Guide on types of insurance in Germany that are mandatory by law, must-haves, good-to-have, and not required.

Key Takeaways

• Everyone should have health and personal liability insurance in Germany.
• Homeowners insurance is vital if you own a property in Germany.
• Disability insurance and travel health insurance can be helpful but not a must.
• Life insurance in Germany is no longer worth it.
• Mobile phones, glasses, luggage, and pet health insurance are unneeded.
• Legal insurance can come in handy in many situations. However, legal insurance in Germany is costly. Hence, consider your use case before buying one.

This is how you do it

• Check your insurance as soon as something changes in your life. For example, you move in with someone, get married, or retire.
• Taking insurance makes sense when you cannot pay the costs if the insured event occurs. If you can, then in most cases, you don’t need coverage.
• Use this guide to decide whether you have adequate coverage.
• Compare different offers on comparison portals like Check24* and Verivox*.

Table of contents

Insurance companies use the customers’ fear to sell their products. But, of course, life is a risk. However, it doesn’t justify insurance coverage for everything that could happen.

Currently, you can get insurance coverage for wedding cancellations. There is little that you can’t insure in some way nowadays.

However, in many cases, taking insurance is an additional cost that doesn’t make sense.

But everyone in Germany should have at least two types of insurance.

• Health insurance (Krankenversicherung in German)
• Liability insurance (Haft­pflicht­ver­si­che­rung in Germany)

In addition, depending on your life situation, having other types of insurance can be helpful.

Mandatory Insurance in Germany by Law

Under German law, some types of insurance are mandatory. These include health insurance, car insurance, and, for many, statutory pension insurance.

Let’s learn more about them.

Health insurance (Kran­ken­ver­si­che­rung in German)

Every German citizen must have either public or private health insurance.

By default, you enroll in public health insurance. But have the option to move to private health insurance.

However, public health insurance is for most people as the cost of private insurance rises sharply in old age. And moving to public health insurance once you register in private is difficult.

Thus, the long-term costs should be weighed when choosing between public and private health insurance.

NOTE: Doctors only treat you in emergencies if you don’t have health insurance in Germany.

There are many public health insurers to choose from. They all provide competitive benefits.

You can compare different public health insurers on Feather* and find the one that fits your needs.

However, some health insurance companies have ties with businesses and offer additional benefits to their employees at no extra cost.

So, check with your employer if they have ties with any health insurance company.

You can also compare different private health insurance plans on Check24*, especially if you are self-employed or staying in Germany temporarily.

Car liability insurance (Kfz-Haftpflichtversicherung in German)

Every vehicle must have at least third-party insurance. Full and partial comprehensive insurance (Voll- und Teil­kas­ko­ver­si­che­rung), on the other hand, are optional.

Here is the difference between the three.

• Third-party liability (haftpflicht): Under it, the insurance provider covers the damage to third parties and other vehicles in the event of an accident. But the insurer doesn’t cover damage to your car if you are responsible for the accident.
• Partial coverage (teilkasko): It covers third-party liability plus damages to your vehicle in certain cases. For example, theft attempts, fire, storm damage, etc. The coverage benefits may vary depending on the car insurance.
• Full coverage (vollkasko): As the name suggests, it covers everything, including damage to your vehicle. In full coverage, it doesn’t matter if the accident is your fault. The insurer covers all the costs.

NOTE: You will end up with a hefty fine if you own a car but don’t take car insurance.

The cost of car insurance varies depending on your driving experience, type of coverage, and years with no accident. You can compare different insurance plans on portals like Check24*, Verivox*, etc.

Here is how you can decide which insurance policy to pick.

• For new cars, take out Full coverage (Vollkasko)
• For high-quality older cars, partial coverage (Teilkasko) is sufficient.
• For old rust buckets, Third-party liability (haftpflicht) is adequate.

