Germany: BGH ruling clarifies workshop risk and insurance liability

A ruling by the German Federal Court of Justice (BGH) has clarified the concept of ‘workshop risk’ in motor vehicle insurance. Under comprehensive insurance (Kaskoversicherung), the policyholder bears the risk if a workshop bills for unnecessary or overpriced services; the insurer is not obligated to cover such costs. Experts advise policyholders to contact their insurer before repairs to confirm covered expenses.

In cases of third-party liability (Haftpflichtschaden), the rules differ: the perpetrator's insurer generally bears the workshop risk and is responsible for full compensation. However, complications can arise if repairs include damages unrelated to the accident.

For accidents involving uninsured drivers, Germany utilizes a safety mechanism through the ‘Verkehrsopferhilfe’ to assist victims. While the driver remains personally liable for damages even without insurance, the lack of funds often necessitates this institutional support, which also covers accidents involving uninsured vehicles within the EU.