Biggest insurance mistakes made by expats in Germany

Biggest insurance mistakes made by expats in Germany

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Tips on how not to get caught in the expat insurance trap. [Sponsored contribution]

Nowadays, we face an immense insurance market. The products are complex, the contractual basis complicated and often not very comparable. More than 450 insurance companies are active in the German market and offer a variety of policies for residential and commercial customers. The consumer is now face the question: What policies are necessary and which are superfluous? The right answer should not be expected from the insurance agent, because he or she is interested in selling as many insurance policies as possible. The result: Many Expats are incorrectly insured and mostly too expensive.

The idea of this article is to give you an overview of coverage that are good to have. 

Of course the needs of each individual can’t be fundamentally determined. But we can nevertheless categorize insurance into the following three. The "mandatory" and the "Better-Let-Go" - category.

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TIP: Regardless of where you happen to spend your life do consider the following important principle when setting your financial plans:  Protection against existential risks always has priority over capital construction for education or retirement.
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The "mandatory insurance" I would highly recommend, are those that could cost you your existence, if you do not have such insurance. This will be discussed in this article. I will refer to the “Better-Let-Go” category as bullet points.

Let us begin with the mandatory insurance.

Personal Liability Insurance

Have you also experienced this?
An insurance representative will tell you a story about a random acquaintance that had experienced a mishap and is now financially ruined because exactly this insurance was neglected.
Well I do not intend to frighten you, but without this insurance you really face financial hazard in worst case.
The private liability insurance jumps in when you or someone in your family happen to harm another person or damage someone property. Even a slight carelessness can cost you your entire income. Depending on whether you want to protect yourself or the whole family, it only costs 60€ to 120€ per year. It should be noted that the coverage must be at least 3€ million.   

Disability Insurance


Yes, expensive but useful.
Well, I admit that hardly anyone is concerned about the how one’s life could look like if the profession can no longer be exercised due to illness or accident.
The sad truth is that the protection which the statutory pension insurance provides in such cases is simply a joke. Only when you are no longer able to work more than three hours per day, then you get a full disability benefit. The funny thing is that every form work is considered. If for example you can’t pursue your work as an IT-specialist due to illness but can work as a janitor, then you are not entitled to receive disability benefit. The private disability insurance only considers your current occupation and provides the agreed benefit in case of disability.  
The premium you pay monthly depends on the amount you wish to cover in the case of disability.
The coverage can be taken out privately or through your employer. Latter allows you to take advantage of tax and social security benefits, thereby reducing the cost of disability insurance      

Travel Health Insurance

Being an expat in Germany automatically involves travels back home. The statutory health insurance covers the health care cost in other European countries, which correspond to the amounts paid by the local social insurance. Other important services such as transport back home (Germany) are not covered by health insurance, and in exotic countries, there is no insurance cover. This can be expensive: In the U.S., a stay at the hospital costs the equivalent of about 2000€ per day. Therefore it makes sense to take out private health insurance for foreign travel. Very good insurers do offer the coverage for less than 20€ per year and for a period of up to six weeks per trip.

These above-mentioned insurance are optional and not mandatory in Germany but certainly highly recommended.
Compulsory are the health insurance (to distinguish are the statutory and private health insurance), and if you own a car a vehicle-liability insurance.

CAUTION: These types of insurance, you do not need at all. They are either too expensive, in-transparent or actually do not provide coverage in case the event arise. 

  • Endowment policy
  • Education Insurance
  • Baggage Insurance
  • Death benefit insurance
  • Passenger Accident Insurance
  • Glass Insurance


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TIP:  Beware of packaged solutions. Try to avoid package solutions. In very few cases they happen to hold what they promise. This is especially the case for endowment policies. Insurance and savings should always be separated. You will find that there is little transparency regarding the contributions made.
Even a combination of various insurance is to be handled with caution. A package consisting of residential buildings-, contents- and legal protection insurance sounds perfect for homeowners. Often, however, if happens to be far more reasonable to purchase the individual contracts. By doing so you can be sure of selecting the best product offered on the market.
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Have your contracts checked on a regular basis (at least once a year) so you can be sure of maintaining the right premium and most importantly the coverage.



For more information on insurance in Germany, please go to my website www.obn-finance.com.

 Biggest insurance mistake made by expats in Germany

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