Will private liability insurance go up after a claim? Your comprehensive guide
22.06.25
12
Minutes
Katrin Straub
Managing Director at nextsure
A mishap can happen quickly, and the claim has been reported to the private liability insurer. But what follows next – will your premium now inevitably increase? This article explains when a premium increase is likely and what rights you have as the policyholder.
The topic in brief and concise terms
A single liability claim does not automatically lead to an increase in premiums; general cost increases are more often the reason.
Insurers may adjust premiums or terminate the contract after several claims or if the risk assessment changes.
Both insurers and policyholders have a special right to cancel, usually within one month, after a claim or if the premium increases.
Premium increase after a claim: the facts
Many policyholders fear an immediate increase in their premium after reporting a claim. In most cases, however, a single reported claim does not automatically lead to a higher premium. Insurers calculate with a certain claims ratio per policy. An adjustment is more likely due to general cost increases, such as inflation, or if the insurance community as a whole reports more claims, which leads to higher costs for the insurer. Nevertheless, a premium adjustment by the insurer is possible in individual cases, particularly where there is a noticeable claims history. For comprehensive protection, suitable private liability insurance is essential.
When insurers adjust premiums or review contracts
Although a single claim rarely has a direct impact, there are situations in which insurers react. If claims accumulate over a short period, this can lead to a reassessment of your risk. Insurers are commercial enterprises and must calculate their risk. For example, if you report three claims within twelve months, your insurer may review your policy more closely. In such cases, the insurer may propose a premium increase, offer a higher excess or exclude certain risks. In extreme cases, the insurer may also terminate the policy. It is therefore advisable to keep the question what do you need liability insurance for in mind at all times and to appreciate the insurance cover.
The following scenarios may prompt a reaction from the insurer:
Several reported claims within a short period (e.g. two to three claims in one to two years).
A particularly expensive claim that exceeds standard calculations.
Claims indicating gross negligence (although gross negligence is often covered, a frequency of such claims can be problematic).
A general adjustment to the insurer's tariff structure due to increased overall costs.
These factors can lead to your insurer seeking a conversation with you in order to make changes to the policy.
Special right of cancellation: Your rights as a policyholder
After a settled claim, both you and your insurer have a special right to terminate the contract. This right applies regardless of whether the insurer has paid the claim or rejected the benefit. The deadline for such extraordinary termination is usually one month after the completion of negotiations on compensation or after notification of the decision on the claim. You also have a special right to terminate the contract if your insurer announces a premium increase without any improvement in benefits. Here too, the usual deadline is one month after receipt of the notification. Before you cancel, you should find out about the costs of liability insurance with other providers.
Strategies for dealing with liability claims
Not every minor loss necessarily has to be reported to the insurer. Consider covering smaller losses yourself up to a certain amount to keep your claims history favourable. This can minimise the risk of the insurer cancelling your policy or making an unwelcome adjustment to the contract. If the insurer cancels your policy, it can be more difficult to obtain a new contract on good terms, as you must state this when applying. A tip: in the event of a threat of cancellation, ask your insurer whether they will withdraw the cancellation if you cancel yourself. This can make it easier to find a new policy. Also remember how to report a claim to the insurer correctly.
Recommended actions after a loss:
Document the loss carefully (photos, witnesses, circumstances).
Report the loss to your insurer promptly, ideally within a week.
For smaller losses, check whether handling it yourself would make more sense.
Find out about your special right to terminate, should the insurer increase the premium or after claim settlement.
Look for a new insurer in good time before cancelling an existing contract to avoid gaps in cover.
These steps will help you manage the situation after a loss as effectively as possible.
Expert-level depth: Legal foundations and clauses
The Insurance Contract Act (VVG) regulates the rights and obligations of insurers and policyholders. In relation to cancellation after an insured event, Section 40 of the VVG is relevant. This section gives both contracting parties the right to cancel the contract after the insured event has occurred. The notice period is one month. Our expert tip: Pay attention to clauses on premium adjustments in your policy terms. Usually, there are provisions that allow the insurer to adjust premiums due to changes in claims experience, often reviewed by an independent trustee. It is also important to know when liability insurance applies, to avoid misunderstandings.
Some insurers offer plans with a so-called better terms guarantee. This means that if the insurer improves the terms of its plan, these changes automatically also apply to your existing contract. This can be relevant after a claim if you are considering switching. Ask your insurer whether your contract includes such a clause or whether it is possible to switch to a more up-to-date plan with better conditions before considering cancellation. The question of whether personal liability insurance is tax-deductible can also be a factor when looking at your overall insurance costs.
nextsure: Your partner for optimal insurance cover
The concern that private liability insurance becomes more expensive in the event of a claim is understandable. As explained, however, this is not usually the case, but it cannot be ruled out. Transparent communication with your insurer and knowing your rights are crucial. At nextsure, we rely on clear terms and a fair partnership. We help you find the right cover for your individual needs, even when it comes to specific risks, such as cover for children in private liability insurance or cover for liability claims within the family. Our aim is to provide you with long-term peace of mind.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides up-to-date statistics on the development of general liability insurance business in Germany.
Die Versicherer (GDV) provide a comprehensive brochure on liability insurance.
Verbraucherzentrale provides important information on why personal liability insurance is an absolute must for everyone.
Gesetze im Internet (Federal Ministry of Justice) provides Section 823 of the German Civil Code (BGB) on liability for damages.
Gesetze im Internet (Federal Ministry of Justice) provides Section 280 of the German Civil Code (BGB) on liability for damages in the event of a breach of duty.
Sozialpolitik Aktuell (University of Duisburg-Essen) provides comprehensive statistics on the German insurance industry in the form of a pocketbook.
FAQ
Does my private liability insurance premium increase after every claim?
No, not after every claim. An increase in contributions due to a single claim is unusual. More common are general tariff adjustments due to inflation or the insurer’s higher overall claims costs.
What rights do I have if my insurer raises the premium?
If your insurer increases the premium without adjusting the benefits, you will usually have a special right to terminate. You generally need to exercise this within one month of receiving the notice.
Can my insurer cancel my policy after a claim?
Yes, your insurer has a special right to cancel after settling a claim (regardless of whether payment was made or not). This applies in particular if you report several claims within a short period of time.
Should I pay for minor liability claims myself?
It may make sense to pay for very small claims yourself in order to avoid a build-up of claims notifications. This can have a positive effect on your contractual relationship with the insurer and reduce the risk of cancellation or an increase in premiums.
How long do I have to report a claim?
It is advisable to report damage as quickly as possible, ideally on the same day. Legally, there is often no fixed deadline, but a late report without a valid reason can lead to benefit reductions. Reporting within a week is considered advisable.
What can I do if my insurer has cancelled my policy?
If your insurer has cancelled your policy, you should look for a new insurer immediately. Sometimes it is helpful to ask the former insurer to withdraw the cancellation if you are the one who cancels. This can make it easier to find a new provider, as you must state in applications who cancelled the policy.
