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Car Insurance

Written by
Malgorzata Leszkiewicz
Even a minor car accident can result in high costs due to repairs, vehicle towing, and cleaning up the accident site. In the case of personal injury, accident costs can quickly rise to several million euros. Car insurance protects you against these financial risks. We explain how car insurance in Germany works.
At a glance...

Car insurance in Germany: Essentials

  • Third-party motor insurance is compulsory in Germany. The minimum sums insured are also prescribed by law; however, you should choose a higher sum insured for comprehensive protection against financial liability risks.
  • Although taking out partial or fully comprehensive insurance is optional, it makes sense for most vehicle owners.
  • The insurance premium is influenced by the driver’s no-claims class and no-claims discount, the vehicle’s type and regional class, and additional benefits. You can reduce your premiums for comprehensive insurance through deductibles.
  • The main criteria for picking the right tariff are the sum insured, the price-performance ratio, the tariff’s additional benefits, and the insurance company’s service quality.
  • You should always make an individual selection for additional benefits and only book the benefits you need.

Third-party motor insurance — compulsory insurance for all vehicle owners

Third-party motor insurance is compulsory for all vehicle owners. It covers damage that your vehicle causes to potential accident victims, such as personal injury, property damage, or financial loss.

Insurance cover of private liability insurance does not include risks caused by cars and other motor vehicles. You cannot use your car on public roads without third-party motor insurance. Registering the vehicle and obtaining a license plate number is only possible if you provide proof of insurance to the vehicle registration office. Your insurance company will issue you an electronic confirmation (“eVB number”). You can easily apply for this confirmation and send it to the vehicle registration office digitally.

Sums insured in motor vehicle liability insurance

The legislator stipulates minimum amounts for third-party motor insurance that must not be undercut. These are:

  • €7.5 million for personal injury (per injured person)
  • 1.22 million € for property damage
  • €50,000 for financial losses

In practice, however, these sums are rather tight — especially regarding personal injury. In the event of an accident, you are liable for all resulting damage to an unlimited extent. Referring to personal injury, this liability includes all costs for medical treatment and rehabilitation, compensation for pain and suffering, and compensation for loss of earnings. In the event of permanent incapacity to work, the party responsible for the accident may have to pay the injured party a lifelong pension. Benefits from statutory pension funds, occupational disability insurance, or health insurance must also be reimbursed. Damage to buildings or the environment can also be expensive.

Choosing a policy with a lump sum cover of at least €100 million would be best. Insurance companies usually cap the sum insured for personal injury, with policies of up to €15 million per injured person being common. This does not make your third-party motor insurance more expensive — most insurance companies now offer insurance contracts with this coverage level as standard.

Insurance benefits of third-party motor insurance

Your insurance compensates the other party if you have caused an accident with your vehicle. In detail, the following costs incurred by the other party in the accident are covered:

  • Repair and towing costs
  • Costs for a rental car or the purchase of an equivalent vehicle in the event of a total loss
  • Damage to buildings and other material damage caused by the accident
  • All financial consequences of personal injury
  • Legal fees of the other party involved in the accident

The insurance does not cover damage to your car or damage caused intentionally. In some cases and depending on the insurance contract — for example, in an accident under the influence of alcohol or drugs or after a hit-and-run — the insurance company will pay but take recourse against the customer (with a maximum amount of €5,000 per violation).

In addition to the direct insurance benefits, third-party motor insurance acts as passive legal protection insurance. If you are wrongly accused in an accident, the insurance company rejects unjustified damage claims and represents you in court, providing you with a sense of reassurance.

Fully comprehensive and partially comprehensive insurance

Damage to your car is generally not covered by your liability policy. If your opponent caused the accident, their third-party motor insurance will cover it. For all other damages, you need comprehensive insurance. It is available as a fully or partially comprehensive policy and is not required by law.

You can take out full or partial comprehensive insurance with your liability policy or as a separate contract — possibly with a different insurance company — but you will usually benefit from lower premiums if you take out an overall package.

Partially comprehensive policies

Partially comprehensive insurance is sufficient if your car has significantly lost value after three to five years. You may be able to do without it for ancient used vehicles.

Info: Special insurance for classic cars

In Germany, a classic car is at least 30 years old, in good condition, and in its original state or has been professionally restored. Insurance companies offer special classic car insurance for precious vehicles.

A good partially comprehensive car insurance policy protects the policyholder against the financial risks of the following damage that was not caused intentionally or through gross negligence:

  • Damages caused by storms, lightning, hail, and flooding (including consequential damage, for example, from objects hurled against the car)
  • Fire and explosion
  • Loss of a car due to theft, robbery, or embezzlement
  • Theft of car parts
  • Scorch damage to the wiring
  • Damage caused by marten bites
  • Wildlife accidents (depending on the policy, either only with the furred game or also with other animals)

Fully comprehensive policies

We recommend taking out fully comprehensive insurance for younger and more valuable vehicles. The prices are significantly higher than those for partially comprehensive insurance.

Fully comprehensive insurance policies include all partially comprehensive benefits. In addition, damage to your vehicle caused by a self-inflicted accident and vandalism is covered.

For fully comprehensive cover, the no-claims classes and, thus, no-claims discounts for accident-free driving are just as crucial as for third-party motor insurance. These discounts increase with every accident-free year. However, they are irrelevant for partially comprehensive policies, as they only cover damage you have no control over.

Important: Fully comprehensive cover with high no-claims classes

Suppose you have already achieved a high no-claims bonus. In that case, it may make sense to maintain fully comprehensive cover for an older vehicle, as you may then benefit from very favorable premiums.

