Which insurance do you really need? Your guide through the insurance jungle
10.06.25
11
Minutes
Katrin Straub
Managing Director at nextsure
Insurance is a complex topic. Many people ask themselves: which insurance do you absolutely need, and which is just “nice to have”? This article sheds light on the issue and helps you make the right decisions for your financial security.
The topic in brief and concise terms
Health insurance, motor vehicle liability insurance and (depending on the federal state/profession) animal owner’s or professional liability insurance are often mandatory.
Private liability insurance is not legally required, but it is essential for everyone.
Occupational disability insurance protects your income and should be taken out early.
Quick Facts: The most important insurance policies at a glance
Health insurance is absolutely compulsory for every citizen living in Germany. Without motor vehicle liability insurance, no vehicle may be driven on public roads. Private liability insurance is not legally required, but is considered essential for everyone. Income protection insurance secures your income if you are no longer able to work in your profession. For certain professional groups, such as doctors or lawyers, professional indemnity insurance is mandatory. Pet owners often need special pet owner liability insurance, especially for dogs.
Compulsory insurance: These policies are required by law
In Germany there is a system of insurance that the legislature makes mandatory. Health insurance is at the top of the list; every citizen must have health insurance. Anyone insured under the statutory scheme is also automatically covered by social long-term care insurance. Private policyholders must take out separate private long-term care insurance. For vehicle owners, motor vehicle liability insurance is essential; without it, registration is not possible. The minimum cover amount here is 7.5 million euros, although 100 million euros is recommended. Many underestimate the need for this basic cover. Contributions to motor vehicle liability insurance can be claimed for tax purposes as special expenses. These basic forms of cover form the foundation of your financial security.
Understanding indispensable private liability insurance
Although there is no legal obligation, private liability insurance is absolutely essential. It protects you against the financial consequences if you cause damage to others. Costs can quickly become existentially threatening, as your liability is unlimited. Good policies are already available from around five euros a month. The insurer checks whether and to what extent an obligation to pay compensation exists. It also defends against unfounded claims, which is known as passive legal protection. Damage caused by acts of courtesy is often covered today as well. A sum insured of at least ten million euros is recommended. This insurance is a cornerstone for every household.
Benefits of private liability insurance in detail
Private liability insurance covers a wide range of damage. Here are some of the key benefits:
Costs of restoring or replacing damaged items.
Cover for medical expenses and loss of earnings in the event of personal injury.
Payment of compensation for pain and suffering or lifelong pensions in the event of serious injuries.
Protection in the event of damage caused by domesticated small animals such as cats.
Defence against unjustified claims for compensation, if necessary in court.
Cover for consequential losses, for example loss of use.
The cover usually also extends to family members included in the policy. Next, we will look at why occupational disability insurance is so important.
Master safeguarding your livelihood with occupational disability insurance
Disability insurance (BU) is one of the most important optional insurance policies. It pays a monthly pension if you are no longer able to carry out your profession because of ill health. Statistically, one in four employees becomes unable to work in their chosen occupation at some point in their lives. The state disability pension is often not enough to maintain your standard of living. Taking out cover early often secures lower premiums. The most common causes of inability to work are mental health conditions and musculoskeletal problems. This protection closes a critical gap in cover.
Optimising specialised liability insurance for work and livestock farming
For certain professional groups, professional indemnity insurance is legally required or mandated by professional chambers. These include doctors, lawyers, architects and tax advisers. This insurance covers damage caused in the course of professional activity. In many federal states, dog owners are required to have dog liability insurance. In six federal states, this applies to all dogs. Private liability insurance does not cover damage caused by dogs. Dog liability insurance often costs only around EUR50 a year. For horse owners, horse liability insurance is not compulsory, but is strongly recommended. These specific policies cover risks that go beyond standard cover.
Select further important insurance policies for individual life situations
Depending on your life situation and possessions, additional insurance policies can be very useful. A contents insurance policy protects your belongings in the event of damage caused by fire, burst pipes or burglary. For property owners, buildings insurance is essential. It covers damage to the building itself, for example caused by storm or hail. A term life insurance policy is important to provide financial security for surviving dependants, especially where loans are ongoing. Around 16.5 per cent of Germans have taken out such a policy. Many households are underinsured in this area. A private accident insurance policy offers round-the-clock cover, including in your free time. Consider whether accident insurance makes sense. These additional elements round off your insurance cover.
