What general rules, requirements and procedures govern the filing of insurance claims?

The same rules that apply to all commercial matters apply to insurance matters.

Time bar

What is the time bar for filing claims?

Claims arising from an insurance contract are subject to a limitation period of three years. The period is calculated in accordance with the Civil Code. If a claim from the insurance contract has been filed with the insurer, the limitation period is suspended until the insurer's decision reaches the claimant in written form.

Denial of claim

On what grounds can the (re)insurer deny coverage?

The grounds for coverage denial vary from case to case and can generally be of a legal, contractual or factual nature. In contractual terms, the breach of an obligation by the insured or increased risks are common grounds for denying coverage. From a factual point of view:

  • the risk that occurs may not be insured;
  • exclusions may prevent payment (especially in property matters); and
  • the damaged items may not be insured in principle or at the place of loss, or the place of loss may not have been agreed as the insured place.

What rules and procedures govern the insured’s challenge of the denial of a claim?

No specific rules govern these claims in Germany. In particular, the concept of bad-faith litigation (which is common in the United States) is unknown in Germany. However, following a coverage denial, the insured will be freed of any obligations under the policy to cooperate with the insurer and may also claim for additional damages.

Third-party actions

On what grounds can a third party file a claim directly with the (re)insurer?

As a general rule, only an insured has a claim for coverage against an insurer. However, there are exceptions, particularly for liability insurance. For compulsory liability insurance, Section 115(1) of the Insurance Contract Act entitles third parties to bring a direct action against an insurer:

  • in the case of compulsory liability insurance (eg, third-party motor vehicle insurance);
  • if insolvency proceedings have been opened in respect of the assets of the policyholder; or
  • if the policyholder’s whereabouts are unknown.

Moreover, Section 108(2) of the Insurance Contract Act states that liability insurers cannot rule, on the basis of general insurance terms and conditions, that an insured assigns its claim for indemnification to a third party bringing a damage claim. A prohibition of assignment may thus be agreed only individually or in the case of a large risk. In the latter case, the prohibition must withstand scrutiny of general insurance terms and conditions according to the Civil Code. If the assignment is valid, the third party will be entitled to demand indemnification directly from the insurer.

In terms of reinsurance, policyholders generally do not have a direct claim against a reinsurer unless, for example, a cut-through clause is agreed.


Punitive damages

Are punitive damages insurable?

German law does not recognise punitive damages. The Federal Supreme Court has refused the recognition of US judgments on punitive damages for a violation of German public policy.


What regime governs (re)insurers’ subrogation rights?

Upon indemnification by the insurer, if the insured is entitled to claim damages from a third party regarding the insured loss, this claim will be assigned by law to the insurer. The insured is required to safeguard its claim for damages or a right serving to safeguard this claim in accordance with the applicable form and time requirements and must assist the insurer whenever necessary in asserting such claim or right. If the policyholder intentionally breaches this obligation, it will not be obligated to indemnify the insured insofar as the insurer cannot, as a result, claim recourse from the third party. In the event of a grossly negligent breach, the insurer will be entitled to reduce indemnification according to the severity of the policyholder’s fault.