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Insurance in Germany

Better safe than sorry: many German people seem to be fond of this old saying. Insurance in Germany is a lucrative and competitive market. For expats, it can be confusing to get an insight into this key topic. Our guide provides an introduction to risk awareness, essential plans, and common policies.
People in Germany often rely on insurance to make them feel safe. But it's hard to distinguish between necessary and unnecessary policies.

As far as insurance in Germany is concerned, you can get coverage for nearly everything. The range of available policies is as wide as the variety of companies that provide them. Your monthly premiums will quickly add up, though.

In 2011, an average German family spent 2,171€ per year on insurance, not including private pension funds or private health insurance plans. According to independent market research, the insured could save several hundred euros annually: They’d simply need to cancel unnecessary insurance plans and select the provider with greater care.

There are a few types of mandatory insurance in Germany (mostly work-related or part of the social security system). Expats often need a health or travel insurance policy for their visa application, too.

Generally speaking, though, most forms are purely voluntary. The German market is fairly competitive, and it’s in your best interest to compare prices and conditions.

Moreover, you should ask your previous insurance company if you can switch your plans to insurance in Germany. Please keep in mind that foreign or international coverage may cease to be valid as soon as you take up residence in Germany.

Potential Pitfalls

People often tend to make rather unnecessary deals. Unfortunately, there are also cases of reluctant providers, refusing to pay when common sense might suggest that the incident should be covered.

Great emphasis is put on the wording of written contracts. So you have to be very careful and study the insurance contract in detail.

However, it is probably impossible to avoid all pitfalls, even if your German is fluent. Exceptions might be implicitly based on previous court decisions regarding insurance in Germany without being mentioned in the contract.

In some really important cases (e.g. job-related liability insurance), you might want to get expert advice before signing anything. In all other cases, it’s simply enough to do some research online or in special-interest magazines (like those published by Stiftung Warentest) and compare various offers. 

(Un)necessary Insurance Plans

There is another tendency that insurance providers profit from. Most people’s risk awareness does not represent the true risk of events.

They protect themselves from events that are more common and less costly instead of providing security for existential risks with a low probability of occurrence. Intuition suggests that it is more important to get insurance for events with a higher probability. This makes you feel safer, but it doesn’t really answer the question what you actually need.

Stiftung Warentest, Germany’s best-known consumer-protection society, advises you to imagine a worst-case scenario, for instance, serious health issues. Now think whether you would be able to cover the costs yourself.

If you are not, then taking out a plan is recommended. If you could pay those costs from your own pocket and if you estimate the risk of occurrence as average at worst, it may not be worth it.

For example, compare household insurance with glass insurance. Breakage of glass isn’t that common as many assume. If you can afford a nice apartment, you can probably afford a new window, too. But if there’s a fire in your residential building and your flat burns out, you’ll probably not be able to replace all your possessions at once.

So, before buying insurance in Germany, you should rather ask yourself the question: "What do I need to protect myself and my family from existential risk, like a serious accident, loss of health, and medical costs?" You may then arrive at a different conclusion.

There is a lot of potential to save money by comparing offers and maybe dropping a policy or two that only cover minor risks. Rest assured that the companies did do their math. Unless you have an above-average risk profile for certain events, you won’t come out as a winner in the end.

Tax Deductions 

Some kinds of insurance may result in tax cuts and be financially attractive for this reason. This includes private pension plans (Riesterrente), public or private health insurance (Krankenversicherung), nursing care (Pflegeversicherung), liability insurance (Haftpflichtversicherung), as well as disability / income protection (Berufsunfähigkeitsversicherung). You might want to hire an advisor for doing your taxes in Germany.

For more specific information, please read the second part of our overview.


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