Have your car damage paid out: secure maximum compensation
08.06.25
3
Minutes
Katrin Straub
Managing Director at nextsure
Not at fault in an accident? You do not necessarily have to have your car repaired. Find out how you can instead have the damage paid out to you and what you need to bear in mind.
The topic in brief and concise terms
You have the right to have vehicle damage paid out (notional settlement) without having to carry out repairs; the payout is generally made net.
An independent expert report is the basis for notional settlement in the case of major damage and protects against unjustified deductions by the insurer.
In the case of notional settlement, VAT is normally not reimbursed; in the event of a total loss, separate rules apply to compensation.
Fictitious Invoicing: Understanding the Basics
In the event of accident damage, as the injured party you have the right to have the repair costs reimbursed by the other party’s insurer. A notional settlement means that you have the compensation amount paid out to you without having to carry out any repairs. This is enshrined in Section 249 of the German Civil Code (BGB) and gives you the freedom to decide how to use the compensation sum yourself. Around one third of all accident damage is settled in this way. This option is particularly attractive if the damage is minor or if you intend to sell the vehicle anyway. The insurer then pays the amount that would have been incurred for a professional repair in a garage, although usually without VAT. Properly reporting the damage is the first step in this process. Notional settlement therefore offers a flexible alternative to traditional repair.
Quick Facts: The most important information about payouts at a glance
The decision to have a car damage claim paid out involves several key points. Here is a brief summary of the most important aspects for you:
Basis of entitlement: As the injured party, you generally have the right to request payment of the compensation amount instead of a repair.
Calculation: The payout is based on a cost estimate or an expert report.
VAT: As a rule, the compensation amount is paid net, i.e. without VAT, since there is no repair invoice showing tax separately.
Deductions: Insurers sometimes try to reduce items such as transport costs or OEM mark-ups; this is where caution is required.
Total loss: In the event of a total loss, a notional settlement of the repair costs is not possible; the replacement expense (replacement value less salvage value) is reimbursed.
Comprehensive insurance: A notional settlement is also possible for damage via your own comprehensive insurance, but it may lead to a downgrade in the no-claims bonus class.
These points form the basis for your decision and the next steps.
Practical part: How fictitious billing works in practice
Imagine another vehicle causes a dent in your three-year-old car. You do not want the damage repaired. First, you report the damage to the other party’s insurer. To calculate the amount of the damage, you will usually need an expert report, as an estimate is often only sufficient for minor damage of up to around €750. The expert determines repair costs of, for example, €1,500 net (excluding VAT) and a loss in value of €200. You inform the insurer that you want to settle on a notional basis. The insurer reviews the report and, ideally, transfers €1,700 to you. Make sure the insurer does not apply hourly labour rates from an independent garage without justification if you are entitled to a manufacturer-approved repair shop. In the case of glass damage, the process can be similar. This example shows the typical process of a notional settlement.
Calculation examples and comparison: When does the payout make sense?
Notional settlement is often worthwhile for older vehicles with a low residual value or for purely cosmetic defects. Assume your ten-year-old vehicle suffers damage assessed at €2,000 (net). The car’s market value is now only €3,000. A repair would hardly be economically sensible. You receive the €2,000 and can decide whether to carry out an inexpensive partial repair for €500 or leave the damage as is. You therefore have €1,500 at your free disposal. If you had the damage repaired for €2,000, you would have a repaired car, but no additional liquidity. A self-payment form is not needed here, as the third party’s insurer pays. The decision depends on your priorities and the condition of the vehicle.
Here is a direct comparison for clarity:
Option 1: Repair: cost €2,000, vehicle repaired, no additional liquidity.
Option 2: Notional settlement: payout €2,000, vehicle not (or more cheaply) repaired, additional liquidity of up to €2,000.
This comparison helps with your individual decision-making.
In-depth expertise: legal aspects and recent rulings
The basis of fictitious settlement is Section 249(2), sentence 1 of the German Civil Code (BGB), which establishes the injured party’s right of choice. Courts have repeatedly confirmed that the injured party is in control of the restorative process. This means that you decide how the damage is remedied. It is important to distinguish between liability claims (the other party pays) and own-damage claims (your own insurer pays). In the case of own-damage claims, the policy conditions (AKB) can restrict fictitious settlement or make it subject to conditions. Our expert tip: In liability claims, insist on reimbursement of the costs of a manufacturer-authorised specialist workshop if your vehicle is less than three years old or has a full service history. Recent rulings often strengthen the rights of injured parties against attempts to reduce compensation for transfer costs or parts mark-ups. These principles can also be relevant in the event of hail damage. Knowing these details is crucial to enforcing your claims in full.
VAT in the case of notional billing: What is reimbursed?
