# D&O insurance in Germany: personal liability of a GmbH managing director > A German GmbH protects its shareholders, not its managing directors. A Geschäftsführer who breaches his or her duties is personally liable to the company with private assets, and in insolvency the administrator enforces that claim. D&O insurance pays justified claims and the often considerable cost of defending them. Quelle/Source: https://www.nammert.com/en/insurance-broker-directors-and-officers.php Updated: 2026-09-18 ## Can I be personally liable as managing director of a German GmbH? Yes. Under § 43 of the GmbH Act a managing director who breaches the duty of care of a prudent businessperson must compensate the company for the loss, jointly with any co-directors, for five years. The riskiest phase is a crisis: payments made after the company became insolvent must be refunded personally (§ 15b Insolvency Code). This applies to foreign directors of a German subsidiary just as much as to local ones, and being the sole shareholder does not protect you once an insolvency administrator is appointed. ## At a glance - **Compulsory?:** No; for AG board members a deductible is mandatory if D&O is bought - **Policyholder:** the company, the insured persons are its directors and officers - **Trigger:** claims made, with retroactive cover and extended reporting period - **Limitation period:** five years for GmbH directors (§ 43(4) GmbH Act) - **Insolvency filing deadline:** three weeks after illiquidity, six weeks after over-indebtedness (§ 15a Insolvency Code) ## Most claims come from inside the company People used to US litigation expect D&O claims from shareholders or regulators. In Germany most claims are internal: the company, or later its insolvency administrator, sues its own managing director for a loss caused by a breach of duty. Typical examples are an unsecured large order, missing insurance, poor supervision of finance staff or a contract signed without the required shareholder approval. The burden of proof is uncomfortable. The company only has to show a loss and conduct that may have been a breach. The director must then prove that he or she acted with due care. German law protects sound business decisions made on adequate information (the business judgment rule in § 93 of the Stock Corporation Act, applied to GmbH directors by the courts), but only if the decision process can be documented. ## Crisis and insolvency: the most expensive phase German insolvency law sets strict deadlines. Once a GmbH is unable to pay its debts, the managing director must file for insolvency without undue delay and at the latest after three weeks; in case of over-indebtedness the limit is six weeks (§ 15a Insolvency Code). Late filing is a criminal offence. Every payment made after insolvency has occurred must be refunded to the company unless it was consistent with the care of a prudent manager (§ 15b Insolvency Code). Directors are also personally liable for unpaid company taxes (§ 69 Fiscal Code), and withholding employees' social security contributions is a crime under § 266a Criminal Code. Good D&O wordings state expressly that § 15b claims are covered losses. ## Foreign parent, German subsidiary: check where the cover sits Directors of German subsidiaries are often insured under the parent company's global D&O programme. That can work, but three points need checking: whether the programme includes a local German policy or at least complies with German requirements, whether it covers claims by the subsidiary against its own director, and whether insolvency of the subsidiary is excluded. Also check how the limit is shared. A global limit is available to all directors of all group companies together. If a large claim in another country uses it up, the German director may be left without cover in the same year. ## What is covered - Claims by the company against its directors, board members and supervisory board - Claims by third parties against directors personally - Defence costs for lawyers, experts and courts - Claims by the insolvency administrator, including § 15b refunds if included - Criminal and regulatory defence costs, depending on the policy - Former, current and future directors and senior managers - Directorships in subsidiaries and, if agreed, in outside companies - Past breaches, as far as retroactive cover applies ## What is not covered - Knowing breach of duty and intent - Fines, penalties and the taxes themselves - Claims known when the policy began - Personal gain to which the director was not entitled - Bodily injury and property damage, which belong to liability insurance - US claims unless expressly agreed ## Who needs it - Managing directors of a GmbH or UG, including shareholder directors - Foreign executives appointed to the board of a German subsidiary - Start-ups with investors, venture debt or several shareholders - Board and supervisory board members of an AG, cooperative or foundation - Employed managing directors without a shareholding ## Who can do without - Sole traders, because there is no company to which a director owes duties ## What it costs D&O premiums depend on the company, not the individual. Small, profitable GmbHs can use simplified tariffs based on a short questionnaire; larger or loss-making companies are underwritten individually on the basis of their accounts. **What drives the premium:** - Turnover and total assets - Equity ratio and recent results - Sector, especially financial services and start-ups - Limit and deductible - US subsidiaries or revenue - Listing or planned funding rounds _We do not publish sample D&O premiums, because they vary strongly with the balance sheet even at the same size. Your premium is fixed only in the quote, for which we need the latest annual accounts._ ## The policy levels on the market - **Compact policy for small GmbHs:** Limits usually from EUR 500,000 to EUR 2 million, questionnaire instead of full underwriting, standard wording. For healthy companies without foreign exposure. - **Mid-market cover:** Individually underwritten, higher limits, separate defence cost limit, criminal defence cover, longer reporting period and express cover for insolvency claims. - **Group and listed companies:** Layered programmes with primary and excess insurers, Side A cover for individuals only and securities claims cover. ## How to recognise a good policy | Criterion | Minimum standard | Strong policy | Why it matters | | --- | --- | --- | --- | | Retroactive cover | for unknown breaches | unlimited | Breaches are often discovered years later. | | Extended reporting period | three years | five years or more, free on insolvency or change of control | The limitation period for GmbH directors is five years. | | § 15b Insolvency Code claims | unclear | expressly covered | Refund claims for payments after insolvency are among the most common. | | Defence costs | within the limit | additional limit for defence