Notional Repair Costs: Cash Instead of Repairs – Is That Allowed?

After an accident that wasn't your fault, you don't have to have your car repaired – you can take the cost of the damage as a cash payment instead. I explain what you need to watch out for and where the limits lie.

Your car was damaged in an accident, and someone else was to blame. Perhaps you’re wondering whether you actually have to put the repair money into a garage at all. Maybe you’d rather sell the car as it is, repair it yourself, or simply keep the money. The good news: the law gives you exactly this choice.

In short

Yes – after an accident you can claim the sum needed to put the damage right instead of having the actual repairs carried out, without ever taking the car to a garage. This is known as settling on a notional basis, using an expert’s assessment. The catch: you don’t automatically receive the garage’s full net repair price. You receive only what the repair would genuinely require. And, provided certain conditions are met, the other driver’s insurer is entitled to point you to a cheaper garage of equivalent standard.

How I can help you

• Assessing whether settling on a notional basis makes financial sense in your case, or whether claiming the actual costs would leave you better off
• Enforcing your full claim for compensation against the other side’s insurer, including rejecting unjustified deductions
• Checking whether a referral to a cheaper garage is permissible at all
• Clarifying the VAT question where you repair the car yourself or sell it on
• Handling the correspondence with the assessor and the insurer, so you don’t have to fight your way through the claim on your own

The legal basis: your right to choose under § 249 BGB

Under § 249 Abs. 2 Satz 1 BGB, where property has been damaged you may claim the sum of money needed to restore it (that is, to carry out the repair) instead of the restoration itself. You are under no obligation to anyone to have the vehicle repaired, and you need not account for what happens to the money. The calculation is normally based on an expert’s report setting out the likely net repair costs. For smaller amounts of damage, a written estimate will often be enough.

One point is worth being clear about: “notional” does not mean “invented”. The figure is tied to what a repair at a franchised, manufacturer-approved garage near your home would actually cost. The difference is simply that you are paid this sum rather than handing it to the garage.

The limit: VAT is only reimbursed if it’s actually incurred

This is the most important difference from a claim for actual costs, and many clients underestimate it. § 249 Abs. 2 Satz 2 BGB makes it clear that the sum required includes VAT only if, and to the extent that, it has actually been incurred. If you don’t have the car repaired, you receive only the net repair sum. The same applies if you repair the car yourself without any VAT arising. In that case the insurer is quite right to strike the VAT shown in the report out of the settlement. If you later do have the repair carried out and prove it with an invoice, you can then claim back the VAT you have actually paid.

The garage referral: when the insurer may send you to a cheaper garage

A frequent point of dispute: the insurer reduces the notionally assessed repair costs by pointing to a cheaper “independent” or “alternative” garage near you. This is not impermissible as a matter of principle, but the insurer must satisfy a number of conditions:

• The alternative garage must, on the evidence, work to an equivalent technical standard (the same quality standards, original parts and warranty cover as a franchised garage)
• It must be readily and conveniently accessible to you
• For newer vehicles (as a rule up to around three years old), a referral to an independent garage will regularly be unreasonable. The reason: a service and repair history at a franchised garage matters for the car’s resale value
• The burden of setting out and proving that the alternative garage really is equivalent and reasonable rests with the insurer – not with you

If the insurer refuses to pay the full amount established in the report and relies on a blanket referral, without genuinely testing it against these criteria, that position can be challenged in law.

The process: how I act for you

1. Establishing the damage: I make sure that an independent expert’s report – not the other insurer’s – reliably documents the net repair costs.
2. Notional or actual settlement: I assess for you whether settling on a notional basis, carrying out the actual repair, or selling the car will leave you better off. That depends on whether and how you intend to keep driving it.
3. Pursuing the claim against the insurer: I claim the net repair sum required and reject unjustified deductions, in particular blanket garage referrals.
4. Later top-up claim if you do repair: If you have the car repaired at a later date, I secure your right to claim the VAT you then actually incur.

An example from practice

A client is driven into at a junction, through no fault of his own, taking the impact on the driver’s door. The expert’s report sets the net repair costs at a mid four-figure sum, plus VAT. The car is already on the older side. The client doesn’t want it repaired; he’d rather keep driving it and set the money aside towards his next car. At first the other insurer pays only a reduced amount, pointing to an “equivalent” independent garage two hours’ drive away. After examining whether that garage really was reasonable and of equivalent standard, I secured the full net sum set out in the report. The VAT stays out of it, because no repair is carried out.

Common mistakes

• Claiming the gross figure from the garage’s estimate without checking: on a notional settlement you are only entitled to VAT if it is actually incurred. Overlook this and you claim too much from the outset, or find yourself cut back later.
• Accepting the insurer’s blanket garage referrals without challenge: it is for the insurer to prove equivalence and reasonableness concretely, not for you to disprove them.
• Not obtaining an independent report: relying solely on the other insurer’s calculation means giving away your own negotiating position.
• Forgetting to claim the VAT once you do repair: the claim does not lapse immediately, but it should be pursued promptly and backed by an invoice.

Frequently asked questions

Do I have to have my car repaired in order to receive compensation?

No. Under § 249 Abs. 2 BGB you have the choice of claiming the sum of money required instead of the repair itself. You need neither carry out the repair nor account for what happens to the money.

Do I get the VAT reimbursed on a notional settlement?

Only if, and to the extent that, it is actually incurred. Without a repair evidenced by an invoice, only the net repair sum is reimbursed.

Is the insurer allowed to point me to a cheaper garage?

Only if that garage is demonstrably of equivalent technical standard and reasonably accessible to you. For newer vehicles such a referral is usually unreasonable. The burden of proof rests with the insurer.

Can I still have the car repaired later and claim the VAT afterwards?

Yes. If you produce a repair invoice, you can claim the VAT actually incurred on top of the net sum you have already received.

Is settling on a notional basis always the better choice?

Not necessarily. Where the damage is more extensive, or where you want the vehicle professionally repaired in any event, claiming the actual costs – that is, reimbursement of the real invoice including VAT – can be the more advantageous option financially. It depends on the particular case.

Your next step

Whether a notional or an actual settlement works out cheaper for you depends on the details of your case. The same goes for the question of whether an insurer’s garage referral is justified. So that you don’t leave money on the table needlessly, I’ll review your report and the insurer’s position in an initial consultation. You’ll find more information on settling a claim after a road traffic accident on my topic page Traffic accidents. Or simply get in touch with me directly, and I’ll work out how to secure your full compensation.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-08-21.

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