Various insurers offer special legal expenses packages which also apply to criminal law. Anyone intending to take out legal expenses insurance should, with a view to possible criminal proceedings, bear in mind a number of points which insurance agents do not always state clearly. In the practice of the criminal defence lawyer, clients not infrequently have mistaken ideas about the conditions under which the defence counsel’s fee is actually covered by the insurer.
The agreed policy wording is decisive. The ARB 2009 are not a universally applicable current rule. The GDV now publishes ARB 2021 (June 2025 version) as non-binding model conditions. Under their general criminal legal expenses cover, an allegation of intent initially excludes cover; retrospective cover depends on the policy conditions. Section 6 explains the argument under older wording, not every current tariff.
1. Confirmation of cover (Deckungszusage) for the costs of the criminal defence lawyer
Where a person accused in criminal proceedings consults a specialist lawyer for criminal law in order to instruct him with his defence, it is clarified at the beginning of the engagement whether legal expenses insurance will pay the costs of the criminal proceedings. For this purpose the lawyer obtains what is known as a confirmation of cover from the insurer, after he has concluded the fee agreement with the client. The insurers regularly require information about precisely what is being alleged.
For this purpose the client releases the lawyer from his duty of confidentiality. The release from the duty of confidentiality is regularly deemed to have been granted tacitly where a client instructs his lawyer to contact the insurer in order to clarify whether the latter will cover the costs. The Federal Court of Justice (Bundesgerichtshof, BGH) made this clear in a decision of 13 February 2020 (case no. IX ZR 90/19).
“In the present case the lawyer’s duty of confidentiality under § 43a para. 2 BRAO likewise did not preclude the transfer of the claim. A release from the duty of confidentiality may be declared expressly by the client, but may in principle also be given by conclusive conduct. The appeal court rightly assumed that, where the legal expenses insurer pre-finances litigation with the client’s consent and the client also leaves the correspondence with the legal expenses insurer to the lawyer, the client covered by legal expenses insurance has tacitly released the lawyer from the duty of confidentiality in so far as the billing of the engagement is concerned. For only in this way can the lawyer properly discharge the client’s instructions and the client’s duty to provide information to his legal expenses insurer”
The time at which the offence was committed plays a decisive role for the confirmation of cover. For insurance cover exists only for the period during which the policy was in force. It therefore makes no sense to take out insurance quickly once criminal investigation proceedings have become known. There is no such thing as retrospective criminal legal expenses cover.
The insurance contract exists between the policyholder (that is, the lawyer’s client) and the insurer. Independently of this, the client has a contractual relationship with his respective lawyer, namely the defence mandate, which gives rise to the respective claim to a fee. Between the lawyer and the insurer, by contrast, there is no separate contractual relationship. Nor does one come into being through the insurer’s confirmation of cover. With the confirmation of cover the insurer merely confirms to its own policyholder that it will bear the lawyer’s costs in so far as it is contractually obliged to do so vis-à-vis the policyholder.
Fines, monetary conditions and the like are not covered by the insurance. If these are paid by third parties (for example by the employer), this does not, according to current case law, fulfil the offence of obstruction of criminal prosecution (§ 258 StGB). Where costs are assumed by third parties, however, care must always be taken to consider the collateral consequences under company law, social security law and tax law. If this is not done, there is a risk, for example, of criminal liability for breach of trust (Untreue, § 266 StGB, cf. BGH, judgment of 07.11.1990 – 2 StR 439/90) and / or for withholding and evading wages (§ 266a StGB) or for evasion of wage tax.
2. Differences between criminal legal expenses policies
There are considerable differences between the insurance contracts. There are almost equally great differences in the way they are handled in practice by the respective insurers or by the respective case handler.
A good criminal legal expenses policy differs from a bad one above all in the answers to the following questions:
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- Are the costs reimbursed only in accordance with the Lawyers’ Remuneration Act (RVG), or does the insurer also bear the costs of individual fee agreements, in particular hourly rates?
- Is the insurance limited to allegations from the private sphere, or does it also cover the professional activities of the accused?
- Is the insurance limited to negligence offences and administrative offences, or is insurance cover also granted where an intentional offence is alleged?
- How does the insurer deal with an allegation of tax evasion?
- If an intentional offence is at issue: does the insurer refuse a confirmation of cover from the outset, or does it merely reserve the right to reclaim the money from the client in the event of a conviction (what is known as recourse)?
- What happens if there is a conviction for an intentional offence?
The decisive answers, which are examined more closely below, should if possible be clarified before a criminal legal expenses policy is taken out. At the latest when the confirmation of cover is obtained by the defence counsel, a client must be clear about which costs will be covered and what he has to pay for himself.
