receive your notice of termination by no later than 30 November. Nowadays, some insurers also allow you to take out a policy at any point during the year, for example a policy may begin on 1 April and expire on 31 March of the following year. With these policies, a notice period of one month usually also has to be observed.
  • Termination in the event of a claim: Your insurer must receive your notice of termination within one month following the conclusion of negotiations regarding your claim, i.e. following the discussion between the policyholder and the insurer regarding the claim to compensation or the basis for the claim. Alternatively, your notice of termination must be received by the insurer within one month after the motor vehicle third-party liability insurer has either accepted or rejected their obligation to compensate the insured.
  • Termination in the event of an increase in premiums: If the insurer plans to increase your premiums, they must inform you of this no later than one month before the change comes into effect. This is normally the end of November. You then have a special right of termination and can terminate your policy within one month following receipt of this information. This notice period of one month also applies if the insurer informs you at a later time of a planned increase in premiums.
  • Sale: If you sell your vehicle, only the purchaser has the option to terminate the contract. If they submit confirmation of their insurance with another insurer, this is automatically regarded as termination.

The insurer can only expect you to pay your premiums for as long as the policy is still active, i.e. up until termination takes effect.

How are motor vehicle insurers supervised?

BaFin supervises German insurance companies and monitors all of their business operations. BaFin’s responsibilities include ensuring that the legal and financial interests of all insured persons are adequately protected. In order to protect the interests of all insured persons, BaFin accepts and processes complaints about individual insurance companies. However, BaFin cannot enforce your rights as an individual. That is the responsibility of the courts.

The quality and contents of insurance policies and tariffs are not subject to review by BaFin. If BaFin determines that insurance terms and conditions are in breach of the law (in particular consumer protection law) or (high) court decisions, it can take measures to remedy or prevent such shortcomings.

Where can I find more detailed information?

You can get further information:

  • from insurance companies, who can provide information about the specific contractual terms and the scope of insurance cover they offer;
  • from local consumer advice centres and other consumer protection organisations – contact details can be found on the website of the consumer advice centre (Verbraucherzentrale);
  • on the website of the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft e. V.);
  • and in specialist media.

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