Statutory pension insurance for employees (Gesetzliche Ren­ten­ver­si­che­rung in German)

Most people live on their pension after retirement. Hence, taking pension insurance becomes a must for many.

All employees in Germany are, by default, part of the statutory pension insurance. And the contribution to pension insurance is automatically deducted from their salary every month.

For self-employed people, that’s not the case.

Some self-employed people, such as craftsmen and midwives, are also compulsorily insured by statutory pension insurance. Others have the option to enroll.

However, the statutory pension is often insufficient, and experts advise additional private pension coverage. We will learn more about it later in this guide.

These insurances are essential in Germany

In addition to compulsory insurance, you should consider taking the following insurance to protect yourself against major financial risks.

The good thing is these types of insurance are not always expensive.

For example, you can find liability insurance for 5 € a month and travel health insurance for less than 10 € a year.

Personal liability insurance (Pri­vat­haft­pflicht­ver­si­che­rung in German)

Personal liability insurance covers the cost of damage to property and injury to a person caused by you.

In my view, personal liability insurance should be mandatory by law. But, unfortunately, it’s not.

This insurance policy is a must for everyone in Germany, as you may end up bankrupt if you don’t have it.

For example, you injure someone accidentally, resulting in a permanent disability. In this case, you will end up paying tens of millions to the injured party.

If you don’t have that sum, you must file bankruptcy and end up in debt for life.

So, make sure you take this insurance.

Moreover, it costs only 5 € per month, and you can insure your whole family under the same plan.

You can find good personal liability insurance on Check24* or Verivox*. You can also check Getsafe* and Feather* if you are looking for services in English.

Homeowners insurance (Wohn­ge­bäu­de­ver­si­che­rung in German)

If you own a property, you should get homeowners insurance. It covers damages caused to the property by storm, hail, fire, or lightning.

If you own an apartment, your house union (Hausverwaltung in German) ensures taking homeowners insurance. Hence, you don’t have to worry about it.

You can find good homeowners insurance on Check24* and Verivox*.

Travel health insurance (Auslandsreise-Krankenversicherung in German)

Travel health insurance makes a lot of sense, even when traveling within the European Union. It covers the costs of treatments in foreign countries and returning to the home country for further treatment.

Both public and private health insurance only sometimes cover such costs. Thus, it is vital to check with your health insurance provider before your travel.

Moreover, you need travel health insurance if you travel abroad for longer than eight weeks. It is an add-on to your existing health insurance and costs only 10 € per year.

For employed people: Disability insurance (Be­rufs­un­fä­hig­keits­ver­si­che­rung in German)

Almost everyone should have disability insurance – regardless of whether they are construction workers or software engineers.

Because not only can broken bones make you unable to work, but also mental illness.

The statutory disability pension is often not enough. Hence, you should protect yourself by taking a private disability insurance policy.

Disability insurance is cheaper for young people than it is for old ones. Thus, the earlier you take this policy, the better.

If you cannot get a contract for health reasons or if the protection is too expensive, there are alternatives to disability insurance, like private accident insurance.

You can compare different disability insurance plans on Check24* and Feather*.

For dog owners: Dog liability insurance (Hun­de­haft­pflicht­ver­si­che­rung in German)

Dog liability insurance is a must for every Dog owner. Some federal states in Germany made it mandatory by law.

Pet insurance compensates for the damage caused by your pet, in this case, your dog. Unfortunately, private liability insurance does not cover your four-legged family member.

Find good and cheap pet liability insurance on Check24* and Feather*.

For sole earners with home loans: Term life insurance (Ri­si­ko­le­bens­ver­si­che­rung in German)

If one parent dies, the other parent alone must secure the family income. Therefore, being a single parent is one of the greatest risks of poverty in Germany.

This is where Term life insurance comes into play. It protects your surviving dependents financially, especially when you are the sole earner and have a home loan.

Term life insurance is different from life insurance. Term life insurance protects you for a specific period, whereas life insurance covers your entire life.

