Does private liability insurance increase after a claim? Your comprehensive guide
22 Jun 2025
6
Minutes
Katrin Straub
CEO at nextsure
An accident can happen quickly, and the damage is reported to the personal liability insurance. But what happens next – will your premium inevitably increase now? This article explains when a premium increase is likely and what rights you have as a policyholder.
The topic in brief and concise terms
A single liability claim does not automatically lead to a contribution increase; general cost increases are more often the reason.
Insurers can adjust premiums or terminate the contract after multiple claims or a changed risk assessment.
Both insurers and policyholders have a special right of termination, usually within one month, following a claim or an increase in premiums.
Increase in Premiums after Claims: The Facts
Many policyholders fear an immediate premium increase in their private liability insurance after reporting a claim. Generally, however, a single reported claim does not automatically lead to a higher premium. Insurers calculate with a certain loss ratio per contract. Adjustments are more likely due to general cost increases, such as inflation, or if the insurance community reports more claims overall, leading to higher expenses for the insurer. Nevertheless, a premium adjustment by the insurer is possible in individual cases, especially if there is a noticeable loss pattern. For comprehensive protection, an appropriate private liability insurance is essential.
When insurers adjust premiums or review contracts
Although a single claim rarely has direct impacts, there are situations where insurers respond. If claims accumulate within a short period, this can lead to a reassessment of your risk. Insurers are businesses and need to calculate their risk. For instance, if you report three claims in twelve months, your insurer may examine your contract more closely. In such cases, the insurer may propose a premium increase, offer a higher deductible, or exclude certain risks. In extreme cases, the insurer may also terminate the contract. Therefore, it is wise to always keep the question why do you need liability insurance in mind and appreciate the insurance coverage.
The following scenarios can lead to a reaction from the insurer:
Several claims reported in a short period (e.g., two to three claims in one to two years).
A particularly expensive claim that exceeds usual calculations.
Claims indicating gross negligence (although gross negligence is often covered, a frequent occurrence can be problematic).
A general adjustment of the insurer's tariff structure due to increased overall costs.
These factors may lead your insurer to seek a discussion with you to make contract adjustments.
Special cancellation rights: Your rights as a policyholder
After a regulated claim event, both you and your insurer have a special right of termination. This right exists regardless of whether the insurer has paid the claim or declined the service. The period for such extraordinary termination is usually one month after the conclusion of negotiations on compensation or after notification of the service decision. Similarly, you have a special right of termination if your insurer announces a premium increase without an improvement in benefits. Here too, the deadline is usually one month after receipt of the notification. Before you terminate, you should find out about the costs of liability insurance from other providers.
Strategies for Handling Liability Claims
Not every minor damage necessarily needs to be reported to the insurance company. Consider handling smaller damages up to a certain amount yourself to maintain a positive claims history. This can minimize the risk of cancellation by the insurer or an unwelcome contract adjustment. If the insurer cancels your policy, it may become more difficult to obtain a new contract on favourable terms, as you will need to disclose this when applying. A tip: If you receive a cancellation notice, ask your insurer if they will withdraw it if you choose to cancel yourself. This can make finding a new policy easier. Also, remember how to correctly report a claim to your insurance company.
Recommended actions after an incident:
Document the damage carefully (photos, witnesses, circumstances).
Report the damage to your insurance promptly, ideally within a week.
For smaller damages, check if self-regulation is more advisable.
Learn about your special right of termination if the insurer increases the premium or after claims settlement.
Search for a new insurance policy in good time before cancelling an existing contract to avoid coverage gaps.
These steps will help you manage the situation optimally after a claim.
Expert Depth: Legal Basis and Clauses
The Insurance Contract Act (VVG) governs the rights and obligations of insurers and policyholders. With regard to termination following an insurance claim, § 40 VVG is relevant. This paragraph grants both contracting parties the right to terminate the contract after the occurrence of the insurance event. The notice period is one month. Our expert tip: Pay attention to clauses on premium adjustments in your insurance terms and conditions. There are usually provisions that allow the insurer to adjust the premiums due to changed claims experience, often reviewed by an independent trustee. It is also important to know when liability insurance applies, to avoid misunderstandings.
Some insurers offer tariffs with a so-called improvement guarantee. This means that if the insurer improves the conditions of their tariff, these automatically apply to your existing contract. This can be relevant after a claim if you are considering switching. Ask your insurer whether your contract contains such a clause or if a switch to a current tariff with better terms is possible before contemplating cancellation. The question of whether private liability insurance is tax-deductible can also be an aspect in the overall consideration of your insurance costs.
nextsure: Your partner for optimal insurance coverage
The concern that private liability insurance will become more expensive after a claim is understandable. As outlined, this is not usually the case, but it is not ruled out. Transparent communication with your insurer and knowing your rights are crucial. At nextsure, we focus on clear conditions and a fair partnership. We help you find the right protection for your individual needs, even when it comes to special risks such as insurance for children in liability or coverage for liability claims within the family. Our goal is to provide you with long-term security.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimisation suggestions.
More useful links
Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides current statistics on the development of the general liability insurance business in Germany.
Die Versicherer (GDV) offer a comprehensive brochure on liability insurance.
Verbraucherzentrale provides important information on why private liability insurance is an absolute must for everyone.
Gesetze im Internet (Bundesministerium der Justiz) provides paragraph 823 of the German Civil Code (BGB) on liability for damages.
Gesetze im Internet (Bundesministerium der Justiz) provides paragraph 280 of the German Civil Code (BGB) on compensation for breach of duty.
Sozialpolitik Aktuell (Universität Duisburg-Essen) provides comprehensive statistics on the German insurance industry in the form of a handbook.
FAQ
Does the premium of my private liability insurance increase after each claim?
No, not after every claim. A premium increase due to a single claim is uncommon. More frequently, there are general rate adjustments due to inflation or increased overall claims expenses of the insurer.
What rights do I have if my insurer increases the premium?
If your insurer increases the premium without adjusting the benefits, you generally have a special right to terminate the contract. You usually need to exercise this right within one month of receiving the notification.
Can my insurer cancel my policy after a claim?
Yes, your insurer has a special right of termination after a claim has been settled (regardless of whether a payment was made or not). This is particularly true if you report multiple claims in a short period of time.
Should I pay for minor liability claims myself?
It may be advisable to pay for very minor damages yourself to avoid a buildup of claims. This can positively affect your contractual relationship with the insurer and reduce the risk of cancellation or premium increases.
How long do I have to report a damage?
It is advisable to report damages as soon as possible, ideally on the same day. Legally, there is often no fixed deadline, but a delayed report without a valid reason can lead to reduced benefits. Reporting within a week is considered advisable.
What can I do if my insurer has terminated my policy?
If your insurance company has terminated the contract, you should promptly look for a new insurance provider. Sometimes, it is helpful to ask the previous insurer to withdraw the termination if you initiated it yourself. This can make the search for a new provider easier, as you must state who terminated the contract when applying.
