Which insurances do you need?

 
Photo by  Ian Wagg  on  Unsplash

Photo by Ian Wagg on Unsplash

We are often asked which insurances are necessary. The answer: It depends. Some insurance covers are mandatory, while others are optional.

 

What insurances does the typical German citizen have?

According to Statista, the most popular insurances are Health Insurance, Household Contents Insurance, and Liability Insurance, followed by Vehicle Liability. More than 50% of all households in Germany have these insurances. Enclosed is a list of insurance policies by relevance:

1 - Necessary or prescribed by law: This includes insurances that are required by law, as well as Insurance Protection, without which you’d be left looking pretty silly in the event of damage.

Prescribed by Law:

  • Health Insurance: compulsory (whether statutory or private)

  • Motor Vehicle Liability: for motor vehicle owners

  • Professional Liability: professions such as lawyers, notaries, architects, etc.

  • Animal Liability: for dog owners; in some federal states this also applies to horse owners.

Recommended:

  • Liability: Liability Insurance covers damage caused by the insured person. Every year you spend 50-80 EUR for such an insurance - in case of damage millions may arise unless you are insured (e.g. injuries etc.)

 

2 - Our Strong Recommendation: This category includes insurances without whose coverage your financial security could be at risk. 

  • Occupational Disability Insurance: if you are dependent on your earned income to provide for you and your family- you should have this one - because once you are no longer able to work, it becomes effective (important to know: the older you are at the start of the insurance, the more expensive and difficult it will be to obtain the ODI)

  • Disability Insurance: In case you don't have occupational disability cover due to cost reasons or your risk class (e.g. stuntwoman)

  • Child Invalidity Insurance: relevant for parents. If your child should become severely disabled due to illness or accident (disability of more than 50%), this ensures that sufficient money is available by means of a lifelong monthly pension.  

  • Term Life Insurance: this is a so-called Individual Insurance, which distributes a contractually fixed sum to your loved ones in the event of your death.

  • Residential Building Insurance / Real Estate Insurance: a property insurance for real estate owners

  

3 - Useful: Normally we would say that with these insurance policies, the costs will be incurred to you in the event of damage, but most of the times, in cases other than a burned-down home, the financial security is not immediately threatened. 

  • Home Contents Insurance - covers fire, flooding, theft; useful if you own valuables such as expensive furniture

  • Legal Expenses Insurance - Professional Legal Expenses Insurance, Residential Legal Expenses Insurance or Traffic Legal Expenses Insurance makes sense if you drive a lot and fast (Traffic Law), if you have a problematic landlord, if you are a member of a problematic community of owners (Tenancy and Residential Property Law) or if you are active in an industry with a higher risk of cancellation (Occupational Safety). However, trade unions (Labor Law) or associations (Tenancy Law) often offer cheaper legal protection for special cases.

  • Child Accident Insurance: Only useful for children and young people who do not already have Child Invalidity Insurance.

  • Accident Insurance: useful if you have neither an Occupational Disability Insurance nor a Disability Insurance; however, in many cases you are already covered by your employer.

  • Private Health and Supplementary Long-Term Care Insurance: Is not necessary; if you would like benefits that go beyond the statutory health insurance coverage, (chief physician treatment in hospital, better dental care, the reimbursement of costs of naturopathic visits or higher benefits in the case of long-term nursing care)                                               

  • Travel Cancellation Insurance: It pays off if you like to book expensive package holidays and if you travel together with your small children; some credit cards offer this four-shear protection as part of their own services (if you pay for the trip with your credit card)                                               

  • Fully Comprehensive Vehicle Insurance: If you’re buying a new car, you should consider this insurance                                                          

  • Partial Cover Car Insurance : Makes more sense if you’re buying an expensive car  

 

4 - Not very useful and therefore not recommended by us:  Viewed from a cost perspective, these most expensive insurances are not to be recommended

  • Mobile Phone Insurance: in case of damage, you usually pay more than you receive as an insurance premium; certain damages are usually excluded in this case; the legal guarantee still applies in Germany.                        

  • Accident and Breakdown Cover: is usually more expensive than Motor Vehicle Liability Insurance

 

In general: review your insurance contracts from time to time. Do you really need the respective insurance and whether you can take advantage of a cheaper offer from another provider?

OuR recommendation: USE APPS AND NET CONTRACTS

In some cases, you do not need to change your provider if you indicate that you want to cancel the contract. You will be surprised at how often you can negotiate insurance costs. Be sure to remember the keyword Net Cost Contracts. These are contracts for which you do not have to pay commission to the agent or broker. Accordingly, they are cheaper. Because usually the commission or fee is included in your premium. You are usually not aware of this: when a contract is concluded, a broker can receive a commission of 2,500 EUR, which you will be paying off for 10 years. Not everything is subject to Net Cost Contracts: some of them can be found under gonetto.                      

Use some apps to compare prices; like verifox or finanzguru. Please be aware that these apps also often receive commissions from the providers.


Written by Clara Creitz
Finelles Founder. Coach and Consultant (UBS, Towers Watson). 

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