Bad debt coverage in private liability is important!
Private liability insurance usually protects consumers from claims for damages that third parties have against them. But what happens if you become the victim yourself and the victim does not have his own liability insurance.
Then a clause called bad debt coverage comes into play. This important clause is by no means anchored in every policy. In the event of a claim, it protects consumers from those in our society who do not have their own personal liability.
But what exactly is meant by bad debt coverage (short: bad debt coverage)? And what services in relation to this coverage must consumers pay close attention to when taking out liability insurance? In this article, we go into more detail on these and other questions and give interesting tips on all aspects of bad debt coverage in private liability.
Why is bad debt coverage necessary at all?
Around a quarter of households in Germany do not have private liability. In return, this means that the risk of being harmed by someone who is not covered by liability insurance can be very high.
If a consumer is now harmed by such a person and he cannot pay the damage out of his own pocket, he often remains at the expense. With minor damage to property, this may not be tragic. But what does it look like when, for example, serious personal injuries are caused, which could potentially run into the millions.
- A cyclist seriously injures a pedestrian due to careless behavior. As a result, the pedestrian becomes unable to work and can no longer carry out his work. This personal injury can potentially go into the millions with claims for pain and suffering and pension payments. Since the cyclist does not have private liability insurance, the injured party remains at full expense.
This example shows how important it is to cover bad debts in liability insurance . If the injured consumer had integrated this component into his policy, his insurance would have to cover this damage.
Differences in performance of bad debt coverage
In practice, however, there are some differences in default coverage. For example, there are providers who only offer adequate protection from a certain minimum loss level. But where exactly are the policy differences? The following points should be noted:
- Default coverage itself: Unfortunately, there are still many tariffs that do not cover this risk. However, the tariffs that include default coverage can be filtered using our comparison calculator.
- Minimum damage amount: When selecting the tariff, it should be noted that this provides for a moderate minimum damage amount. As a rule, this is $ 2,500 per claim. Very good tariffs completely dispense with the minimum damage amount and pay from the first USD.
- Limitation of the sum insured: Especially very low tariffs do not pay up to the agreed sum insured, but limit the bad debt coverage to, for example, $ 1,000,000 instead of $ 5 million per claim.
- Exclusion from deliberate action: Consumers never receive a personal liability benefit if the damage was caused intentionally. However, there are providers who integrate tariff protection in their tariffs for deliberate action and also for crimes within the framework of bad debt coverage. In this case, the consumer would also receive benefits if he became a victim of a crime. Example: someone is beaten for no reason.
Default coverage is subject to certain conditions
Consumers must also note that bad debt coverage only applies under certain conditions. If the above-mentioned conditions, such as the minimum loss amount, are met, the insurance conditions also stipulate that the damage to the person causing the damage is only paid if:
- there is a legally enforceable title against the injuring party, or
- there is a notarized acknowledgment of debt in front of a notary and any meaningful execution has been unsuccessful.
In practice, this means that consumers have to take legal action against the polluter in order to receive any private liability insurance benefits. Legal protection insurance can therefore make sense.
Because this would in advance possibly pay for the costs of the legal dispute. If you do not have legal protection insurance, you can also choose private liability that offers legal protection within the framework of bad debt coverage. Our comparison calculator can easily determine which tariffs offer this extended legal protection.
Legal protection in the event of bad debts
If you do not have legal expenses insurance, you should select a liability tariff that offers legal protection for default coverage in addition to bad debt coverage. Because the tariffs only pay if all legal remedies have been exhausted to receive the compensation.
Service exclusions for default coverage
The bad debt coverage also does not apply if the insured person is entitled to benefits from a social insurance provider or the benefit can be claimed from another private insurance such as household, residential or legal expenses insurance. Nevertheless, there are sufficient reasons for the clause of bad debt coverage in private liability.
Compare tariffs with bad debt coverage
Since this clause is so important in the contract terms, this point has been integrated into our free comparison calculator. This gives consumers the opportunity to filter all tariffs that have anchored this component in their contracts.
It is only important that you pay attention to the criteria mentioned above, such as the minimum amount of damage. These points can give you a first overview of the performance comparison that is available in the computer. In addition, one should take a look at the insurance conditions of the individual providers.