What is it?

It can go very quickly: you drive your bike through a red light, a car has to swerve and drives against a wall. The car is completely destroyed and the wall is also damaged. Now you not only have to pay the fine for the red light, but the driver and the homeowner can demand compensation from you.

In Germany, everyone is liable for the damages caused to others, regardless of whether it is a deliberate act or not. You are liable with your entire private assets until the damage has been compensated.

It’s not just about property damage, like accidentally knocking over your neighbour’s new TV. You are also liable for financial losses (e.g. if the damaged person loses business because of you) and personal injury (e.g. if the injured person requires medical attention).

From these and other situations, private liability insurance (also called third-party liability insurance or PHV) was created. They cover the damage you are liable for and more.

What are the benefits?

A PHV insures personal injury, damages to property as well as financial damages that you and your family are liable for under German law. As the name suggests, only your private life (and vacation) are covered.

In particular, the insurer has three main duties:

• To check whether you are liable for the damage.
• To defend you against unjustified claims.
• To pay for justified claims.

Especially important for PHVs is the coverage or insurance sum. This is the amount of money the insurer ultimately pays. If the damage is higher than the coverage, you have to pay the rest.

PHVs apply both in Germany and in contractually stipulated foreign countries.

Who is it for?

The universal recommendations are unusually clear here: everyone.

This is mainly due to the legal situation described above, you have to pay for all damages you and your family is liable for and have to do so with your entire private assets.

Additionally, PHVs are an established insurance product with great competitive pressure, so prices are low and benefits standardized. Simple but good plans usually start at around 50€ / year.

It is particularly important that the insurance sum is sufficiently high and new benefits updated regularly. Additionally, a “bad debt” condition (e.g. if someone has caused damages to you, but the person has no assets) should be included in a good and modern PHV.