You can buy this insurance directly from the bank while taking a loan or from one of the portals like Check24* and Feather*.

For the self-employed and high earners: Daily sickness benefits (Krankentagegeld in German)

The daily sickness benefit compensates for the loss of income due to illness.

You need daily sickness allowance insurance if you are not eligible for sickness benefits from statutory health insurance.

Moreover, if you are a high earner, you can use such insurance as a supplement to sick pay from statutory health insurance.

The reason is the sick pay has a maximum limit of 2979 € net per month as of 2022. And it may not be enough to cover your expenses.

You can learn more about sickness benefits and health insurance costs in our guide, “Sick Leave in Germany.“

I know it can get overwhelming to understand which types of insurance you should have. So to support you in making the best decision, Feather* offers a free service to identify the insurance you may need based on your personal situation.

These insurances are good to have in Germany

Some insurance policies belong more to the category of “optional” or “good to have.” They are not necessary, but in some cases, they can be a good addition to your insurance coverage.

However, you should only consider such insurance if you have all the essential insurance policies and there is still enough money in the household budget for additional protection.

Supplementary care insurance (Pflegezusatzversicherung in German)

Nursing care is expensive in Germany.

The benefits from statutory long-term care or nursing care insurance are usually insufficient to cover the medical costs.

The good news is supplementary nursing care insurance can help close this gap. But it is often quite expensive.

Thus, you should consider having such a policy if you can afford the high contributions in the long term.

For parents: Child disability insurance (Kin­der­in­va­li­di­täts­ver­si­che­rung in German)

If your child suffers permanent health damage due to illness or a severe accident, child disability insurance can provide financial security for your child.

Good policies pay a monthly pension for life. But unfortunately, only a few insurance companies still offer such tariffs.

Please note that “Child disability insurance” is valid until your child is in school. Once your child’s schooling ends, they will need “Occupational disability insurance” instead.

Household insurance in Germany (Hausratversicherung in German)

Household insurance covers you in the event your house catches fire. And fire damages the household contents like clothes, furniture, and valuables.

Such insurance makes sense when you have expensive things in the house that you cannot replace with your savings.

Statistically speaking, the probability of your house catching fire is very low.

However, you can check different household insurance plans on Check24* or Verivox* and decide whether it makes sense for you to take one.

Pension for the self-employed: Basic security pension (Basisabsicherung Rente in German)

If you are self-employed, you must take care of your retirement and pension.

You can secure your older self in three ways.

• Take out compulsory insurance in the statutory pension insurance scheme.
• Enroll in a classic Rürup pension scheme.
• A combination of statutory pension insurance and bonds linked to Rürup pension insurance.

We added this insurance in the good-to-have category as there are better alternatives to secure your retirement. For example, ETF savings plans, investing in real estate, etc.

Pension for employees: Company pension scheme (Betriebliche Altersvorsorge in German)

If you are employed and will continue to work for your employer for the next few years, you should review company pension schemes (Betriebliche Altersvorsorge – bAV).

As per German law, employers must arrange private pension insurance for their employees.

In company pension schemes, one also speaks of direct insurance (Direktversicherung). The advantage of this policy is that you don’t pay social security or taxes on your monthly policy contributions.

Moreover, your employer shares parts of your contribution. Since 2019, the minimum employer share has been 15 percent. But we recommend you negotiate for more.

This insurance is a good way to save for your retirement and tax.

Pension for employed high earners: Riester

A Riester contract is an option if you are employed and a high earner and want to top up your statutory pension with a private pension.

Under this scheme, the state supports you with allowances and tax advantages. It is especially beneficial for families with several children or high earners.

You can think about a classic Riester pension insurance. However, the Riester fund savings plan offers better prospects for returns.

Before taking this insurance, you must weigh its benefits against investing in ETF savings plans.

You can compare different Riester plans on Check24*.

