Landlord liability insurance – can German landlords pass it on?

If you rent out an apartment building in Germany, you practically always need it: Haus- und Grundbesitzerhaftpflicht, the landlord liability insurance. It protects property owners when third parties are injured on the premises – the classic textbook case is a fall on an icy, ungritted pavement. The good news for landlords: the premium counts as an allocable operating cost (umlagefähige Betriebskosten). The conditions, however, are missed surprisingly often in practice.

The legal basis: Sec. 2 No. 13 BetrKV

Germany's Operating Costs Ordinance (Betriebskostenverordnung) lists exhaustively which costs landlords may pass on to tenants. Sec. 2 No. 13 BetrKV explicitly covers the "costs of property and liability insurance" – in particular:

• the landlord liability insurance itself,
• the buildings insurance (including natural-hazard riders),
• oil tank liability and glass insurance, where they exist.

Not allocable, by contrast, are policies that primarily protect the landlord's interests beyond the building – such as rent default insurance or the owner's legal expenses insurance.

Three conditions must be met

1. Agreement in the lease. No contractual basis, no allocation. In practice it is sufficient for the lease to state that the tenant bears "the operating costs pursuant to the Betriebskostenverordnung" – that captures every item in the catalogue. If the lease is silent, the premium stays with the landlord.
2. Actual costs only. Only the real insurance premium may be passed on – no administration surcharges, no mark-up, no "safety margin". The item must be clearly identifiable in the annual operating cost statement, and tenants have the right to inspect the underlying invoices.
3. Correct allocation key. The usual key is living space; a different key applies only if agreed. In mixed-use buildings (commercial + residential) a preliminary deduction may be required if the commercial units noticeably increase the premium.

The economy principle: staying fair pays off

Landlords may not buy arbitrarily expensive policies and simply forward the bill. The economy principle (Sec. 556 (3) BGB) applies: costs must be reasonably in line with the market. Tenants can challenge clearly overpriced contracts – and courts will trim the allocation. Regular market comparison therefore protects both sides: tenants from inflated service charges, landlords from disputes over the statement.

Common mistakes in practice

• Lump-sum items such as "insurances" without itemisation – formally contestable.
• Mixing allocable and non-allocable policies in one line.
• Outdated contracts that have not been re-tendered for years and sit above market level.
• Missing preliminary deduction for commercial units with elevated risk.

Bottom line

Landlord liability insurance is passable to tenants – provided the lease covers operating cost allocation, only the actual premium is billed and the allocation key is correct. Economically, the policy is essential for landlords anyway: personal injury claims after a black-ice accident can reach six figures.

As a non-tied insurance broker we compare landlord policies across 100+ insurers – premiums can often be reduced while improving cover, which benefits your tenants through the service charges too. Get in touch or start a request directly.