3. Statutory fees and fee agreements in criminal law
A large proportion of the cases that come before the criminal courts every day are road traffic accidents or fines in traffic-related administrative offence proceedings. Where a person concerned who wishes to defend himself against an administrative fine notice or a penalty order (Strafbefehl) turns to a lawyer specialising in criminal law, the instructions given to the lawyer are in most cases manageable. In most cases a specialist lawyer for criminal law can, by means of an initial inspection of the file and an appraisal of the situation, quickly assess the prospects of success of a legal remedy. The costs incurred by a lawyer for everyday instructions can usually be billed in accordance with the Lawyers’ Remuneration Act (RVG).
Matters become more complicated where, for example, a driving ban is imposed on account of a traffic offence. If such a ban cannot be averted in advance, it is sometimes necessary to hold a main hearing (trial) in criminal proceedings. Because of the workload involved, legal fees here quickly exceed EUR 1,000.
Considerably higher costs arise in cases that are not part of everyday life. These often concern people who bear particular responsibility in the exercise of their professional activities. The greater the responsibility, the greater the risk of criminal liability. Thus, for example, criminal proceedings against doctors arise again and again, for instance where the allegation is that a patient was restrained too hastily, or where low-priced medicines were passed on. Criminal allegations can also affect, for example, the managing director of a GmbH, for instance where insolvency offences are at issue. Other people with responsibility in companies can also quickly become accused persons, for example in criminal tax proceedings, where an allegation of intentional tax evasion is at issue.
In all of these cases standard legal expenses insurance is of no further help. For as a rule such policies cover the costs only at the fee rates of the Lawyers’ Remuneration Act (RVG). In criminal investigation proceedings, however, these fees amount to only a few hundred euros. The actual workload of a good criminal defence lawyer is thus not remotely covered by them.
For this reason, fee agreements in criminal law are concluded with clients which provide either for appropriate flat fees or for hourly rates. Such fee agreements are, however, only covered by what are known as premium or specialist criminal legal expenses policies.
Extended insurance packages of this kind are indispensable in particular for managers, in the form of what is known as D&O insurance (directors’ and officers’ liability insurance).
4. D&O insurance in criminal law for companies
If a company has taken out what is known as directors’ and officers’ (D&O) insurance for its corporate officers and senior employees, the costs of the manager’s criminal defence are borne by the insurer. The requirement is that the allegation is connected with the professional activity. This is then a special contractual arrangement in which the liability insurance is taken out for the account of another. In other words: the company pays and the respective managing director or management board member is the beneficiary. In legal terms, the basis is a contract for the benefit of a third party. Model contracts for the General Insurance Conditions for Financial Loss Liability Insurance of Supervisory Board Members, Management Board Members and Managing Directors (AVBAVG) can be viewed online.
Managing directors of a GmbH in particular, who see themselves exposed to criminal law risks to a particular degree, should insist vis-à-vis their employer that D&O insurance be taken out before they start work. The same applies to management board members of an AG, who can also be held liable under criminal law, for example where compliance rules are breached.
5. Exclusion of allegations of intent
The basic rule is: intentionally committed criminal offences cannot be insured. No one is to have the commission of a criminal offence made easier for him by being able to rely in advance on saving himself the costs of a defence lawyer.
The dividing line between intent and negligence in criminal law is, however, wafer-thin. Sometimes it is also a matter of chance which form of fault is formally alleged at the beginning of investigation proceedings, that is to say what “is on paper”.
Many simple standard policies apply in criminal law only to allegations of negligence or to administrative offences. If the formal allegation is that intentional offences have been committed, such insurers refuse a confirmation of cover for the defence from the outset. So if an eBay trader is accused of having sent the wrong goods to customers and of thereby having committed the offence of fraud (§ 263 StGB), under these contracts there is no criminal legal expenses cover at all.
Other insurers initially grant legal expenses cover where there is a formal allegation of intent. They then reserve the right, however, to reclaim the money from the accused client if a conviction for an intentional offence follows.
In this context the possibility of a discontinuance of the criminal proceedings against payment of a monetary condition under § 153a StPO plays a major role. For if criminal proceedings are discontinued under this provision, the insurer bears the costs without taking recourse against the accused policyholder. In very large criminal proceedings, such as the Love Parade proceedings (the criminal trial after the 2010 Duisburg Love Parade disaster), where there were dozens of days of the main hearing at which the lawyers often billed by the hour as well, this can amount to several times EUR 10,000.00.
6. Is tax evasion an offence that can only be committed intentionally?
On the question of which offences can only be committed intentionally, the allegation of tax evasion constitutes a special case. For under § 370 of the Fiscal Code (AO) only intentional tax evasion is punishable. “Negligent” tax evasion is sanctioned only under certain conditions, namely in the case of gross negligence (Leichtfertigkeit), that is to say where there is a heightened degree of fault. Even then, grossly negligent understatement of tax under § 378 AO is not punishable in the true sense, but is prosecuted only as an administrative offence.