Supplementary dental insurance (Zahn­zu­satz­ver­si­che­rung in German)

Statutory health insurance covers part of the dental costs. As a result, you end up paying a few hundred to thousands of euros during your dental visit.

Hence, having supplementary dental insurance can save you some money. However, it only pays off if you often need expensive dental care.

We compared several dental insurance plans and found Ottonova*, Deutsche Familienversicherung AG*, and Hallesche Zahnzusatzversicherung* one of the best dental insurance providers.

Private legal insurance (Rechts­schutz­ver­si­che­rung in German)

If you want to protect yourself against the costs of a legal dispute, you can take out legal protection insurance.

There are many types of private legal insurance in Germany, depending on the area you want to cover.

For example, property owners can take private legal insurance to cover disputes with their tenants. Likewise, employees can take legal insurance to cover the legal costs of conflicts with their employer.

The insurance covers legal costs, court fees, and costs of legal consultation. But unfortunately, no single policy covers the legal expenses of all your life situations.

On top of it, legal insurance in Germany is expensive. Hence, you must consider which policy you really need.

There are also cheaper alternatives to cover the legal costs of certain areas of your life. A few worth mentioning:

• Tenants’ association membership (Mieterverein in German) to insure against conflicts with the landlord. And it costs around 50 € annually.
• Similarly, Landlords’ association membership (Vermieterverein / Eigentümersverein in German) to insure against quarrels with the tenant.
• Trade union members (Gewerkschaftsmitglieder in German) against labor law proceedings.
• Private liability insurance (Haft­pflicht­ver­si­che­rung) helps if someone makes an unjustified claim for damages against you.

However if you find yourself in a situation where taking legal insurance makes sense, you can compare different offers on Check24* and Verivox*.

Supplementary Hospital Insurance (Krankenhaus-Zusatzversicherung in German)

Supplementary hospital insurance pays for specialists and extra costs for private services, such as accommodation in a single or double room.

It is a good-to-have policy, and many don’t need it.

Accident Insurance in Germany (Unfall­ver­sicherung in German)

Accident insurance pays if a permanent physical impairment remains after an accident. However, you will not receive any money if your injuries heal without consequences.

Important to know: Accidents cause only 2 percent of severe disabilities. Instead, illness is the primary cause of it.

Hence, private accident insurance doesn’t make much sense based on the statistics. But you can consider it if occupational disability or disability insurance is not possible.

The best thing about private accident insurance is it covers you if you can no longer work – regardless of what caused it; an accident or illness.

Travel cancellation insurance (Rei­se­rück­tritts­ver­si­che­rung in German)

You like to travel and plan your trips in advance. But sometimes, you must cancel your vacation because someone in the family gets sick.

Canceling the holidays is sad, but not getting a refund on your bookings makes it worse.

Travel cancellation insurance can save you a lot of money in such situations. Because the insurance steps in if you or your loved ones get sick or die unexpectedly.

Hence, families with kids or elders should consider this insurance.

NOTE: Getting money from the insurer might be difficult if you have previous illnesses. The reason is there may be a dispute about whether the sickness was really unexpected.

You don’t need these types of insurance in Germany.

A thick folder with many insurance contracts may give you a reassuring feeling. But every insurance costs money and doesn’t always protect you the way you want it to.

Our Advice: Think about the costs you would incur in the event of an insurance claim. You wouldn’t need insurance if you could pay the cost from your savings.

An example: If your mobile phone breaks, it’s annoying. However, buying a new smartphone will not cause you financial difficulties. Thus, you don’t need mobile phone insurance.

But it’s different if your house burns down. In such a case, your financial situation will be adversely affected without homeowners insurance.

Here are some types of insurance that we think you don’t need.

Life insurance (Le­bens­ver­si­che­rung in German)

Due to low returns and high costs, it is no longer worth taking out capital or bond-linked life insurance policies.

