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Types of 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.
Medical insurance and car insurance are actually legal obligations in Germany.

Below we intend to give you an overview of insurance coverage available in Germany. Most is related to work, vehicles, or housing. You can find some more detailed information in the corresponding articles on these subjects.

A few insurance plans, however, do not fit these three categories. Among those, private liability insurance, legal insurance, and life insurance are the most important.

Personal Liability Insurance

Only two thirds of all households in Germany have personal liability insurance, though it’s one of the most important forms of insurance coverage. It covers all damage you may cause carelessly, e.g. by forgetting to snuff a lighted candle and causing an entire apartment block to burn down. The definition of damage also includes the physical injuries of others.

However, it does not cover any damage to yourself, your family members, or your own property. Furthermore, neither car accidents nor accidents at work are covered.

As a rule of thumb, you can assume that personal liability insurance excludes everything for which there is a separate insurance plan. When in doubt about the coverage, ask your insurer or a lawyer. Personal liability insurance deals start at as little as 60€ per year for minimum coverage including an entire family.

Legal Insurance

Legal insurance covers all costs of a trial except fines. This includes a lawyer, fees for expert witnesses, legal expenses, as well as the other party’s costs if you should lose the case. A bail may be covered as well.

You can only make a claim after a certain waiting period that begins upon obtaining the insurance. When you file a claim, the insurance company usually checks the case and may refuse to cover it if it doesn’t stand much chance. For the latter, you may want to ask your lawyer for advice.

Legal insurances are customized to their specific field of coverage, be it work, traffic, housing, or other issues of daily life. It’s only recommended to take out this kind of insurance policy if your risk is higher than average.

For example, if you drive a lot, you might want to think about getting legal insurance for this. Lots of car accidents lead to lawsuits concerning whose fault it actually was.

Life Insurance in Germany

Those taking out a life insurance policy can have very different motivations. It can be intended as a benefit for one’s family in case of premature death, but it can also serve as an investment for retirement or as a supplement to one’s pension. There is a variety of policies and tariffs available.

If you are interested in obtaining a life insurance policy, we recommend consulting an expert. However, there are some tips that might apply to most people living in Germany. For example, a life insurance policy is highly useful for everyone who has financial dependents to support. Then they don’t have to worry about their loved ones facing ruin if the household’s “breadwinner” dies suddenly.

But if you’re worried about serious illnesses before your retirement, about affording a caretaker in old age, or about the amount of your pension, other insurance plans are more suitable. Think about paying into a private retirement funds, about taking out nursing care insurance, income protection, or accident insurance instead.

Work-Related Insurance Policies

In Germany, a variety of insurance plans are compulsory when you take up employment. Contributions to social security in Germany are automatically deducted from your salary by your employer, who shares the costs with you. These contributions go to the national unemployment, nursing care and pension funds, and to either public or private healthcare providers.

Work-related accident insurance is entirely your employer’s responsibility. If you fall ill, your employer is usually obliged to keep paying your full salary for six weeks. After that, your health insurance provider pays about 70% of your salary for up to 18 months.

Of course, you can obtain additional private insurance policies for illness or disability. If you are self-employed, you even have to organize your healthcare plan yourself. You can’t simply go without medical insurance in Germany. Health insurance is obligatory for everybody. If you can’t afford a fancy private plan, private insurance providers have to offer you a cheaper basic policy. It features the same kind of coverage as public healthcare.

Whether you have to contribute to the government’s pension fund, too, depends on your occupation. Also, you might want to consider taking out additional insurance in case of accident or chronic illness. That way, you have something to fall back on without depending on the rather meager government benefits for people with disabilities.

Housing-Related Insurance Plans

In Germany, you can spend a lot of money on insurance policies concerning housing and accommodation. Insurance coverage for burglary, as well as all kinds of damage to your property and belongings, is available.

Homeowners who rent out their property should get a special kind of liability insurance, too (Haus- und Grundbesitzerhaftpflicht). If you have an oil tank in your house, an insurance plan in case of oil spill (Gewässerschutzversicherung) is also advisable.

German Car Insurance

Basic insurance coverage (Kfz-Haftpflichtversicherung) is mandatory for every car owner. To register a car and get a valid license plate, you have to show proof of third-party liability insurance.

Coverage can be extended to damages to your own vehicle (Teilkasko/Vollkasko). You can read more about vehicle insurance in our guide to owning a car in Germany.


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