BaFin - Navigation & Service

Stand:updated on 21.01.2023 | Topic Consumer protection Reporting a loss

In the event of damage or loss, policyholders have a number of obligations. For instance, they must inform their insurer without delay that an insured event has occurred. They must also limit the damage or loss as far as possible. The law does not set out any time limits within which insurers are required to pay compensation. Past experience has shown that obtaining expert opinions and information, for instance, takes time. In some cases, it is possible to request a partial payment in advance.

What obligations do policyholders have in the event of damage or loss?

In the event of damage or loss, policyholders have a number of obligations. Some of these obligations arise from operation of law, others from the contractual agreement entered into with the insurer. First of all, the policyholder is obliged to inform the insurer of the loss that has occurred without undue delay; upon request the policyholder must also provide the insurer with any information it needs to establish the insured event or the scope of its liability.

A further important duty is the obligation to minimise losses. This obligation to minimise losses means that, in the event of loss, the insured must take all steps possible to limit or prevent such loss. The insurance corporation bears the costs of the measures taken to minimise or prevent the loss provided that such measures do not exceed the total costs of the loss.

In the event of loss, the insurer’s instructions must be followed. If a policyholder fails to meet their obligations to minimise losses, the insurer may refuse to settle the claim. For the insured that means that they have to carry the costs of a loss themselves.

I have reported a loss to my insurer. When will I receive my compensation?

There are no established time limits within which the insurer is required to pay the compensation. It has to be born in mind that, pursuant to the German Insurance Contract Act (VersicherungsvertragsgesetzVVG) and the insurance terms and conditions, the insurer is entitled (and in the interest of all insured persons also obliged) to review the claims asserted on the merits and in terms of amount. For this purpose, it is frequently necessary to obtain expert opinions and information or to procure other documents as evidence. As past experience shows, this takes a certain amount of time. It is also generally the case that the insurer has to deal with numerous claims reported to it and has to be allowed a reasonable period within which to process such claims. However, insurers are not allowed to needlessly draw out the process of reviewing claims. Delays in the payment of compensation are not acceptable and will not be tolerated by BaFin.

When do claims against the insurer become statute-barred?

For insurance contracts concluded after 1 January 2008, the claims – like any other contractual claims – are subject to a uniform limitation period and become statute-barred in three years. The calculation of the time limit is governed by the general provisions of the German Civil Code (Bürgerliches GesetzbuchBGB) according to which the three-year period of limitation generally commences at the end of the year in which the insurer has decided on the insured event and has notified the policyholder of its decision on the insurance payment.

In a legal suit, the insurer may raise a plea of the limitation period against a statute-barred claim. If it rightly raises such plea, it cannot be ordered by the court to perform under the insurance contract.

For contracts concluded before 1 January 2008, the commencement of the limitation period is governed by the complex transitional provision of Article 3 of the German Introductory Law of the Insurance Contract Law (Einführungsgesetz zum Versicherungsvertragsgesetz – EGVVG).

Under what conditions is it possible to request partial payment from the insurer in advance?

If the insurer does not complete the assessment on the scope of the insurance benefit owed by it before a period of one month has elapsed, the policyholder may request a partial advance payment equal to the amount that the insurer is at least likely to be required to pay. In other words, the pre-condition for such partial payment in advance is that the insurer’s liability has been established on the merits. Only the amount of the compensation remains to be settled.

Partial advance payment has to be distinguished from an insurance benefit paid by the insurer subject to reservation. In contrast to a partial advance payment, a benefit paid subject to reservation remains, at the point in time of the provision of benefits, uncertain not only in terms of its amount but also in terms of the question of whether any performance at all is owed by the insurer. It may therefore turn out at a later point in time that the policyholder had no entitlement to the insurance benefit. In this case, the entire benefit would then have to be returned to the insurer by the policyholder.

Did you find this article helpful?

We appreciate your feedback

Your feedback helps us to continuously improve the website and to keep it up to date. If you have any questions and would like us to contact you, please use our contact form. Please send any disclosures about actual or suspected violations of supervisory provisions to our contact point for whistleblowers.

We appreciate your feedback

* Mandatory field