The coverage limit (in German: Deckungssumme) is the maximum amount an insurer pays for a claim. It is mainly used in liability insurance and sets how much the insurer covers at most. The amount is written into the contract and is not the same as your premium.
Short answer: The coverage limit is the maximum an insurer pays for a claim. Separate limits often apply to personal, property and financial losses. If a claim is higher, you pay the rest yourself. The amount is set out in the terms and should fit your risk. Last updated: October 2026.
The most important points
- The coverage limit caps what the insurer pays. The terms state whether it applies per claim or per year.
- It is common to distinguish between personal injury, property damage and financial losses.
- If a claim exceeds the limit, the insurer pays only up to the cap and you bear the rest.
- The limit should fit the possible damage, not only the premium.
- For property insurance, a sum that is too low can lead to underinsurance (section 74 VVG).
What does coverage limit mean?
The coverage limit is the benefit ceiling, not the amount you have to pay, and not a premium. In liability insurance, it is the amount up to which the insurer settles justified third-party claims. It also defends against unjustified claims, and the costs of that defence are regulated separately in each contract.
How does the cap work in a claim?
A worked example shows the effect. Assumption: the coverage limit for personal injury is 5 million euros. The damage occurs in three variants, and defence costs are left out.
| Size of claim | Coverage limit | Insurer payment | Your share |
|---|---|---|---|
| 500,000 EUR | 5 million EUR | 500,000 EUR | 0 EUR |
| 5 million EUR | 5 million EUR | 5 million EUR | 0 EUR |
| 6 million EUR | 5 million EUR | 5 million EUR | 1 million EUR |
The table shows why the amount matters. In the third case, the part above the cap stays with you. Check any further restrictions in the terms before you sign.
What to consider when setting the amount
- Name the risk: what damage could you cause? Think of people, property and assets.
- Check the contract: are separate or combined limits used, and is there an annual maximum?
- Compare: look at the terms, not only the price in the offer.
- Review: check each year whether your risk has changed, for example after a move or new purchases.
- Get advice: if you are unsure, a personal assessment can help.
What is underinsurance in property claims?
For property insurance such as contents cover, the insured sum must not be too low. If the actual value at the time of the loss exceeds the sum, the insurer reduces the benefit proportionally. This is regulated in section 74 VVG (in German: Unterversicherung).
Frequently asked questions
Is a higher coverage limit always better?
Not automatically. A higher limit can increase the premium. What matters is that it fits your realistic risk. Exclusions in the contract may still apply even with a high limit.
What is the difference between coverage limit and insured sum?
The term coverage limit is mainly used for liability insurance, while insured sum is more common for property and life insurance. Both cap the benefit, but the rules differ by contract.
Does the limit apply per claim or per year?
This can be set differently. The terms state whether the limit applies to each claim or to each insurance year.
Do I need to adjust the amount myself?
Usually not automatically. If your risk or the value of your possessions changes significantly, review the amount and adjust it if needed.
Related reading
- Liability insurance for students: who needs it
- Liability insurance in a shared flat or your own flat
- Contents insurance in a dorm or shared flat (in German)
- Deductible
Sources: Section 74 VVG, underinsurance, as of October 2026; German Insurance Contract Act (VVG), full text, as of October 2026.
Last updated: October 2026. This guide is general information, not individual advice.