A common point of contention is VAT. In a notional settlement, this is usually not reimbursed, as it has not actually been incurred. You therefore receive the net amount of the repair costs. An exception may apply if you can prove that you made a replacement purchase on which VAT was incurred. Our expert tip: Do not rush into accepting a net payout if you plan to have the vehicle partially repaired later and VAT will be incurred in the process. In such cases, a subsequent reimbursement of the VAT actually paid may be possible under certain circumstances, if the repair has been demonstrably carried out. The VAT rules are complex; a careful review of the individual case is often necessary, similar to the question of when comprehensive insurance does not pay out. Correct handling of VAT is an important factor in notional settlement.
To assess the amount of your loss, you have two tools at your disposal: the cost estimate and the expert report. A workshop’s cost estimate is often sufficient only for minor damage up to a threshold of around €750 to €1,000. For higher damage, or where there is diminution in value, an independent expert report is essential. In the case of a third-party liability claim, the cost of the report must be borne by the opposing insurer (except in cases of minor damage). Our expert tip: Always choose your own independent assessor and do not accept the expert appointed by the opposing insurer. A detailed report lists all damage items, including the repair method, spare parts prices and any diminution in value, which can also be relevant in the case of a marten damage. A solid report is your strongest argument against the insurer.
The following points illustrate the difference:
Cost estimate: An estimate of repair costs, usually for damage under €1,000.
Expert report: Detailed damage analysis, determination of repair costs, diminution in value, salvage value, replacement value; necessary for more significant damage.
Preservation of evidence: A report also serves to preserve evidence of the extent of the damage.
Expert fees covered: In third-party liability claims (not minor damage), the opposing insurer pays.
Choosing the right option safeguards your claims.
Insurer reductions: How to defend yourself successfully
Insurance companies often try to make deductions in the case of fictitious settlement. Popular targets for reductions are labour rates, transport costs, parts mark-ups (OEM mark-ups) or the necessity of certain paintwork. It is often argued that repairs at a cheaper independent workshop are sufficient. You do not have to accept this if your vehicle is, for example, less than three years old or has always been serviced at a franchised dealership. Our expert tip: If deductions are made without justification, lodge a written objection and refer to the relevant court rulings or the statements in your expert report. Sometimes it helps to use a direct claims service hotline to clarify uncertainties quickly. Persistence and good arguments are often the key to success here.
Special case: total loss and comprehensive insurance
If there is an economic write-off, this means that the repair costs exceed the vehicle's replacement value by more than 30 per cent. In this case, a notional settlement of the repair costs is not possible. The insurer reimburses the replacement value minus the salvage value of the damaged vehicle. An exception is the so-called 130 per cent rule, under which repairs of up to 30 per cent above the replacement value can be carried out if the vehicle is to remain in use. When settling a comprehensive insurance claim on a notional basis (e.g. fully comprehensive damage), the terms of your insurance contract (AKB) apply. An excess may apply here, and there is often a downgrade in your no-claims discount class. Our expert tip: For comprehensive claims, check carefully whether notional settlement is worthwhile despite the downgrade and excess. Sometimes it is more sensible to bear minor comprehensive damage costs yourself so as not to jeopardise your no-claims discount, especially if own damage cover does not apply. These considerations are important for making an informed decision.
Request your individual risk analysis now: Have your insurance situation checked free of charge and receive specific suggestions for optimisation.
More useful links
The Federal Statistical Office (Destatis) provides comprehensive statistics on road traffic accidents in Germany.
The German Insurance Association (GDV) provides statistics on road traffic accidents from the German insurance industry.
The Federal Highway Research Institute (BASt) provides information on GIDAS (German In-Depth Accident Study).
The German Bar Association provides an example of claims for pain and suffering after a road traffic accident.
On Laws on the Internet you will find the German Road Traffic Act (StVG).
FAQ
Can the insurer refuse notional settlement?
In principle, as the injured party in a liability claim, you have the right to a notional settlement. The insurer cannot simply refuse this, but it will review the amount and may make deductions where appropriate. In the case of comprehensive cover claims, the options depend on your policy.
How long does the payout take in the case of fictitious settlement?
The payout period can vary, but it is often between four and six weeks after all documents have been submitted and reviewed by the insurer.
What happens if I still have the car repaired after a notional settlement?
If you have the vehicle repaired (in full or in part) after a notional settlement and VAT is incurred, you may be able to have the VAT actually paid reimbursed by the insurer at a later date, provided the repair is proven.
Do I need to involve a lawyer for a notional settlement?
Not essential, but in the case of more extensive damage, complex cases or if the insurer makes substantial deductions, a solicitor specialising in road traffic law can be very helpful in fully enforcing your claims. In the event of a non-fault third-party liability claim, the opposing insurer must cover the costs.
Can I also settle the damage on a notional basis through my comprehensive cover?
Yes, a notional settlement is also possible with your own comprehensive or partial comprehensive insurance. However, please note a possible excess and a downgrade in your no-claims discount class.
What if the insurer pays less than what’s stated in the appraisal?
If the insurer pays less, you should examine the reasons for the reduction carefully. Reductions in labour rates or material mark-ups are often disputed. Lodge a written objection and justify it, if necessary with legal assistance.
