All about this insurance: Business liability
Is business liability insurance compulsory in Germany?
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When does business liability insurance not pay?
In short
When does business liability insurance not pay in Germany? Mainly for defects in your own work, for pure financial loss without injury or property damage, and for intent. Claims also fail when an add-on is missing, such as cover for items you work on, or when an activity is not listed in the policy. Unpaid premiums after a reminder and late notice can cost you cover entirely.
What it costs
Published guide prices per year in Germany, to judge what complete cover costs, 2026.
| Example | Typical range |
|---|---|
| Office, consulting, administration | about EUR 60 to 120 a year |
| Retail, small shop | about EUR 120 to 250 a year |
| Standard trades | about EUR 200 to 450 a year |
| Construction, roofing, scaffolding | from about EUR 600 a year |
Guide values from published examples, October 2026.
Sub-limits of a few tens of thousands of euros for add-ons such as lost keys are a guide value from our quoting practice.
Your premium depends on trade, turnover and add-ons; we obtain the exact quote for you.
Worked example
IT freelancer installs a network at a client's office
While pulling cables, the freelancer drills through a water pipe in the wall. Days later the client's server is misconfigured by the same freelancer and the online shop is down for two days.
| Repairing the pipe and the wall | covered |
| Water damage to the client's carpet and furniture | covered |
| Correcting the server configuration | not covered, own work |
| Lost shop revenue from the configuration error | not covered, pure financial loss; needs professional indemnity |
| Excess | paid by the freelancer |
The physical damage is insured. The financial loss from the faulty setup is not, unless the freelancer also has professional indemnity insurance.
Your own work is never insured
Business liability insurance, called Betriebshaftpflicht in Germany, pays for damage you cause to others. It does not pay for doing your contract properly. If the tiles you laid are uneven or the software you delivered has bugs, fixing it is your cost. That is business risk, not an insured event.
What is insured is the damage your faulty work causes to other property or people. You pay to fix the leaking pipe; the insurer pays for the water damage in the flat below.
| Reason | What you can do |
|---|---|
| Defect in your own work | not insurable, work carefully and document it |
| Pure financial loss from advice | take out professional indemnity cover |
| Damage to the item you are working on | add cover for damage during work (Tätigkeitsschäden) |
| Damage to rented premises | add cover for rented property (Mietsachschäden) |
| Activity not listed in the policy | report every new activity before you start |
| Damage caused with a registered vehicle | motor liability insurance applies |
| Intent | not insurable |
Gaps written into the policy
Many refusals have nothing to do with small print. They concern things that were never agreed. If you are insured as a carpenter and also fit windows on the side, the fitting may not be covered. What counts is the business description in your policy schedule.
Other usual exclusions: damage to your own property, borrowed or rented items without the add-on, claims between people insured under the same policy, asbestos, gradual environmental damage without an environmental add-on, and liability you accept by contract beyond the law, such as a contractual penalty.
When you put your own cover at risk
Report every incident that could lead to a claim within one week, and immediately if you are sued or investigated. Breaching these duties intentionally or with gross negligence can reduce the payout, in the worst case to zero (section 28 VVG).
Admitting fault to the injured party does not automatically void your cover, but the insurer only pays what you actually owe. On site, say you will report the damage instead of promising to pay.
If the first premium is unpaid, cover usually does not start. For later premiums the insurer must give you at least two weeks in writing; after that it will not pay for new claims.
When the limit is not enough
Even a covered claim is only paid up to the limit of indemnity and any sub-limits. Add-ons such as lost keys or rented property often have much lower limits, for example a few tens of thousands of euros. The rest, and your excess, you pay yourself.
Step by step
- Read your policy schedule: is every activity in the business description?
- Check add-ons and sub-limits, especially work damage, rented property and keys.
- Pay the premium by direct debit so no reminder gets lost.
- Tell staff: promise nothing on site, take photos, report at once.
- Report every incident within one week, even before a claim arrives.
Checklist
- Business description covers all activities
- Damage during work included if you work at clients' premises
- Sub-limits match your risk
- Premium paid by direct debit, letters from the insurer are read
- Claims procedure known to the whole team
- Advice errors covered separately if you advise clients
Common mistakes
- Submitting the cost of fixing your own work as a claim
- Offering new services without updating the policy
- Promising payment on site before the insurer has checked
- Reporting only when the lawyer's letter arrives
Questions and answers
Frequently asked
Does it pay in cases of gross negligence?
Yes. Only intent is excluded. Gross negligence in your work is covered; it is different when you breach duties towards the insurer itself.
Does it pay if an employee causes the damage?
Yes, damage caused by staff at work is covered. If an employee acted intentionally, the position for that person may differ.
What happens if I report a claim late?
With slight negligence nothing. With gross negligence the payout can be reduced, with intent it can be refused. If the delay did not affect how the claim was assessed or its amount, the insurer must still pay unless you acted fraudulently (section 28 VVG).
Is damage to rented equipment covered?
Usually not in basic cover. Borrowed and rented items need their own add-on, and so do rented premises.
What can I do if the insurer refuses?
Ask for the reasons in writing and compare them with the policy terms. Your broker or a lawyer specialising in insurance law can help.
Can the insurer cancel after a claim?
Yes. After a claim has been accepted or refused, both sides may cancel within one month (section 111 VVG).
Sources
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