Is liability insurance worth the cost? [2025 Data]

One morning you’re riding your bike on your way to work when you collide with a pedestrian. They’re taken to the hospital and it’s discovered they’ve suffered a broken leg and their bag full of photography equipment is destroyed.

As a result of the accident, they can’t work for 8 weeks and will need to replace all of their equipment. Under German law, you’re liable to cover their lost earnings and any damage to their property. You’re looking at thousands of euros in replacement costs and thousands more in lost earnings.

Can you afford to cover them out of pocket?

If you have liability insurance, you won’t have to. However, it’s hard to know how common accidents like this are and if you’ll find yourself in one.

Here’s some information to help you decide if liability insurance is worth it for your lifestyle.

How popular is liability insurance in Germany?

Let’s face it, everyone experiences moments of inattention occasionally and mistakes happen. Sometimes, those mistakes lead to someone or their property getting damaged. Under German law, anyone who causes damage to another person or their property is liable for compensation.

Liability insurance is there to cover you financially from damages, injuries, and financial loss caused to another third party, along with any associated legal expenses

While it isn’t a compulsory form of insurance, it’s a popular form of personal insurance in Germany. 83% of Germans have liability insurance and 79% consider it a crucial type of insurance.

To learn more about liability insurance and what it covers, check out our comprehensive guide.

What does liability insurance cost?

Liability is one of the cheaper types of German insurance available. For example, the tariff cost for a 30-year-old single, child-free person ranges from €1.04 per month for the cheapest plans up to €16.24 per month for the most expensive.

For plans that cover a partner, tariffs can cost between €2.85 and €19.09, while for families this can range from €3.27 up to €22.03. That means for the price of a cup of coffee you can get €5 million worth of coverage.

It’s worth keeping in mind that the exact cost of your tariff will depend on your individual circumstances and lifestyle, such as:

The level of coverage you’re looking for
If your plan includes a deductible
The number of people you’re looking to cover
Coverage for items like drones or side hustles

We recommend getting a personalized recommendation based on your lifestyle to ensure this is the right level of coverage for you.

What financial protection does liability insurance offer?

The main benefit of having liability insurance is financial protection from costs due to accidental damages and injuries to another person. This peace of mind comes relatively cheaply.

From €4.94 per month, you can get up to €50 million in coverage. A high-level of coverage is necessary in an accident involving another person.

For example, if you collide with another person on your bicycle and they suffer spinal damage, you might be liable for damages of more than €5.3 million. Trying to pay for these costs out of pocket is impossible for the average person.

Not every accident will lead to damages amounting to millions of euros, but that doesn’t mean they don’t pose a financial risk. According to data from our analytics team, the most common claims submitted are for damage to another’s property (83.3% of claims), key loss (16%), and injury to others (0.7%).

The average liability insurance claim amount is €569.24 and the average person will submit a claim less than 1 year (262 days) from when they start their coverage. Looking at the same data shows that they will submit more than one claim over the course of a policy.

So what does this mean for you? Let’s say you accidentally break a friend’s Macbook Pro and it can’t be repaired. The cost of replacing it will be at least €1900. If you’re a single person paying €4.94 per month for a tariff, the claim amount equates to more than 20 years of premiums.

That means your coverage for accidental damages will almost always exceed the amount of money you’ll pay in tariffs.

What are the alternatives to liability insurance?

One of the most common objections to getting liability insurance is the cost of a tariff. While a relatively cheap form of insurance, the costs of a tariff add up over time. This can end up being money that’s not saved or invested elsewhere (especially if you don’t make up any claims).

It can be tempting to think the risks of an accident are low enough that you’ll be able to cover damages out of pocket. Here are three alternatives to liability insurance and where they might work compared to a policy:

Savings account: Using money from a savings account for emergency expenses is one alternative to liability insurance and has the advantage of not having to pay a tariff. This approach works best for small claims, usually a few hundred euros. Larger claims could take a considerable bite out of your savings or deplete them entirely.
Credit card: Using a credit card to pay for damages is another alternative to liability insurance. This approach can work for small claims amounting to a few hundred to a few thousand euros, depending on your credit limit. However, with this approach your total costs are even higher due to interest rates that reach up to 20%.
Financing: A last alternative is taking out a personal loan from a bank or lending institution to pay for larger damages. Unlike a personal credit card or savings, you can access larger amounts of money. This can work for larger claims but you’ll end up repaying considerably more in interest, and many people would also prefer using a large loan for a mortgage rather than paying off debt.

While there are alternatives to liability insurance, they typically work best for small claims provided you have savings or access to credit. Using them to cover larger damages out-of-pocket can put you in a worse financial position.

Conclusion

So, is liability insurance worth it? It is if you want peace of mind and financial protection for a small monthly amount.

While the average liability insurance claim amount is under €600, you’ll likely submit more than one claim in your lifetime. You’re also protected against larger damages that involve injury to another person.

If you’re ready to get liability insurance, make sure that you’re getting the right coverage and product for your individual situation.