Professional indemnity and Tech E&O insurance in Germany
A bug takes a customer’s shop offline, a migration loses data, a go-live slips by three months. Nobody is hurt and nothing is broken — but the customer has lost money. That is pure financial loss, and ordinary business liability insurance does not pay for it.
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In Germany the cover for this is called Vermögensschadenhaftpflicht. For technology companies insurers offer combined IT liability policies that put business liability, professional indemnity and often cyber modules into one contract.
The cover matters more in Germany than many foreign companies expect. Limitations of liability that are standard in UK or US contracts frequently do not hold under German law when they are agreed in standard terms and conditions. The contractual cap you rely on at home may not protect the German entity.
Is professional indemnity insurance mandatory in Germany?
Only for certain regulated professions, such as lawyers, tax advisers, auditors, insurance intermediaries and residential property managers. For software, IT and consulting firms there is no statutory duty. The obligation usually comes from customers: enterprise contracts and procurement departments regularly require proof of cover with specified limits.
What is covered?
Programming and implementation errors
Financial loss caused by faulty software, configuration or integration work.
Advice and planning
Wrong recommendations, calculation errors and flawed concepts.
Delay
Loss resulting from missed deadlines, where the policy includes it.
Data and confidentiality
Loss of customer data and breaches of confidentiality or data protection duties.
Intellectual property
Unintentional infringement of copyrights, trademarks or licences.
Defence costs
Examination of the claim and defence against unjustified demands.
A difference to UK and US policies
German professional indemnity insurance traditionally follows the breach principle (Verstoßprinzip): what counts is when the error was made, not when the claim is raised. UK and US policies usually work on a claims-made basis. The difference matters when you change insurers or align the German policy with a group programme, because the two systems can leave a gap or overlap between them.
What customers typically ask for
Enterprise customers commonly ask for limits between €1 million and €5 million for financial loss, sometimes with separate limits for data protection breaches. For business with US customers, or contracts under US law, cover has to be agreed explicitly, as many standard policies exclude or restrict it.
What does it cost?
The premium depends mainly on turnover, the type of service, the limit and any US exposure. Small software and consulting firms often pay from several hundred euros to a low four-figure sum a year for a €1 million limit. Insurance premium tax of 19% is added; only a quote is binding.
Who is behind this page
Vivid Protect GmbH, insurance broker licensed under Section 34d (1) of the German Trade Regulation Act (GewO), broker register no. D-Y7GD-S7M7K-61, managing director Alexia Manukwem. About us
General information, not legal or tax advice. Figures are orientation values and not an offer.
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FAQ
Frequently asked questions
Does business liability insurance cover financial loss?
Only where the financial loss follows from an insured injury or property damage. Pure financial loss — the customer loses money although nothing was damaged — needs professional indemnity cover or a combined IT liability policy.
Is professional indemnity insurance mandatory for IT companies in Germany?
No. It is compulsory only for certain regulated professions. For software, SaaS and consulting firms the requirement usually comes from customer contracts.
Do we need special cover for US customers?
Yes, in most cases. Claims brought in the USA or Canada or under US law are excluded or restricted in many standard policies and must be agreed explicitly.
Can cyber cover be included?
Many IT liability policies offer cyber modules for your own losses after an attack. Whether a module is enough or a separate cyber policy is the better choice depends on your size and how critical your systems are.
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