Bundesgerichtshof rules on workshop risk in vehicle insurance

The German Federal Court of Justice (BGH) has ruled on the so-called ‘workshop risk’ in motor vehicle casco insurance. The court clarified that the risk of inflated or unnecessary repair bills remains with the policyholder.

In a case involving a driver from Heilbronn, an insurer refused to pay the full amount of a repair bill after an expert determined certain items were excessive or unnecessary. The BGH ruled that standard insurance terms covering ‘costs necessary for repair’ only encompass expenses that a reasonably prudent person would incur for professional restoration. Consequently, insurers are not required to cover objectively unnecessary work, unperformed measures, or inflated material and labor costs, provided the insurer did not mandate a specific workshop.

This decision establishes a clear legal precedent for how insurance coverage is interpreted regarding repair costs in Germany.