Motor vehicle liability insurance is mandatory for vehicles admitted to travel on public roads in Germany (the same applies to non-motorised trailers and semi-trailers) and covers damages caused by the policyholder to third parties or their vehicles. However, a Federal Court of Justice decision emphasises that subsidiary clauses in mandatory insurance contracts which limit liability are void unless such exemptions are legally permitted or agreed on by the insurers.
The controversial prohibition on passing on commission forbids brokers and insurers from granting or promising special remuneration to policyholders, insured persons or beneficiaries under an insurance contract. According to the legislature, the prohibition was upheld during the implementation of the EU Insurance Distribution Directive into national law over the past three years. However, whether reinsurance remains excluded from the prohibition is unclear.
The Federal Court of Justice recently ruled that claims settlements by brokers on behalf of liability insurers constitute a violation of the Legal Service Act. The settlement of claims for insurers does not qualify as an accessory activity of the main activity of a broker, because a broker's main activity is to safeguard the assured's interests. It is not possible to represent the insurer's and the assured's interests simultaneously.
A transport insurer claimed damages from a carrier for damage to transported goods. The Federal Court of Justice decided that the damage had taken place outside the period of custody – with the consequence that transport law rules on liability did not apply. According to the court, general contract law applied and the defendant was liable due to violation of its duty of care.