costs | Long proceedings can use up the limit before any damages are paid. | | Knowing breach exclusion | applied on the insurer's assessment | only after a final court finding | The insurer should not be able to walk away on a mere allegation. | | Insured persons | current directors | former, future and de facto directors and senior managers | Claims often target people who have already left. | | Insurer's right to cancel after a claim | yes | no | Otherwise cover disappears exactly when it is needed. | ## Insurers on the German market D&O is a specialist market. Several international insurers write German D&O through branches of companies based in other EU countries and therefore do not appear in the BaFin register of German insurers. The list shows only insurers from that register and nothing about who we work with. - **Allianz**: D&O for small and mid-sized companies - **AXA**: D&O for small and mid-sized companies - **HDI Global**: industrial insurer of the Talanx group, large companies - **HDI**: Talanx group, mid-market and professions - **Zurich**: German entity of the Zurich group - **R+V**: insurer of the German cooperative banks, also for cooperatives - **Markel**: specialty insurer in Munich, broker only - **Great Lakes**: Munich Re subsidiary, specialty risks 127 insurers supervised by BaFin, the German regulator, are licensed for this class of insurance. (Allgemeine Haftpflicht). Source: BaFin company database, retrieved 2026-09-18. Insurers from other EU countries selling through a branch or without a German office are not included. ## Typical claims and who pays - **MD keeps paying bills after insolvency** (all payments made after that point, often six figures): The insolvency administrator can reclaim these payments from the managing director personally. Older wordings leave open whether this counts as damages, strong ones include it expressly. - **Unpaid employee social security shares** (the missing contributions, often five figures): Withholding employees' shares is a criminal offence that requires intent, and the MD is personally liable. Intent is never insurable. - **Parent company sues the German MD** (six figures plus legal costs): Claims from the company or group against its own director are the core of D&O. The policy also pays to defend them. - **Prosecutor investigates the MD** (defence costs, often five figures): Basic wordings pay defence only when a damages claim is involved. Strong policies include criminal defence for directors. - **Tax office claims wage tax from the MD** (the unpaid wage tax, often five figures): Personal liability for company taxes can be covered if the breach was not knowing. Strong wordings say so clearly. - **Bank calls the MD's personal guarantee** (the guaranteed amount): A personal guarantee is a contract the director signed himself. D&O covers liability for breaches of duty, not promises to pay. ## Myth or truth - „In a German GmbH, limited liability also protects the managing director." ✘ False, limited liability shields the shareholders. The MD is personally liable to the company for breaches of duty, without a cap. - „German D&O cannot pay a claim brought by your own company." ✘ False, such internal claims are the most common D&O cases in Germany. The policy was designed with them in mind. - „German law forces AG board members to carry part of any loss themselves." ✔ True, the Stock Corporation Act requires a deductible of at least 10 %. The cap may not be set below one and a half times the fixed annual pay. - „If the shareholders instructed you, you can never be liable as MD." ✘ False, an instruction does not protect you where the money is needed to pay creditors. In a crisis, it is little help. - „D&O pays your lawyers before anyone knows whether you are liable." ✔ True, defence against unfounded claims is part of the cover. In many cases that is most of what the insurer ends up paying. ## Common mistakes - Assuming the parent company's policy covers claims by the German subsidiary - Cancelling D&O when the company is sold or wound up - Understating financial difficulties in the proposal form - Treating the three-week insolvency deadline as a grace period - Not notifying circumstances before the policy ends ## FAQ ### Who pays the D&O premium? Normally the company, as policyholder. According to a 2002 letter from the Federal Ministry of Finance, the premium is a business expense and not taxable salary for the directors, provided the management is insured as a whole in the company's interest. ### Does D&O cover gross negligence? Yes. Only knowing breaches of duty and intent are excluded. Gross negligence, such as inadequate supervision of staff, is exactly what most claims allege. ### Is a deductible mandatory for GmbH directors? No. The statutory deductible of at least 10 percent of the loss, up to at least one and a half times annual fixed pay, applies only to management board members of an AG. GmbH policies often have no deductible at all. ### Am I still covered after I leave the company? Yes, as a former director you remain insured under the company policy as long as it continues. The risk is that the company later cancels or reduces it. A clause in your service agreement requiring continued cover helps. ### Does D&O pay if the tax office holds me liable? Possibly. Personal liability for company taxes under § 69 Fiscal Code can be a covered loss if there was no knowing breach. Many wordings address this expressly, older ones do not. ### What does D&O cost for a small GmbH? Healthy small companies can buy simplified tariffs whose premium depends on turnover and limit. Negative equity, losses or financial services activities raise the price considerably or lead to a decline. We calculate a figure from your accounts. ### Why arrange D&O through a broker? Because the differences are in a few clauses that only matter when a claim arrives, and the proposal form must be accurate. We check insolvency, defence costs and reporting period clauses and explain the German wording in English. ## Legal basis and sources - [Limited Companies Act (GmbHG), director liability](https://www.gesetze-im-internet.de/gmbhg/) - [Insurance Contract Act (VVG, German)](https://www.gesetze-im-internet.de/vvg_2008/) - [BaFin company database (licensed insurers)](https://portal.mvp.bafin.de/database/InstInfo/) ## Request quotes We obtain quotes and come back with a comparison. Free of charge and without obligation: the insurer pays our commission. You can write in English. https://www.nammert.com/en/insurance-broker-directors-and-officers.php#anfrage --- NAMMERT Assekuradeur GmbH, insurance broker licensed under section 34d(1) of the German Trade Regulation Act, broker register no. D-C08Q-TOSD4-37. For boat and yacht insurance we act as underwriting agency, not as broker. NAMMERT Assekuradeur GmbH, Karl-Marx-Straße 4, 15711 Königs Wusterhausen, +49 3375 29 12 77, info@nammert.com. Wikidata: Q141141479.