Does liability insurance fight off unjustified claims in Germany?
In short
Yes. Under § 100 of the German Insurance Contract Act (VVG), liability insurance must pay justified claims against you and fight off unjustified claims. It negotiates, goes to court if needed and, under § 101 VVG, pays lawyers and court fees. In Germany this passive legal protection is included in a premium of about 40 to 120 euros a year, but only for insured risks.
Passive legal protection costs nothing extra, it is part of every personal liability policy. Published premium examples in Germany:
Example
Typical range
Single person, typical policies
about 40 to 120 euros a year
Couple or family
about 60 to 180 euros a year
Single, age 28, at least 10 million euros cover, several policies compared
about 30 to 93 euros a year
Guide values as of May to October 2026 from publicly quoted tariff examples.
Amounts in the worked example are guide values from quoting practice.
Your premium depends on cover and deductible; we obtain the exact quote for you.
Worked example
Water stain downstairs, cause in the shared pipe
Your downstairs neighbour demands 3,000 euros for a water stain on the ceiling. An expert finds the cause in the building's shared drainpipe, not in your flat.
Neighbour's claim
3,000 euros
Check and rejection by the insurer
0 euros for you
Neighbour sues, lawyer and court
paid by the insurer
If you had admitted liability in writing
dispute over payment, risk for you
You pay nothing because you are not liable. Without insurance you would have had to fight and fund the dispute yourself.
Defence is a core benefit
Many people think liability insurance only pays. German law gives it two equal duties: it must free you from claims by third parties and fight off unfounded claims, as § 100 VVG states. Germans call this passiver Rechtsschutz, passive legal protection.
This matters because many claims are too high or simply wrong. Under § 823 of the German Civil Code (BGB) you are only liable if you acted with intent or negligence. If there was no fault, or the damage is smaller than claimed, the insurer refuses instead of paying.
Situation
What the insurer does
Your cost
Claim justified
pays the damage
at most the deductible
Claim too high
pays the justified part, rejects the rest
at most the deductible
Claim unjustified
rejects it with the other side
no lawyer's fees
Other side sues
handles lawyer and court
no court costs for an insured risk
Risk not insured, such as a car or your job
no defence
all yourself or another policy
Who pays the costs
§ 101 VVG obliges the insurer to pay the court and out of court costs of defence, as far as they are reasonable. If you ask, it must pay them in advance. Defence costs in criminal proceedings are included if the insurer instructed them.
Court costs the insurer initiates must be paid even if, together with the compensation, they exceed the sum insured. Whether a deductible also applies to a pure defence depends on your policy.
What you have to do
Report every claim within one week, even if you think it is wrong. If you are sued, receive a court payment order (Mahnbescheid) or are investigated, report it at once (§ 104 VVG).
Do not admit anything. A clause saying an admission costs you your cover is void under § 105 VVG. But anything you promise beyond your real liability is usually not paid by the insurer. Many policy terms also say the insurer runs the lawsuit and chooses the lawyer.
Limits of passive legal protection
Defence only applies to damage your policy covers. If someone claims money over a car accident, a dog bite without dog liability insurance or a mistake at work, personal liability insurance neither pays nor defends.
If you want to claim money from someone yourself, that is not a liability case. Legal expenses insurance (Rechtsschutzversicherung) does that. If you only want protection against claims by others, you do not need it for this.
Step by step
Ask for the claim in writing and promise nothing.
Report it to your insurer within one week, with letters and photos.
Forward any lawsuit or court payment order at once.
Tell the other side that your insurer is checking the case.
Follow the insurer's instructions and supply documents.
Checklist
Claim reported within one week
No admission, no promise to pay
Court letters forwarded at once
Photos, witnesses and letters kept
Checked that the risk is covered by your policy
Common mistakes
Not reporting a claim because it seems unjustified
Promising payment straight away to be polite
Hiring your own lawyer without asking the insurer
Confusing liability and legal expenses insurance
Questions and answers
Frequently asked
What is passive legal protection?
Your liability insurer fighting off unjustified claims against you,
including lawyers and court fees.
By law it is part of the benefit.
Do I need legal expenses insurance for this?
No.
You need legal expenses insurance to enforce your own claims,
not to defend against claims by others for insured risks.
Must I report a claim I think is wrong?
Yes, within one week under § 104 VVG.
Checking liability is exactly the insurer's job.
Who pays if the lawsuit costs more than the sum insured?
Court costs the insurer initiated are paid even beyond the sum insured, § 101 (2) VVG.
Can I choose my own lawyer?
Many policy terms let the insurer choose.
Do not hire anyone without asking first, or you may be left with the bill.
What if I already admitted something?
You do not lose all cover, § 105 VVG.
But the part you promised beyond your real liability is usually not paid.
Does defence also apply to gross negligence?
Yes, if the risk is covered.
Gross negligence is insured in personal liability insurance, only intent is not.
