In Germany, D&O insurance does not pay for a knowing breach of duty, for claims made after the policy ends without an extended reporting period, for circumstances known at inception, or after false answers in the proposal form. Fines, penalties and the tax itself are never covered. Good policies still pay defence costs until a court has decided.
What it costs to close the typical gaps of a D&O policy, from published tariff examples for small German GmbHs.
Example
Typical range
Base premium, small GmbH, EUR 2 million turnover, EUR 1 million limit
about EUR 750 to 1,100 net a year
Double annual aggregate instead of a single limit
about 10 to 15 percent extra
EUR 1 million instead of EUR 250,000 limit
about EUR 300 to 400 more a year
No deductible
about EUR 100 to 200 more a year
Guide values as of October 2026 from publicly quoted 2025 tariff examples,
before 19 percent insurance tax.
Longer reporting periods and criminal defence cover are included without a fixed surcharge in many
policies; the exact price is set in the quote.
Worked example
Insolvent GmbH, the administrator claims EUR 180,000
A managing director kept paying suppliers after the company was unable to pay its debts. This decides whether D&O pays.
Claim under § 15b Insolvency Code
EUR 180,000
Policy names § 15b expressly
covered if not knowing
Director knew of the insolvency and kept paying on purpose
exclusion possible
Defence costs until a decision
advanced in good policies
Policy cancelled before filing, no reporting period
no cover
Whether D&O pays the EUR 180,000 depends on what the director knew and on two clauses: the reporting period and § 15b. The figures are a worked example.
Knowing breach of duty: the most common dispute
Almost every German D&O policy excludes losses caused by a knowing breach of duty. Knowing means the director knew the duty and deliberately ignored it, for example by approving a payment the articles of association prohibited. Negligence, even gross negligence, remains covered.
The statute is narrower: under § 103 of the Insurance Contract Act (VVG) the insurer is free only if the loss was caused intentionally and unlawfully. D&O wordings draw the line earlier. Good policies apply the exclusion only after a final court decision and pay defence costs until then.
Outside the time window: when D&O comes too late
D&O insurance covers claims first made while the policy is in force. If the policy is cancelled or the GmbH is sold or wound up, later claims are covered only through an agreed extended reporting period. Directors' liability becomes time-barred after five years, so a one-year reporting period often leaves a gap.
D&O also does not pay for breaches before inception without retroactive cover, and never for circumstances you already knew when you signed. A director who senses a dispute with a shareholder and only then buys D&O insurance gets no cover for that dispute.
False answers and late notification
The proposal form asks about accounts, losses and known disputes. Leaving something out lets the insurer withdraw or reduce cover under § 19 VVG. With D&O this can hit every insured director unless the policy has a severability clause, which stops one person's knowledge being attributed to the others.
After a claim, speed matters. Any demand letter, lawyer's letter or notice from an insolvency administrator belongs with the insurer at once; liability events must be reported within one week (§ 104 VVG). Directors who start their own defence or accept a claim without the insurer's consent put their D&O cover at risk.
What D&O insurance never covers
D&O pays financial loss from directors' liability. Bodily injury and property damage belong under general liability (Betriebshaftpflicht). Fines, penalties and the tax itself are never insured, although criminal defence costs may be, depending on the D&O policy.
Many packaged policies also exclude claims by majority shareholders against their own management, claims under US law and contractual guarantees. On refunds of payments made after insolvency, the Federal Court of Justice ruled in 2020 that such a claim can be covered as damages (IV ZR 217/19); older wordings should still name today's § 15b Insolvency Code expressly.
Reason
Consequence
Prevention
Knowing breach of duty
no indemnity, defence costs depending on policy
exclusion only after a final judgment
Claim after the policy ends
no cover without reporting period
extended reporting period of five years or more
Circumstance known at inception
no cover
buy cover before the first dispute
False answers in the proposal
withdrawal or reduction
complete answers and a severability clause
Fine, penalty, tax
never covered
include criminal defence cover
Limit used up
no further payment that year
higher limit or reinstatement
Step by step
Check how the policy words the knowing breach exclusion.
Agree an extended reporting period of at least five years.
Answer the proposal form completely and keep a copy.
Report every demand at once, within one week at the latest.
Accept or pay nothing without the insurer's consent.
Checklist
Knowing breach exclusion only after a final judgment
Defence costs advanced until then
Reporting period of five years or more, also on insolvency
Claims under § 15b Insolvency Code expressly included
Severability clause for the proposal form
No exclusion for claims by the company itself
Common mistakes
Cancelling D&O when the GmbH is sold and forgetting the reporting period
Leaving a lawyer's letter unanswered for weeks
Buying D&O only after the first allegations
Assuming tax debts or fines are insured
Questions and answers
Frequently asked
Does D&O pay for gross negligence?
Yes.
Only intent and knowing breach of duty are excluded; gross negligence stays covered.
Does D&O pay in insolvency?
Yes, that is one of its main purposes.
What matters is a reporting period that survives insolvency and express cover for § 15b claims.
Do I have to repay defence costs?
If a final judgment later finds a knowing breach, many policies reclaim the costs they advanced.
What if the limit is used up?
Then D&O pays nothing more in that policy year, not even for other directors.
Reinstatement or a higher limit protects against this.
Does a global group policy cover me in Germany?
Only if it includes a local German policy or clearly applies to claims by the German subsidiary