For this reason some insurers take the view that tax evasion is an offence that can only be committed intentionally. On this ground they sometimes refuse insurance cover in advance.
Such a refusal must be assessed against the specific policy. Under the older wording discussed below, the following arguments in particular speak against a blanket exclusion.
It is true that, under the OLD version of the General Conditions for Legal Expenses Insurance (ARB) (§ 4 para. 1 lit. n ARB 75), there was a general exclusion of risk for allegations from the field of tax and levy law. The ARB 2009 discussed here, however, no longer provide for such an exclusion.
The following argument concerns § 2 i bb) sentence 2 ARB 2009. Whether cover applies while intent is alleged or only retrospectively, and when it is lost, depends on the agreed conditions and any special tariff clauses.
Within the meaning of these provisions, tax evasion is an “other offence whose intentional as well as negligent commission is punishable”. For the objective elements of the offence under § 370 AO are identical with those under § 378 AO (cf. Jäger, in: Klein, Kommentar zur AO, 14th ed. 2018, para. 16).
“Gross negligence” (Leichtfertigkeit) within the meaning of § 378 AO constitutes a form of negligence (cf. the explanatory memorandum, BT-Drs. IV/650, 18 ; on this Franzen/Gast/Joecks, Kommentar zum Steuerstrafrecht, AO § 378 para. 34). This means that tax evasion is not an offence that is punishable only where it is committed intentionally, such as trespass (§ 123 StGB), false accusation (§ 164 StGB), insult, defamation and malicious defamation (§§ 185 to 187 StGB), theft (§ 242 StGB), misappropriation (§ 246 StGB), assistance after the fact (§ 257 StGB), handling stolen goods (§ 259 StGB), fraud (§ 263 StGB), breach of trust (§ 266 StGB), forgery of documents (§ 267 StGB), criminal damage (§§ 303 to 305 StGB) and failure to render assistance (§ 323 c StGB), resistance to state authority (§§ 113, 114 StGB) or coercion (§ 240 StGB).
The commentary literature accordingly likewise assumes that insurance cover exists where tax evasion is alleged:
“Insurance cover also exists for tax offences and tax-related administrative offences whose objective elements are identical, such as, on the one hand, intentional understatement of tax (tax evasion, § 370 AO) and, on the other hand, grossly negligent understatement of tax, § 378 AO. While the ARB 75 applied, insurance cover was excluded in this respect under § 4 para. 1 n ARB 75.”
(Harbauer/Stahl, Kommentar zum Versicherungsrecht, ARB 2000 § 2 para. 270)
7. Conviction for an intentional offence
Further points of dispute arise in cases that end in a criminal conviction. If a final conviction for an intentional offence is handed down, the policyholder is in principle contractually obliged to notify the insurer of this. If he fails to do so, he may in certain circumstances render himself criminally liable for fraud (by omission). If the insurer learns that there is a final conviction for an intentional offence, it sometimes happens that the lawyer’s invoices still outstanding at that point are no longer settled, despite a previously given confirmation of cover.
This is justified by reference to the triangular relationship that typically underlies an insurance contract. Only the client – that is, the policyholder – himself has a contractual claim against the insurer. Even where a confirmation of cover has been given, this does not give rise to a claim of the lawyer’s own against the insurer. For this reason the lawyer always addresses his invoice solely to his own client. Where such invoices are submitted directly to the insurer, this merely represents a short cut in the payment route. Since at that moment the accused no longer has any claim against his own legal expenses insurer for the costs to be covered, the insurer’s refusal to pay the outstanding legal fees is legally difficult to challenge.
Fortunately, many insurers are accommodating and honour confirmations of cover once they have been given. A criminal defence lawyer is nevertheless well advised to bill the insurer for the costs already incurred before a final conviction is handed down. In many cases it also helps to agree appropriate advance payments and to request them from the insurer in good time.
8. Conclusion
Specialist legal expenses insurance in criminal law makes sense above all for those people who work in an exposed position of responsibility. This applies, for example, to doctors or managing directors of a GmbH, but also to tax advisers and architects. When an insurance contract is concluded, particular attention should be paid to whether insurance cover for allegations of intentional offences is excluded from the outset, and to the extent to which professional risks are covered. It must also be ensured that individual fee agreements, and in particular hourly rates, are covered. For if the worst case of a search and seizure occurs, or even pre-trial detention, an insurance policy makes no sense if it does not make it possible to pay for an outstanding criminal defence lawyer.