Car Insurance in Germany: A Comprehensive Guide

Germany is known worldwide for its precision engineering, efficient transportation systems, and high-quality vehicles. As the home of iconic automobile brands such as Mercedes-Benz, BMW, Audi, and Volkswagen, cars play a significant role in everyday life. Whether you are a local resident, an expatriate, or a foreign student in Germany, owning and driving a vehicle comes with specific legal responsibilities. One of the most important is having proper car insurance.

This article provides an in-depth look at the German car insurance system, including the legal requirements, types of coverage, factors affecting premiums, and tips for choosing the best policy.

1. The Legal Framework for Car Insurance in Germany

In Germany, car insurance is mandatory for all vehicle owners. According to the German Road Traffic Act (Straßenverkehrsgesetz), no car can be registered without valid insurance. The law requires at least third-party liability insurance (Kfz-Haftpflichtversicherung) before a vehicle can be driven on public roads.

When you purchase insurance, the company issues an eVB number (Elektronische Versicherungsbestätigung), which is an electronic confirmation that proves your vehicle is covered. This number is necessary for car registration at the local vehicle registration office (Zulassungsstelle).

Driving without insurance is illegal and can lead to severe penalties, including heavy fines, license suspension, or even imprisonment.

2. Types of Car Insurance in Germany

There are three main types of car insurance policies in Germany, each offering different levels of protection.

2.1 Third-Party Liability Insurance (Kfz-Haftpflichtversicherung)

• Mandatory by law for all drivers.

• Covers damages or injuries you cause to other people, their property, or their vehicles.

• Does not cover your own vehicle’s damage.

• Minimum coverage limits are set by law:

  • €7.5 million for bodily injury per person.

  • €1.22 million for property damage.

  • €50,000 for financial losses.

• In practice, most insurance providers offer higher coverage to ensure better protection.

2.2 Partial Coverage Insurance (Teilkasko)

• Optional, but often chosen for added protection.

• Covers damage to your own car from specific risks such as:

  • Theft

  • Fire and explosion

  • Storm, hail, lightning, and flooding

  • Broken glass (e.g., windshield damage)

  • Animal collisions

• Does not cover accidents caused by your own fault.

2.3 Comprehensive Coverage Insurance (Vollkasko)

• The most extensive and expensive option.

• Includes everything in Partial Coverage plus:

  • Damage to your own car from accidents you cause.

  • Vandalism.

• Especially recommended for:

  • New or expensive cars.

  • Lease or finance agreements (often required by the lender).

3. Additional Optional Coverages

In addition to the main types, drivers can choose extra protection:

• Passenger Accident Insurance – covers injuries to the driver and passengers.

• Legal Protection Insurance (Verkehrsrechtsschutz) – helps with legal costs in case of traffic disputes.

• Breakdown Assistance (Schutzbrief) – roadside assistance and towing services.

• Gap Insurance – covers the difference between the car’s current value and the outstanding finance balance in case of total loss.

4. Factors Affecting Car Insurance Premiums in Germany

German car insurers calculate premiums based on several factors:

4.1 Type and Model of Car

Each car model is classified into a type class based on accident statistics, repair costs, and theft rates. High-performance or luxury cars usually have higher premiums.

4.2 Region and Postal Code

The region class reflects the accident frequency in your area. Urban regions with heavy traffic generally have higher premiums than rural areas.

4.3 No-Claims Bonus (Schadenfreiheitsrabatt)

The longer you drive without causing an accident, the lower your premium becomes. This discount can be significant over time, reducing costs by up to 70% for drivers with many claim-free years.

4.4 Driver’s Age and Experience

Young and inexperienced drivers often face higher premiums due to higher accident risk.

4.5 Annual Mileage

More kilometers driven increases accident risk, affecting the premium.

4.6 Parking Location

Cars parked in a private garage at night may have lower premiums compared to those parked on the street.

5. How to Choose the Right Car Insurance in Germany

5.1 Assess Your Needs

• For older, low-value cars, third-party liability might be enough.

• For new or expensive cars, comprehensive coverage is usually better.

5.2 Compare Providers

Germany has many insurers, both traditional companies and online providers. Use comparison websites like Check24 or Verivox to compare prices and benefits.

5.3 Check the Deductible (Selbstbeteiligung)

A higher deductible can lower your monthly premium but increases your out-of-pocket expenses in case of a claim.

5.4 Read the Terms Carefully

Pay attention to exclusions, coverage limits, and claim procedures.

6. Switching Car Insurance in Germany

Car insurance contracts in Germany usually run for one year and renew automatically unless canceled in time. The typical cancellation deadline is November 30 for contracts ending on December 31.

You can also switch insurance earlier if:

• Your premium increases without improved coverage.

• You buy a new car.

• Your insurer fails to handle a claim properly.

7. Making a Claim

When an accident happens:

1. Ensure safety first and, if needed, call emergency services.

2. Exchange details with the other driver: names, addresses, license plate numbers, insurance information.

3. Take photos of the accident scene and damage.

4. Inform your insurer immediately (usually within 7 days).

5. Provide a detailed accident report.

Failing to report promptly may lead to reduced or denied compensation.

8. Car Insurance for Foreigners in Germany

Foreigners living in Germany must also follow the same insurance rules. If you import a vehicle, it must be registered locally and insured with a German insurance provider. Some insurers offer English-speaking support for expatriates.

International drivers may be able to transfer their no-claims bonus from their home country, but this depends on the insurer’s policy.

9. The Future of Car Insurance in Germany

With advancements in technology and the rise of electric vehicles, the German car insurance industry is evolving:

• Telematics-based insurance: Premiums are adjusted based on driving behavior tracked via an app or device.

• Green discounts: Lower premiums for eco-friendly cars.

• Autonomous driving: Future laws may change liability rules and coverage structures.

Conclusion

Car insurance in Germany is a legal necessity and a crucial part of responsible vehicle ownership. Understanding the different types of coverage, the factors influencing premiums, and your rights as a policyholder can help you choose the most suitable policy.

Whether you’re a lifelong resident or a newcomer, taking the time to compare options and understand your insurance will not only keep you compliant with the law but also provide peace of mind on the road.