Car Insurance in Germany: Who Pays When the Workshop Overcharges?

Introduction

If you own a car in Germany and hold a comprehensive car insurance policy — known as Kaskoversicherung — a recent ruling from the country's highest civil court affects you directly. The Bundesgerichtshof (Federal Court of Justice) has decided that if a repair workshop bills your insurer more than the actual cost of a repair, your insurance company does not have to cover the excess. The financial gap falls on you, the policyholder. For expats who may already be navigating unfamiliar insurance systems, understanding this ruling is important before your next trip to the mechanic.

What the Court Actually Decided

The Bundesgerichtshof ruled that Kaskoversicherung holders carry what is legally termed the "Werkstattrisiko" — the workshop risk. In plain terms: if your repair shop inflates its invoice, your insurer can refuse to pay the portion it considers unjustified. The insurer's obligation is to cover the reasonable and necessary cost of the repair, not whatever figure appears on the workshop's bill.

This matters because, in practice, many drivers simply hand their car over to a workshop and trust that the insurance will sort out the bill. Under this ruling, that assumption no longer holds. If the workshop and your insurer disagree on what the repair should cost, the financial shortfall is your problem to resolve — not the insurer's.

What Is Kaskoversicherung?

For those newer to Germany, car insurance here comes in several tiers. The mandatory minimum is third-party liability insurance (Haftpflichtversicherung), which covers damage you cause to others. Kaskoversicherung is optional and comes in two forms:

• Teilkasko (partial comprehensive): covers specific risks such as theft, fire, storm damage and broken glass.
• Vollkasko (full comprehensive): covers everything in Teilkasko, plus damage to your own vehicle — including damage caused by your own fault.

The Bundesgerichtshof ruling applies to holders of Kaskoversicherung (either form) when making a claim for vehicle repairs.

How This Affects Expats in Practice

Many expats choose a Vollkasko policy — especially when leasing a car or driving a newer vehicle — because it offers the broadest protection. This ruling introduces an important caveat to that sense of security.

Here is what you should keep in mind:

1. Your insurer can challenge repair bills. If the workshop charges more than the insurer deems reasonable, the insurer may pay only the amount it considers appropriate. You would then owe the workshop the difference.

2. Choose your workshop carefully. Some insurers have partnerships with certified workshops whose pricing they already accept. Using a workshop outside this network can increase the risk of a billing dispute.

3. Ask for a cost estimate upfront. Before authorising major repair work, request a written estimate (Kostenvoranschlag) and, if possible, check with your insurer whether the estimated amount is likely to be covered.

4. Keep documentation. Retain all invoices, estimates and correspondence with both the workshop and your insurer. If a dispute arises, written evidence is essential.

Frequently Asked Questions

Does this ruling mean my insurer can reject the entire repair bill?

Not necessarily. The insurer remains obligated to pay the reasonable and necessary cost of the repair. The ruling specifically addresses situations where a workshop charges more than necessary — in those cases, the excess falls on the policyholder, not the insurer.

What if I disagree with my insurer's assessment of what is 'reasonable'?

If you believe your insurer is unfairly reducing the payment, you can dispute the decision. Germany has an independent insurance ombudsman service (Versicherungsombudsmann) that handles consumer complaints against insurers free of charge. You may also wish to consult a lawyer specialising in insurance law. Always start by filing a formal written objection (Widerspruch) with your insurer.

Does this apply to third-party claims as well?

The ruling concerns Kaskoversicherung claims, which involve damage to your own vehicle. Third-party liability (Haftpflicht) claims — where someone else's insurer pays for damage you caused — operate under different rules and are not directly addressed by this decision.

Conclusion and Next Steps

This Bundesgerichtshof ruling is a useful reminder that comprehensive car insurance in Germany does not offer a blank cheque for repair costs. As an expat, taking a few simple steps can protect you from unexpected out-of-pocket expenses: use insurer-approved workshops where possible, always request a written cost estimate before repairs begin, and keep thorough records of all communications.

If you are unsure about the terms of your current policy, contact your insurance provider directly and ask them to explain your coverage and any workshop restrictions in writing.

Source: tagesschau