Premiums for car insurance

The premium amount for your car insurance depends largely on the policyholder’s no-claims bonus class, type class, and regional class.

No-claims classes and no-claims discount

The system of no-claims classes is used in car insurance for third-party motor and fully comprehensive insurance. Different calculation bases apply to both categories. For every accident-free year you drive, you receive a discount on the introductory price of your car insurance.

In Germany, no-claims classes 0 (new drivers) to 35 correspond to the number of accident-free years driven. In the highest class, you can achieve a discount of up to 80%.

If you report a self-inflicted accident to your insurer, you will be downgraded to a less favorable class the following year and, therefore, have to pay higher premiums again. So, we recommend that you settle minor claims yourself.

The least favorable are the special classes M and S, which apply to new drivers and drivers in the first few years after an accident. They have to pay high surcharges on the introductory price of their car insurance. Long-term customers must also expect to be classified in the M class if they report several claims in one year.

New drivers who insure a vehicle for the first time also pay a surcharge in the first year.

Info: Discount protection

If you choose a rate with discount protection, the first third-party liability or fully comprehensive claim in a year will not result in a downgrade to a lower claim class, so your current no-claims bonus will be retained.

Type and regional classes

Trustees of the German Insurance Association assign all motor vehicles to a specific type class once a year based on the claims settled in the previous year. The type class indicates the probability of damage, which influences the premium amount.

The regional classes of motor vehicles are determined yearly based on the number of claims settlements in the different registration districts in Germany.

Regional and type classes apply to liability insurance and both types of comprehensive insurance. They are calculated separately for these two categories.

The higher the regional class and type class of a vehicle, the more expensive the premiums.

Additional benefits

Additional benefits also influence the premium amount. Some tariffs integrate them as standard, while others allow you to book them as additional modules.

Expected additional benefits in car insurance are:

  • Breakdown cover (“Pannen-Schutzbrief”)
  • Discount protection
  • Liability cover for rental cars in other European countries and usually also in Turkey (“Mallorca policy”)
  • Free choice of garage
  • Environmental damage cover
  • Own damage cover against damage you cause to your property with your vehicle up to the contractually agreed amount
  • GAP cover for leasing vehicles to close the gap between fully comprehensive cover and the leasing company’s claims in the event of a total loss or theft

Info: Passenger insurance — typically not very useful

Passenger insurance makes little sense in private car insurance. Your liability insurance covers passengers in the event of an accident you cause. However, in case of an accident you caused, you are only covered by your health insurance and any existing accident or occupational disability insurance.

Deductibles

There is no excess for third-party motor insurance. The legislator wants to ensure that injured parties can be compensated by the insurance company at short notice.

However, you can reduce your premium by paying excesses with fully or partially comprehensive insurance policies. Independent consumer studies show an average premium saving of 21% for a €150 excess on partially comprehensive insurance. For a fully comprehensive policy, the excess per claim should be at least €300.

Conclusion: Finding the best car insurance in Germany

Choosing the right car insurance in Germany is crucial for financial protection in case of an accident or damage. The benefits of your liability insurance are significant here, as liability claims can quickly lead to remarkably high amounts of damage.

Essential criteria for an insurance comparison are the policy’s price and price-performance ratio, the sums insured, the conditions for additional benefits, and the insurance company’s service quality.

Independent Internet portals provide guidance when choosing insurance; you can use their rate calculators to research and compare tariffs.

In January 2024, the renowned Stiftung Warentest presented a comprehensive comparison of almost all car insurance offers in Germany. 161 tariffs were examined to determine how much liability, partial, and fully comprehensive cover costs for three different age groups. The test winners include the HUK24 Classic, Cosmos Direct Comfort, and ADAC Basic tariffs, which offer comprehensive cover at transparent conditions and fair prices.

Frequently Asked Questions — FAQ

Motor vehicle liability insurance is compulsory — it is impossible for the insurance company to reject your insurance application. Exceptions exist if an insurer has terminated your contract due to a premium shortfall. However, every other insurance company is obliged by law to offer you liability insurance.

On the other hand, the insurance company can refuse comprehensive or partially comprehensive insurance due to excessive risks. Possible reasons for this are insufficient creditworthiness, an adverse claim history, or false information in the insurance application.

The following persons are insured under motor vehicle liability insurance:

  • Policyholder
  • Vehicle owner
  • Vehicle keeper (the person to whom the vehicle is registered)
  • Driver (several drivers can be registered in the insurance contract if required)
  • Passengers

The foreign cover of the policy depends on your insurance contract. German insurance policies that cover damage within Europe and Turkey are standard. If you travel with your car to a country where your car liability insurance does not apply, you must take out separate liability insurance.

Most car insurers allow you to terminate your policy with one month’s notice at the end of the calendar year. The deadline for termination in this case is November 30 — the insurer will need to have received your written notice of termination on this date. Otherwise, the contract will be automatically extended by one year. There are also insurance policies that end during the year.

After a claim settlement and premium increases, you have an extraordinary right of termination, which you must exercise within one month of the event’s occurrence.

Yes, the insurer also has an ordinary and extraordinary right of termination. Reasons for ordinary termination by the insurer are, for example, an increased risk of damage due to frequent claims or rate changes. The notice period is four weeks. Extraordinary termination is possible, for instance, due to non-payment of the premium, false information in the insurance application, or criminal offenses concerning the insured vehicle. Unlike ordinary termination, you cannot object to extraordinary termination by the insurer.

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