Mallorca Policy Clause

Purpose

Statutory minimum liability limits for motor insurance vary considerably across Europe: while Germany, under section 4(2) of the Compulsory Insurance Act (PflVG) together with its schedule, prescribes high minimum sums, the compulsory limits in numerous other European countries are markedly lower. If a German holidaymaker causes an accident with a vehicle hired there, the locally applicable liability limit of the hire vehicle may be insufficient to settle serious personal injury or property damage claims. The Mallorca policy clause – officially termed insurance for the use of third-party vehicles subject to compulsory insurance – closes this gap by using the holidaymaker’s own German motor liability policy to cover the difference up to the German minimum level.

Effect and limits

The extension operates on a subsidiary basis to the hire vehicle’s own liability cover and only responds once that cover has been exhausted by the claim. It applies to hire vehicles of all kinds across geographical Europe and the EU member states, not merely the Balearic Islands, but covers only third-party liability claims – damage to the hire vehicle itself, or its theft, remains uninsured and must be arranged separately through the local rental insurance.

Negotiation and practice

Many German motor liability tariffs now include the Mallorca policy clause as standard; those without their own vehicle can often obtain equivalent protection through private liability insurance or as a stand-alone, time-limited policy. Before travelling, it is worth checking whether the group of insured persons also extends to family members or fellow passengers.