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Summary: under the German Civil Code (§ 823 BGB), anyone who causes damage to another is liable with all of his or her assets. Personal liability insurance (Privathaftpflichtversicherung) covers this damage. It is not mandatory, but it is generally recommended and in many rental contracts it is practically expected.
What does it cover?
Damage to other people and their property; for example breaking a neighbour’s window, damaging someone else’s bicycle, or water damage caused by your mistake. Many policies also cover damage to a rented property (Mietsachschäden), damage caused by children and even a lost key under certain conditions.
What is not covered?
Damage to your own belongings, intentional damage, and driving a car (for a car, a separate compulsory motor liability insurance, Kfz-Haftpflicht, is required).
Tips when choosing
Choose a high coverage amount (Deckungssumme); usually at least several million euros for personal injury and financial damage. Check that the family (spouse and children) is covered under the same contract, how e-bikes and pets are treated, and whether there is a deductible (Selbstbeteiligung). The annual cost of a basic policy usually ranges from a few tens of euros to about one hundred euros.
Other insurance
Health insurance and long-term care insurance are mandatory. Household contents insurance (Hausrat), legal expenses insurance (Rechtsschutz) and disability insurance (Berufsunfähigkeit) are optional. For comparison, get help from an independent insurance advisor or consumer centres.
Frequently asked questions
What if the debt becomes very high?
Without insurance, your assets and income can be tied up for years.
What about students?
Until the age at which they are studying they are usually covered under their parents’ insurance.
Sources: verbraucherzentrale.de. This article is general guidance and is not legal or tax advice; rules and amounts change, so check with the official authority before acting.
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