You may take the money instead of having the repair done. What is reimbursed, what is not – and what the Federal Court of Justice decided in 2025 in favour of injured parties.
In short: On a notional settlement you take the repair amount calculated in the appraisal report as a payment instead of having the vehicle repaired. The basis is § 249 (2) sentence 1 BGB (German civil code). Payment is made net, because § 249 (2) sentence 2 BGB only reimburses VAT so far as it is actually incurred. If you do have the repair carried out later, you can claim the difference afterwards.
Notional settlement means that you settle the claim on the basis of the appraisal report and receive the money without having to prove a repair. What happens to the vehicle afterwards is up to you: you can have it repaired at a workshop, work on it yourself, repair only part of it, or keep driving or sell it unrepaired.
In law this rests on what is called the option to claim money instead. § 249 (2) sentence 1 BGB reads: "Where damages are payable for injury to a person or damage to a thing, the creditor may demand the sum of money required for restoration instead of restoration itself." The legislator thereby gives the injured party a choice. What is owed is not the repair as such but the sum of money that restoration would require.
The second load-bearing provision is § 249 (2) sentence 2 BGB: "Where a thing is damaged, the sum of money required under sentence 1 includes value added tax only if and so far as it has actually been incurred." That sentence was inserted by the Second Act Amending the Law of Damages of 19 July 2002 and is the reason why notional settlements are always calculated net.
The difference lies in the basis of assessment. On a concrete settlement you rely on costs actually incurred, principally the workshop's repair invoice. On a notional settlement you rely on the necessary costs calculated in the appraiser's report. Both routes are open to you, and you are not obliged to commit yourself when you first report the claim.
What is not permitted, however, is mixing the two within the same head of loss, for instance combining the higher labour rates from the report with the parts prices actually invoiced. The Federal Court of Justice confirmed this prohibition on mixing in its judgment of 12 October 2021 – VI ZR 513/19. Within one item you have to choose a route.
| Feature | Notional settlement | Concrete settlement |
|---|---|---|
| Basis of calculation | The necessary amount calculated in the report | Costs actually incurred, per the invoice |
| Proof of repair | Not required | The invoice and the scope of work are the basis |
| VAT | Not recoverable, § 249 (2) sentence 2 BGB | Recoverable so far as actually incurred |
| Referral to a cheaper workshop | Possible where the conditions for a referral are met | Once the repair has been carried out, generally irrelevant |
| Repair shop risk | Plays no part, as no workshop invoice underlies the claim | Borne by the party who caused the damage, so far as errors were not recognisable to you |
| Market-based diminished value | A head of loss in its own right, recoverable in addition | A head of loss in its own right, recoverable in addition |
| Later additional claim | Possible where a repair or replacement purchase actually follows | The settlement already reflects the actual expenditure |
By judgment of 28 January 2025 – VI ZR 300/24 the Federal Court of Justice held that on a notional settlement the injured party does not have to state which repair measures they actually carried out or omitted. What governs is solely the objectively necessary amount as shown by the report, not the actual expenditure. The case decided concerned a repair carried out abroad.
Case law: BGH, judgment of 28 January 2025 – VI ZR 300/24. On a notional settlement the injured party owes no submissions on restoration measures actually carried out or omitted; what governs is the objectively necessary amount per the report.
The practical significance of that decision is considerable, because it strengthens the injured party's position. Before it, it was common in settlement practice to ask injured parties after a notional settlement for evidence of whether and how they had repaired the vehicle – repair confirmations, photographs, receipts for parts. Anyone who produced nothing found themselves facing reductions.
That is precisely the approach the Federal Court of Justice rejected. Notional settlement detaches the claim from what the money is actually used for. If the statute allows you to demand the necessary sum of money instead of restoration, it would be contradictory to make payment of that sum depend on statements about restoration. The size of the claim is measured against an objective yardstick.
For you that means: a request to document the repair is not a permissible ground for reduction on a purely notional settlement. What remains untouched is the insurer's right to dispute the necessity and the level of the calculated items. The dispute therefore shifts to the quality of the report and how well it can be followed.
What is reimbursed is the net repair amount calculated in the report. Alongside it you are entitled to the usual further heads of loss, so far as their conditions are met. What is not reimbursed is everything that the notional approach by definition does not trigger, first and foremost VAT.
Because it does not arise. § 249 (2) sentence 2 BGB turns expressly on whether the tax has actually been incurred. Without a repair or replacement purchase no tax liability arises, so it is not part of the necessary sum of money either. The Federal Court of Justice confirmed this in its judgment of 9 May 2006 – VI ZR 225/05. Notional settlements are therefore calculated net without exception.
In principle yes, but subject to a condition. Transfer costs for moving the vehicle to the paint shop, and surcharges on the manufacturer's recommended prices for parts, are to be judged by the general principles on the recoverability of repair costs. They are recoverable where they would ordinarily arise on a repair at a regional franchised dealer workshop. The Federal Court of Justice clarified this in its judgment of 25 September 2018 – VI ZR 65/18.
Careful: On these two items the lower courts decide expressly inconsistently. There are courts that regularly award parts surcharges on a notional settlement, and others that refuse them altogether. No general statement can be made that these amounts are always reimbursed. They also fall away where a referral to a cheaper workshop applies that does not levy such surcharges.
