Personal liability insurance
If you cause damage to someone else, you have to pay for it, for the rest of your life if need be. Personal liability insurance takes that on for a few euros a month. Hardly any policy is so important and so cheap at once.
Most European countries follow a simple principle. If you negligently cause damage to someone else, you have to make it good, with no upper limit. A small moment of carelessness is enough.
Often it's about small things, like a friend's phone slipping out of your hand. Sometimes it's about sums that change a life. Paul cycles through a red light. A driver swerves and is badly injured. Treatment, lost earnings and a lifelong pension can quickly cost several hundred thousand euros, in severe cases millions. Without insurance Paul pays that from his income for decades.
What liability insurance covers
It pays for damage you cause to others: to people, to property and the financial losses that follow. It also checks whether the claim against you is justified at all. If it's excessive, the insurer fights it for you, in court if necessary.
What it doesn't cover
- Damage to your own things
- Damage you cause on purpose
- Damage with a car or motorbike, that's what motor liability insurance is for
- Damage caused by dogs and horses, which need separate pet liability cover
What to look for
The cover limit should be at least 10 million euros, and many consumer groups recommend more. The difference in premium is small. Also check that damage to rented homes is covered, such as a leak from your washing machine, and borrowed items if that matters to you.
If you live with a partner or children, one family policy is usually enough. Children are often covered until the end of their first training or degree. A policy often costs 40 to 80 euros a year for a single person, a little more for families.
In Germany unlimited liability is set out in the Civil Code, § 823. Anyone who intentionally or negligently injures another person's life, body, health or property must compensate the damage. Other European legal systems have very similar rules.
In Germany children under seven aren't liable, and in road traffic not until their tenth birthday. That sounds reassuring, but it means the injured party gets nothing if no one neglected their duty of supervision. Many policies therefore pay for damage caused by small children on request. That avoids arguments with neighbours and friends.
Personal liability insurance doesn't cover damage you cause at work. Employment law usually deals with that, and some professions have their own professional indemnity insurance. If you rent out property or run a business on the side, you need separate cover for that too.
Old policies often have low cover limits and missing features. So check once how old your policy is and what it covers. Switching is usually possible at the end of the insurance year.
Summary
- If you harm someone else, your liability has no upper limit, for life if need be.
- Liability insurance often costs just 40 to 80 euros a year and is among the most important policies.
- At least 10 million euros of cover, with damage to rented homes included.
Did you get it?
Why is personal liability insurance so important?
Because your liability for damage to others has no limit. A single serious injury can cost you money for the rest of your life.
Which damage does personal liability insurance not cover?
Damage to your own things, damage caused on purpose, damage with a car and damage caused by dogs or horses.
What cover limit makes sense?
At least 10 million euros. More costs hardly any extra premium.
Sources and further reading
- German Civil Code, § 823 (liability for damages, German). View source ↗
- German Civil Code, § 828 (liability of minors, German). View source ↗
- EIOPA, consumer protection information. View source ↗
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