Insurance: Making the best of a bad situation

Unfortunately, it is impossible to predict adverse events and accidents. However, there are many ways of protecting yourself against their consequences. In the following section, we describe the most important kinds of insurance and explain how to obtain such insurance.

Insurance: Making the best of a bad situation

Private liability insurance

Liability insurance

Accidents can happen in the blink of an eye – your child kicks a ball through your neighbour’s window, or you break a vase while visiting a friend. In Germany, you are liable in such cases. In other words, you need to pay for the damage. To prevent this from happening, a liability insurance can be useful. Many Germans regard liability insurance as the most useful and important of the optional types of insurance. In the event of a claim, private liability insurance covers the cost of damages up to a specified amount. It also covers your spouse and children. Liability insurance is available starting at less than 100 euros per year.

Aiste from Lithuania
When I came to Germany to work as an au pair, the mother of the family advised me to take out civil liability insurance. At that time, I thought it was a sheer waste of money. Since she was always nagging me about it, I reluctantly took out civil liability insurance for 60 euros a year with a €5 million cover limit. It annoyed me every year when the insurance fee was debited from my account – until one day, an accident occurred. I was at a party at my host family’s house and I accidentally knocked over a bottle of wine. A mobile phone and a laptop were on the table and unfortunately, they got broken. But before I started worrying about how to pay for them, the mother reminded me of my civil liability insurance. In Germany the law states that if you cause damage intentionally or unintentionally, you have to pay for it. My insurance covered all the damages. My tip: I’d advise anybody, whether they’re a student or working, to take out a civil liability insurance.

Motor vehicle insurance

Motor vehicle insurance
  • Motor vehicle liability insurance: If you own a car or motorcycle, you are required to have motor vehicle liability insurance. You are not allowed to register your vehicle without it. This insurance pays for personal injury, material damage and property loss if you cause an accident or injure someone while driving your car. The cost of the insurance – the insurance premium – may vary widely. It depends on such factors as the type of vehicle (car or motorcycle), its age and the number of years you have been driving without an accident.
  • Comprehensive insurance: Motor vehicle liability insurance covers damages to the opposing party. You may also take out a comprehensive insurance policy to cover your own vehicle. A distinction is made between Teilkasko (comprehensive insurance) and Vollkasko (comprehensive insurance plus collision coverage). Teilkasko insurance generally pays for the following damage to your vehicle:
    • theft or robbery
    • fire or explosion
    • storms, hail, lightning, flooding
    • collisions with certain animals (such as deer)
    • broken glass
    • short-circuit damage to cables

Vollkasko insurance also covers any damage resulting from an accident – even if you were at fault – as well as damage from vandalism. This is particularly advisable if your vehicle is new, since the cost of damage would be especially high.

Among other things, the cost of comprehensive insurance depends on your deductible, which is the amount you are required to pay out of pocket. For Teilkasko insurance, it is generally about 150 euros; for Vollkasko insurance between 300 and 500 euros.

  • Car breakdown insurance: With a car breakdown insurance policy, the provider covers the costs if you need a rental car or to have your car towed because of a breakdown or accident. In many cases it also covers the cost of transporting an injured or ill person. You can purchase car breakdown insurance from motor vehicle insurance companies and automobile clubs.

Further insurances

Social security

Social security

If you have a job that requires social security contributions, you are insured under the Social security system, which covers the major risks in life: illness, unemployment, accidents and the need for long-term care. Information about social security benefits and contributions can be found here.

Household insurance

This insurance covers the contents of your house or flat. For example, it pays if your furniture or clothing is stolen or damaged by fire, storm or water. The cost depends on the size of your home, among other things. It is particularly worthwhile if you keep valuable items in your home.

Accident insurance

You are a member of the statutory accident insurance through your employer. This means that you are covered in the event of an accident in the workplace or on your way to work. However, most accidents happen when you are not at work, and this is where private accident insurance can help. While medical treatment is covered by statutory health insurance, private accident insurance can help mitigate financial consequences. Most importantly, private accident insurance covers you if you become disabled as a result of an accident and are no longer able to work. The insurance company pays disability benefits. You can purchase coverage for types of rehabilitation that are not paid for by statutory health insurance.

Retirement benefits

Germany’s statutory pension insurance is the most important and strongest component of our old-age security system. To maintain your existing standard of living, however, it is advisable to have an additional retirement plan. Since 2002, the government has subsidised such supplementary pensions. The principle is both simple and effective: If you supplement your statutory pension, whether privately or at your workplace, the government will help – by providing subsidies and tax and contribution exemptions.

Taking out insurance policies

How to purchase an insurance policy

To insure yourself against risk, you should purchase an insurance policy. The policy stipulates the following:

  • Who or what is being insured?
  • What is the insured event? In other words, in what case will the insurance company pay?
  • What is the maximum amount that will be paid (amount of insurance)?

Before purchasing a policy, make sure to do plenty of research. Talk to your friends and colleagues. You can also consult a professional insurance consultant, but if you do so, make sure that the consultant provides impartial advice. Insurance consultants at the Consumer protection agency can offer further information.

When you have chosen an insurance company, make an appointment for a personal meeting, where you can talk about the details of the policy. It is a good idea to “sleep on it” before signing a contract. If you are not entirely fluent in German, ask a friend or colleague to go with you to the meeting.

Insurance terms

The most important insurance terms
  • Pflichtversicherung (Compulsory insurance): Insurance required by law. If you have a car, this includes motor vehicle liability insurance.
  • Selbstbeteiligung / Selbstbehalt (Deductible): This is the amount that you are required to pay out of pocket if an insured event occurs. It may be a fixed amount or a percentage.
  • Versicherer (Insurance provider): The company from which you purchase your insurance policy.
  • Versicherungsnehmer (Policyholder): The individual who purchases a policy from the insurance company, normally you or a member of your family.
  • Versicherungsfall (Insured event): The event that triggers payment from your insurance company (for example a car accident in the case of comprehensive motor vehicle insurance or illness in the case of health insurance).
  • Versicherungsprämie / Versicherungsbeitrag (Insurance premium or insurance contribution): The one-time or regular amount that you pay to your insurance company. The insurance policy determines the amount and when it is to be paid.
  • Versicherungsleistung (Insurance benefit): The benefit you receive from the insurance company if the insured event occurs. This may be a monetary amount or a replacement in kind. The latter term means that the damaged item is replaced, for example: A broken window is replaced with a new one. The maximum insurance benefit is defined in the insurance policy.

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Information on this portal

Five types of insurance to cover the major risks

No need to fear crime or natural disasters

Information on the World Wide Web

Federal Office for Migration and Refugees

The German Social insurance in brief (German, English, Russian, Turkish)

Bund der Versicherten

Information about liability insurance (German)

German Insurance Association

Explanation of the most important insurance terms (German)

Information about motor vehicle insurance (German)

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