This article contributes to the debate over how much we can consider Nazi Germany a terror state. It is focused on one type of terror — family liability policy or Sippenhaft— as a means of determining to what extent the German population was terrorised by the regime. Sippenhaft can be considered a key foundation of a terror regime as it targets the innocent over the guilty. This paper argues that Sippenhaft was a component of Nazi terror, operating on a selective basis and was utilised by various local agencies among the party and the army rather than being centrally controlled. These factors helped create a level of threat and fear that contributed to its effectiveness.