Instead, you are better off taking an ETF savings plan. You can even have an ETF saving plan with a payout plan in the retirement phase.

Almost every stockbroker in Germany offers ETF savings plans at a competitive price.

Education insurance(Ausbildungsversicherung in German)

Education insurance is like life insurance for children. Usually, parents or grandparents take it to protect their kids’ future.

However, the policy is expensive and inflexible. Hence, it makes more sense to invest the money yourself instead.

Outpatient supplementary insurance (Ambulante Zusatzversicherung in German)

Outpatient supplementary insurance only makes sense if you want to use alternative healing methods. However, insurers usually limit annual reimbursements.

Moreover, many health insurance companies already offer alternatives like homeopathy, alternative medicines, and osteopathy.

Residual debt insurance/loan default insurance (Rest­schuld­ver­si­che­rung / Kreditausfallversicherung in German)

Residual debt insurance is not worthwhile, especially for smaller installment loans.

It’s too expensive and often does not step in if you can no longer pay the installments.

Death benefit insurance (Sterbegeldversicherung in German)

In the event of the insured person’s death, relatives receive money from the death benefit insurance for the funeral.

It makes more sense to save the money for a funeral yourself. It’s because insurance is expensive, and relatives often receive less money than what was paid into the policy.

Mobile phone insurance (Handyversicherung in German)

Mobile phone insurance is often expensive and excludes many damages.

In addition, other insurances, like household contents and personal liability insurance, cover your mobile phone in certain cases.

Hence, paying for repairs yourself is better than taking insurance.

Pet health insurance (Tier­kran­ken­ver­si­che­rung in German)

Health insurance for your pet is expensive and does not cover many costs.

Also, most dog or cat treatments aren’t so expensive that they will put a dent in your budget. Thus, setting aside some money each month is better than taking pet health insurance.

Horse owners can consider horse surgery insurance.

The policies that only cover the cost of surgeries are much cheaper than horse health insurance. Hence, it can be worthwhile if your horse needs expensive surgery.

Glass breakage insurance (Glasbruchversicherung in German)

Insurance like private liability, residential building, or household contents already covers the costs of glass breakage. Hence taking an additional policy is not intelligent.

Eyeglasses insurance (Brillenversicherung in German)

The insurance broker sells eyeglasses insurance in a package with other insurance policies, none of which are particularly useful.

Moreover, the insurance company caps the reimbursement amounts to somewhere between 100 and 300 € every two years.

Thus, saving money for new glasses is better than paying premiums.

Taking this insurance might be helpful if you or your kids break their glasses often.

Daily hospital benefits insurance (Kran­ken­haus­ta­ge­geld­ver­si­che­rung in German)

Daily hospital benefits insurance pays an amount for each day you spend in the hospital.

But as you already know, employed people get sickness benefits and self-employed can take sickness allowance insurance.

Thus, taking daily hospital benefits insurance doesn’t add much value.

On top of it, sickness allowance insurance steps in when you are sick and unable to work. It doesn’t matter if you are at home or in a hospital.

Travel bags Insurance (Rei­se­ge­päck­ver­si­che­rung in German)

Travel bag insurance protects you if your luggage gets lost or stolen during the vacation.

However, many household contents insurance already offer such protection.

On top of it, usually, the airline is liable for damage or loss of your bags on the flight. And many tour operators insure your luggage without any extra cost.

Hence, taking this insurance is unnecessary.

Child Accident Insurance (Kin­der­un­fall­ver­si­che­rung in German)

Child accident insurance protects children financially if they depend on help for the rest of their lives due to an accident.

However, accidents are rarely the cause of severe disabilities in children.

More often, illness causes severe disability. And in such cases, child disability insurance can help.

However, as we already know, such contracts are expensive, and only a few insurers offer them.

I know it can get overwhelming to understand which types of insurance you should have. So to support you in making the best decision, Feather* offers a free service to identify the insurance you may need based on your personal situation.