Bad debt coverage – also called indemnity cover – is an option that you can add to your personal liability insurance. At Getsafe, it is included as standard in all tariffs.
Normally, your liability insurance will always cover you if you cause damage to others. With bad debt coverage, you extend your insurance with an option for the reverse case – a contingency cover. Anyone who injures you or damages your property must pay you compensation. The person is even legally obliged to do so. The advantage of an insurance with bad debt coverage: If someone causes you damage and is not financially able to pay the damages, your insurance will cover you. It then takes over the costs incurred and you get your money.
Liability insurance is not compulsory, which is why not everyone has bought a policy. When uninsured people cause damage to others, they have to pay out of their own pockets. But what if they are unable to pay compensation in the event of damage? What does this mean for you as the injured party? Well, although you’re entitled to compensation, you still won’t get your money – due to the financial insolvency of the person responsible.
This is exactly what bad debt coverage protects you from. If you add this option to your personal liability insurance, you are fully covered for all cases.
In order for it to apply, certain conditions must be met in the event of a claim:
- The damage must not have been caused intentionally.
- With many insurers, bad debt coverage only applies above a certain minimum amount.
- It must be a private claim – commercial damage caused by a craftsman or gardener, for example, is not covered.
- The claim must not be covered by another insurance policy.
- Pay attention to the local area of validity of your insurance. It is often limited to Germany and the EU.
In order to get paid, you must first make a claim. You can do this by suing the person who caused the damage for compensation. If it turns out that this person is actually unable to pay for the damage, your policy’s bad debt coverage becomes effective.
Bad debt coverage is rarely a fixed component of personal liability insurance. In most cases, you have to purchase it separately. There are a few points you should consider:
- Note whether there are any local to the policy’s bad debt coverage and choose an insurance policy that is also valid abroad.
- Avoid an excess if possible.
- Make sure that the minimum amount of damage is as low as possible or, at best, that there is none at all.
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