Standard commercial general liability policies

Bodily injury

What constitutes bodily injury under a standard CGL policy?

According to section 102 of the VVG, standard CGL policies cover the liability risks of the insured companies and certain insured persons in an employment relationship with the companies. CGL policies cover bodily injury, property damage or financial loss resulting therefrom.

Personal injury (or bodily injury) includes actual bodily injury, as well as health impairment in general and death. Injury to an unborn child is included. Health impairment can consist of physical or psychological damage. Coverage also entails financial losses resulting from personal injury (eg, loss of income and medical expenses).

Property damage

What constitutes property damage under a standard CGL policy?

Compensation for property damage is given if an object is destroyed or damaged. Property is damaged if the substance of the object is affected and thereby the object is impaired and its usability is revoked or changed without the substance of the object having to be impacted as such.


What constitutes an occurrence under a standard CGL policy?

The trigger is usually based on the loss occurrence principle. Accordingly, an occurrence is when an event directly causes an injury or damage to a third party.

How is the number of covered occurrences determined?

German statutory insurance law does not provide for specific rules regarding the determination of the number of covered occurrences. This is left to the relevant terms and conditions of individual agreements and the insurance contract. The model terms and conditions for CGL policies as provided by the German Insurance Association (GDV) provide that several insured events are deemed to be one insured event occurring at the time of the first of these insured events if they are based on: the exact same cause; similar causes with an internal connection, in particular one that is material and temporal; or the delivery of goods with the same defects.


What event or events trigger insurance coverage?

German insurance law does not provide for a single trigger for insurance coverage in standard CGL policies, which leaves this issue subject to individual insurance contract agreements. The insured event can be defined as the breach of duty committed (typical for professional indemnity policies) or the point in time when a claim is made (typical for D&O policies). Typical standard liability insurance policies are based on the loss occurrence principle. The event that directly causes the damage usually triggers the insurance coverage in standard CGL policies.

How is insurance coverage allocated across multiple insurance policies?

Taking out multiple insurance policies is not prohibited and the policyholder may even have an interest in it because the quality or the extent of the cover is improved. In particular, with regard to standard consumer insurance, the policyholder cannot avoid overlapping coverage owing to a lack of influence on the insurer's product design. However, to safeguard that only the insured interest is covered in the event of an insured event and that no overcompensation is paid, section 78 of the VVG provides rules for the scenario of multiple insurers.

According to this provision, multiple insurance policies are taken out in cases involving several insurers when an interest is insured against the same risk and the sums insured together exceed the insured value or if, for other reasons, the sum of the indemnities that would be payable by each insurer without the existence of the other insurance exceeds the total loss. In these cases, the insurers are jointly and severally liable in such a way that each insurer is obliged to pay the amount it is obliged to pay under the contract. However, the policyholder cannot claim more than the amount of the loss in total. Internally, the insurers must pay each other pro rata the amount that relates to the amounts that they are obligated to compensate the policyholder under the respective contracts. If the policyholder has taken out multiple insurance policies with the intention of obtaining an unlawful pecuniary advantage, any contract concluded with this intention is null and void. The insurers, however, are entitled to receive the premium until they become aware of the circumstances.

Most insurance policies contain other insurance clauses, typically establishing only subsidiary coverage for the insurance policy containing the clause. So-called ‘simple’ subsidiarity clauses usually call for a payment obligation insofar as coverage is not available under another contract. ‘Qualified’ subsidiarity clauses, however, exclude coverage if another insurance contract covering the same risk is already in place. Whether coverage is in fact available under the other contract is irrelevant under these qualified clauses. If only qualified subsidiarity clauses are in place, the multiple insurers do not have to provide coverage. If qualified and simple other insurance clauses conflict, the qualified clauses take precedence and only those other insurers are obligated to provide coverage. If simple other insurance clauses conflict they are generally deemed to be non-existent and the rules contained in section 78 of the VVG will apply.

Law stated date

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3 January 2020