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What happens to business liability insurance when I close my business in Germany?

In short

What happens to business liability insurance when I close my business in Germany? If the business stops completely, the policy ends; the premium is owed until the insurer learns of it (section 80 VVG). Only damage events during the term are covered. If damage from old work appears later, you need agreed run-off cover (Nachhaftung). Defect claims on buildings run on for 5 years.

What happens to business liability insurance when I close my business in Germany?

What it costs

What business liability costs and how closure affects the premium.

ExampleTypical range
Trades, standard workusually EUR 200 to 450 a year
Construction and roofingfrom about EUR 600 a year
Small businessesabout EUR 60 to 200 a year
Closed 30 June, reported 15 July, annual premium EUR 360premium until 15 July, about EUR 193

Guide values from published examples, October 2026.

The closure calculation is an example under section 80 VVG.

Whether run-off is included or costs extra is a guide value from quoting practice.

Worked example

Electrician, 63, sole trader

He closes at year end after five years of home installations.

Policyends with the closure
Reportedon closing day, in writing
Run-off coverfive years agreed
Fire from an old distribution board in year threecovered by run-off

Without run-off he would have paid privately.

What happens to the policy

If you close the business (Geschäftsaufgabe) completely, the insured interest disappears. The insurer keeps the premium until it learns of the closure (section 80 of the Insurance Contract Act, VVG). Report the closure in writing at once. A sale or a change of legal form is not a closure.

The gap after the policy ends

Business liability insurance (Betriebshaftpflicht) covers damage events that happen during the term, no matter when the mistake was made. If a plumber lays a pipe in March, closes in June and the joint bursts in November, the damage event is after the end. Without run-off cover, nobody pays, and a sole trader is liable with private assets.

SituationCovered?
Damage before closure, reported lateryes
Mistake before, damage after, no run-offno
Mistake before, damage after, with run-offyes, within the agreed period
Change of legal formno run-off, new policy needed

How run-off cover works

The model conditions offer run-off cover as an extension that must be agreed. It applies only if the policy ends because the business stops completely and permanently, not when the legal form changes. Damage in the agreed years is treated as if it happened on the last day of the policy, limited to what is left of the last year's annual maximum.

How long you remain liable

Defect claims for building work expire five years after acceptance, two years for other work. Claims for injury to body or health can run up to 30 years. Choose the run-off period with these limits in mind. Norman Nammert arranges cover as an insurance broker (Versicherungsmakler).

Step by step

  1. Check whether your policy includes run-off cover and for how long.
  2. If not, agree it before closing.
  3. Report the closure in writing with the date.
  4. Keep job records from recent years.
  5. If you sell, inform the buyer about the policy.

Checklist

  • Run-off in the policy schedule
  • Period matches warranty limits
  • Closure reported in writing
  • Remaining annual maximum known
  • Job records archived

Common mistakes

  • Simply cancelling without run-off cover
  • Reporting the closure months later
  • Treating a change of legal form as a closure

Questions and answers

Frequently asked

Do I have to cancel the policy?

On full closure it ends because the risk disappears.

Still report it at once in writing.

Do I get premium back?

The insurer may keep the premium until it learns of the closure.

What is run-off cover?

An extension covering damage from your former work for a set period after the policy ends.

Does it apply when I switch to a GmbH?

No, the model conditions exclude a change of legal form.

How long should it run?

At least as long as your warranty periods, five years for building work.

Sources

NAMMERT insurance broker

Request a quote: Business liability

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1Who is it for?
2Which insurance?

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3Details

Business liability insurance in Germany (Betriebshaftpflicht)

For example electrical installation in homes, café with outdoor seating, online shop for furniture

For example work at clients' sites, own products, exports to the US, parent company abroad

4Your current policy
5How can we reach you?

Related questions

Your broker: Norman Nammert, trading as NAMMERT.

Insurance broker licensed under section 34d(1) of the German Trade Regulation Act.

Broker register no. D-C08Q-TOSD4-37.

NAMMERT Assekuradeur GmbH is a separate company.

It does not arrange your contract.

Statutory disclosure (German) · Updated

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