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German court ruling on casco insurance workshop risk

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What changed

2026-09-18 16:04 UTC → 2026-10-04 18:17 UTC · added ~~removed~~

The German Federal Court of Justice (BGH) has issued a ruling (Az. IV ZR 235/25) clarifying that the ‘workshop risk’ (Werkstattrisiko) in motor vehicle casco insurance remains the responsibility of the policyholder. The court established that insurers are only obligated to cover costs that are strictly and objectively necessary for a repair according to the insurance contract. This decision distinguishes casco insurance from liability insurance, where the responsible party or their insurer typically bears the cost of excessive or incorrect repair invoices. Under the BGH ruling, Consequently, insurers are not liable for inflated material costs, excessive labor times, or inefficient workshop practices, provided the insurer did not mandate a specific repair facility. This decision distinguishes casco insurance from third-party liability insurance (Haftpflichtschaden). In liability cases, the perpetrator or their insurer typically bears the risk of excessive or incorrect repair invoices. However, complications may arise in liability claims if repairs include damages unrelated to the specific accident. Following the ruling, the Automobilclub von Deutschland (AvD) ~~has advised~~ and other experts advise drivers to mitigate financial risks by obtaining cost estimates and securing insurance approval before authorizing repair work. This precaution is recommended for all casco claims, including those involving storm damage, vandalism, or animal collisions. In scenarios involving accidents with uninsured drivers, Germany utilizes the ‘Verkehrsopferhilfe’ to assist victims, providing institutional support for damages caused by uninsured vehicles, including those within the EU.

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