Liability insurance and the most important insurances

In short: Private liability insurance pays when you accidentally cause damage to others; it is regarded as the most important protection, other insurances make sense depending on circumstances.

In more detail: Insurance spreads the risk of large losses across many. It is worthwhile for events that could ruin you financially, and less so for small damages that you can bear yourself. Under German law whoever culpably causes damage is liable without limit with their own assets (§ 823 BGB).

In Depth

Private liability (very important)

It pays justified claims of third parties and fends off unjustified ones, for example if you drop someone else’s phone, cause an accident with your bike or damage the rented flat through water damage. It often costs only about €50 to €100 a year. Children are usually co-insured in their parents’ policy; for adult children in training often until the end of their first education. Important points: high cover (at least €10 million), damage to rented property, loss of claims.

Other important insurances

• Disability insurance (BU): protection of income if you can no longer practise your profession for health reasons. The younger and healthier, the cheaper the entry.
• Health insurance (statutory or private): compulsory.
• Statutory accident insurance: exists for work, training and school.
• Motor liability for vehicle owners: compulsory.
• Household contents: sensible with valuable possessions.
• Legal expenses: depending on need.

Rather dispensable

Small damages and low-value devices (phone insurance, luggage cover for short trips, payment-protection insurance) often cost more than they are worth. Check whether benefits are already covered by credit card, bank or parents.

Tips when taking out

• Read the terms: what is excluded, how high is the excess?
• Use comparison portals and independent advice (consumer advice centre), consider brokers’ commissions.
• Report damage immediately and acknowledge nothing.
• Mind notice periods (often 3 months before expiry, special right to terminate on premium increase).
• Insurance does not replace saving: an emergency fund remains important.

See also: Insurance for small businesses, Health insurance for young founders, Emergency fund