Market-based diminished value is a head of loss in its own right under § 251 (1) BGB and is owed in addition to the repair costs, including on a notional settlement. Since the Federal Court of Justice's judgments of 16 July 2024 – VI ZR 205/23 and VI ZR 188/22 it is always to be determined from the net sale price, regardless of whether you are entitled to deduct input tax. Loss-of-use compensation, recovery costs, appraiser's fees and the flat-rate allowance for outlays also remain untouched. Registration and deregistration costs, by contrast, are frequently not allowed by the courts on a purely notional settlement; they presuppose an actual replacement purchase with re-registration, and the case law is inconsistent here too.
Such a referral is permissible where the workshop named is easily and readily accessible to you, technically equivalent, and actually cheaper. Under the Federal Court of Justice's judgment of 25 September 2018 – VI ZR 65/18 that applies even where your report already uses average local rates of independent workshops. The referral then reduces the labour rates to the level of the reference workshop.
What is decisive is the allocation of the burden of proof. It is not for you to show that the workshop named is unsuitable; it is for the party who caused the damage, or their insurer, to plead and prove equivalence and accessibility. A blanket reference to a workshop by name, without specific details of its equipment, qualifications and prices, is as a rule not sufficient.
A referral is ruled out in three situations among others. First, for vehicles that were no more than three years old at the time of the accident. Second, where the vehicle has a complete service record at a franchised dealer, because an unbroken history has a value of its own. Third, where the reference workshop is only cheaper because it has agreed special terms with the insurer. The Federal Court of Justice decided the latter point in its judgment of 28 April 2015 – VI ZR 267/14.
Careful: Fixed distances in kilometres circulate online on the question of geographical proximity. No such limit can be found in the decisions of the highest court. The Federal Court of Justice requires only a workshop in the vicinity, without fixing a figure. Whether a particular workshop still counts as accessible is judged by the courts on the circumstances of the individual case.
Yes. A notional settlement does not cut off the route to a concrete settlement for good. If you later do have the vehicle repaired or obtain a replacement, you can claim the VAT then actually incurred, up to the amount of tax actually paid. Where the real repair costs exceed the amount settled notionally, a further claim comes into consideration in that respect too.
The limit on this is the limitation period. Claims in damages arising from a road accident become time-barred after three years under §§ 195, 199 (1) BGB, counted from the end of the year in which the claim arose and you learned of the damage and of the party responsible. For as long as the claim is registered with the insurer, the limitation period is suspended.
A special point applies where the repair costs exceed the replacement value. You are then in the territory of the 130 percent rule, and its conditions must be met: a complete and proper repair in accordance with the report, and continued use of the vehicle for at least six months. The Federal Court of Justice laid down these requirements in its judgments of 3 March 2009 – VI ZR 100/08 and 13 November 2007 – VI ZR 89/07.
It is therefore sensible to keep the report and all the documents, even if you initially opt for the payment. Without a calculation that holds up, the basis for quantifying a later claim is missing. Because on a notional settlement it is the report alone that carries the claim, the outcome depends directly on how complete it is and how well it can be followed.
Yes. § 249 (2) sentence 1 BGB gives you the right to demand the sum of money required for restoration instead of restoration itself. What you do with the money is your decision. You may keep driving the vehicle unrepaired, repair it in part or sell it, as long as it remains roadworthy.
Not on a purely notional settlement. Under the Federal Court of Justice's judgment of 28 January 2025 – VI ZR 300/24 the injured party need not state what repair measures were actually carried out or omitted. What governs is the objectively necessary amount per the report. The insurer can, however, still dispute the level of the calculated items.
Because it does not arise without a repair. § 249 (2) sentence 2 BGB includes VAT only if and so far as it has actually been incurred. Notional settlements are therefore always calculated net. If you later have the repair done or obtain a replacement vehicle, you can claim the tax then paid.
Only subject to conditions. The workshop must be equivalent, cheaper and easily accessible to you; pleading and proving that is for the other side. A referral is unreasonable, among other cases, for vehicles up to three years old, where the service record is complete, and where the prices rest on special terms agreed with the insurer.
Yes. Market-based diminished value is a head of loss in its own right under § 251 (1) BGB and stands alongside the repair costs, whichever settlement route is chosen. Since the Federal Court of Justice's judgments of 16 July 2024 – VI ZR 205/23 and VI ZR 188/22 it is to be calculated from the net sale price.
Claims arising from a road accident become time-barred after three years under §§ 195, 199 (1) BGB, from the end of the year in which the claim arose and you knew of the damage and of the party responsible. For as long as the claim is registered with the insurer, the limitation period does not continue to run.
Not within the same head of loss. In its judgment of 12 October 2021 – VI ZR 513/19 the Federal Court of Justice held that notional and concrete settlement must not be mixed. You cannot therefore assemble the more favourable figures from both sources but must choose one route per item.
This article reflects the position as at 3 August 2026 and is no substitute for legal advice in an individual case. Written by PKW Gutachter Service GmbH, automotive appraisal firm, Neu Wulmstorf, Germany.
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