Checklist for useful supplementary insurance policies:
Depending on your personal situation, the following insurance policies can complement your cover:
Legal expenses insurance: covers legal and court costs in disputes.
Overseas travel health insurance: important for travel, as statutory health insurance does not cover all costs abroad.
Dental supplementary insurance: can offset high costs for dentures or specialist treatments.
Long-term care supplementary insurance: closes the gap between statutory care benefits and actual care costs.
Private pension provision: essential, as the state pension often is not enough to maintain your accustomed standard of living.
Insurance for landlords: special policies protect against loss of rent or damage caused by tenants.
A precise analysis of your needs is crucial here. Next, we will look at expert tips and legal aspects.
In-depth expertise: taking legal foundations and current rulings into account
The Insurance Contract Act (VVG) forms the legal basis for most insurance contracts in Germany. For example, Section 113 VVG governs compulsory insurance for motor vehicle owners. With compulsory insurance, insurers are often under an obligation to contract. This means they must generally accept applications. Recent court rulings can influence the interpretation of insurance terms and conditions. For example, there are rulings on the obligation to pay benefits in cases of occupational disability or on cover under private liability insurance. Our expert tip: Keep up to date with changes or have your contracts reviewed by specialists. A precise knowledge of the terms and current case law is worth its weight in gold in the event of a claim. Careful selection and review of your policies is therefore essential.
Identify and optimise your individual insurance needs
Determine and optimise your individual insurance needs
The question of which insurance you need cannot be answered in the same way for everyone. Your personal needs depend on many factors. These include your age, marital status, occupation, income and existing assets. A young family with children and a house has different needs from a single person in rented accommodation. Review your insurance cover regularly, at least once a year or when there are major life changes. Getting married or buying a property are typical times for a review. Professional advice can help avoid overinsurance or underinsurance. Also consider a occupational pension scheme. This ensures your cover always matches your life situation perfectly.
Request your individual risk analysis now: Have your insurance situation checked free of charge and receive specific recommendations for improvement.
More useful links
Federal Statistical Office (Destatis) offers a press release with current statistical data relevant to the insurance industry.
German Pension Insurance provides comprehensive information on disability pensions and their eligibility requirements.
Federal Ministry of Finance provides a glossary entry on private retirement provision, explaining important terms and interrelationships.
Federal Ministry of Health offers detailed information on the benefits of long-term care insurance and their scope.
GDV (German Insurance Association) provides comprehensive statistics and data on the German insurance industry.
Federal Office for Social Security provides current figures and statistics on health insurance in Germany.
BAuA (Federal Institute for Occupational Safety and Health) provides information on the costs of incapacity for work and relevant facts in this area.
FAQ
Which insurance policies are mandatory in Germany?
In Germany, mandatory insurance includes health insurance (statutory or private), long-term care insurance (automatic with statutory health insurance, otherwise to be taken out privately), and motor third-party liability insurance for vehicle owners. Depending on the federal state and dog breed, dog liability insurance may also be compulsory. For certain professions, professional liability insurance is also required.
Why is private liability insurance so important?
Private liability insurance is important because you are liable without limit with your entire assets for damage you cause to others. Without insurance cover, even small mishaps can lead to costs that threaten your financial security. It covers personal injury, property damage and financial losses.
When should I take out occupational disability insurance?
You should take out occupational disability insurance as early as possible, ideally while still a pupil, student or just starting your career. Younger people are often healthier and therefore receive lower premiums and better conditions.
Which insurance policies are particularly relevant for families?
For families, in addition to compulsory and basic insurance policies (health, private liability), term life insurance to provide for surviving dependants, contents insurance and, where appropriate, accident insurance for children are often sensible. Disability insurance for the main earners is also crucial.
Does my personal liability insurance also cover damage caused by my drone?
Usually not. For drones, a separate drone liability insurance policy is usually legally required, as they are considered aircraft and entail specific risks.
How can I find out which insurance I really need?
Analyse your personal life situation: age, marital status, profession, income, assets and future plans. Review your needs regularly. Professional advice from an independent insurance expert or a digital insurance portal such as nextsure can help you identify the right insurance policies and avoid unnecessary policies.
