Representative Liability (Repräsentantenhaftung)

Concept

Representative liability is an attribution doctrine of insurance contract law under which a policyholder must accept responsibility for the conduct and knowledge of a third party if that party has independently taken over management of the insured risk or performance of contractual policy conditions on the policyholder’s behalf. A representative might be a property manager, plant manager, or authorised signatory, provided they have been given a sufficiently independent sphere of decision-making and responsibility; a mere auxiliary without such independent responsibility does not qualify as a representative.

Distinction and legal consequences

Representative liability must be distinguished from ordinary liability for auxiliaries: while a policyholder is generally not liable for the fault of ordinary auxiliaries in the context of the pre-contractual duty of disclosure, a breach of policy conditions or an increase of risk caused by a representative is attributed to the policyholder as if they had acted themselves. If the representative breaches a safety regulation or conceals hazard-relevant circumstances, this can result in the insurer being released from its obligation to pay.

Relevance for insurance practice

Particularly in commercial, property, and financial-loss liability insurance, where actual risk management is frequently delegated to third parties (property managers, managing directors, plant managers), the question of representative status is of considerable practical importance for claims handling; policyholders should therefore carefully select to whom they delegate independent management tasks.