In addition to the five compulsory social insurance schemes (medical, long-term care, pension, accident and unemployment insurance), there are other types of insurance one can apply for in Germany. These are optional, even though the word "compulsory" ("Pflicht") may sometimes appear in their titles, e.g. in the "liability insurance" ("Haftpflichtversicherung"). Most of these optional insurances protect you against financial risks. Depending on the life situation you are in, some of them may be useful.
A liability insurance is optional and it is considered to be one of the most important voluntary insurances. A liability insurance covers the costs when you damage something that belongs to another person or do someone an injury. For example, they cover the damage if you scratch someone's car while riding your bike. Same applies if you cause an accident and the injured individuals demand you to pay their medical costs and compensate for the pain you have created them. This can be very expensive, and without a liability insurance, it may make your life really difficult.
Besides, the liability insurance can provide you with legal protection, in case someone asks you to cover damage which, in fact, was not caused by you. Your small pets and children will be also included in the liability insurance. So if your child, for example, breaks another kid's toy, your insurance can pay for it. Larger animals, e.g. big dogs and horses, require a separate insurance. To learn more check our chapter “Pets”.
You can decide about the amount of insurance you are buying. The German Consumers' Center ("Verbraucherzentrale") recommends a liability insurance as big as at least 5 million euros. After deciding about the insurance sum, the outlay of contributions will be determined. With a 5 million Euro liability insurance, you would have to pay about 50 to 80 euros per year. For more information, visit the Consumers' Center's website where you can find a video which explains liability insurance system. On the Consumers' Center website you can also seek personal counselling.
At Vergleichportal Check24, you can compare different liability insurance schemes and choose the one that fits your needs.
Household insurance covers the costs of any loss or damage that might happen in your home. If something is stolen from your home or destroyed in a fire, household insurance will pay for it. It covers almost everything you might have at home or in your garage, e.g. electrical appliances, work equipment, clothing and furniture. Household insurances often also cover you in vacation, e.g. when your luggage is stolen during your trip.
In the cases of damage, you must report to your insurance immediately, and if a crime results in the damage, then you should also inform the police. You must provide the insurance company with a list of all items that have been affected. You should not take care of the damage and eliminate it before the insurance company pays for it. If you have been very negligent and for example left the door open, then in any case of robbery that might subsequently happen, you would be personally responsible and will not receive any refunds from the insurance company.
At Vergleichportal Check24, you can compare different liability insurance schemes and choose the one that fits your needs.
New cell phones are often sold along with a cell phone insurance. These insurances are often too expensive, which is why the Consumer Center does not recommend them. In some cases, such as burglary, household insurance cover the damage. If you are planning to buy a cell phone insurance, make sure you first check the website of the Customers' Centre for some tips on what you should look out for.
If you own a car or motorbike and you want to drive, you must first apply for a permit– and you must have Motor Vehicle Liability Insurance to obtain it. It covers the damages, e.g. in the accidents, which are caused by your vehicle. In the case of an accident, the costs can be very high; It is therefore recommended to buy an insurance that covers up to 100 million euros of damage. At Vergleichportal Check24, you can compare different liability insurance schemes and choose the one that fits your needs.
If you want to protect your car or motorcycle against damage, you can purchase partially comprehensive insurance ("Teilkaskoversicherung") or fully comprehensive insurance ("Vollkaskoversicherung"). Comprehensive insurance is not mandatory. Partially comprehensive insurance, for example, covers the car damages caused by fire or theft. Fully comprehensive insurance will also cover the damages for which you are responsible or the ones that are caused intentionally. This type of insurance is expensive and not always worth it. In any case, as a vehicle owner, you do not need a separate Personal Accident Insurance ("Insassenunfallversicherung"), as such accidents are usually covered by your standard motor vehicle liability insurance.
You have to pay close attention to the terms and conditions of the insurance contract, particularly if you are applying for private insurance. Often suppliers lure the customers with reasonable prices and then limit their services. Some insurances are unnecessary or cost too much. If you do not understand the details of an insurance contract, you should definitely consult someone who does. Once you have signed the contract, you are obliged to pay the fees, often over an extended period of time. You can benefit from insurance counselling at the Consumers' Center.
When it comes to private insurances, always watch out for the details. It is never precisely clear beforehand that which cases are covered and to what extent. The answer to these questions depend on the contents of the contract you have signed with the insurance company.
Social Insurances
Germany has an efficient social security system which covers those who are insured against unemployment, illness, long-term health issues, occupational accidents and old age. In Germany, insurance regulations are set by the state. The benefits are paid (according to the regulations) by the so-called "Sozialversicherungsträgern" or social insurance providers, i.e. the health insurance companies, the trade associations, the Employment Office ("Arbeitsamt") and the German Pension Insurance ("Rentenversicherung").
Health Insurance
Health insurance is obligatory in Germany. If you wish to apply for a residence permit, you must be a member of a health insurance fund. Your health insurance provider, in principle, covers the costs of doctors' visits, hospitalisations, and (often partly) medications. In some cases, the health insurance scheme may take over the full expenses of your medicines.
If your asylum procedure is ongoing or have a "Duldung" or another temporary residence document, you can find the information you need in the chapter "Health Care for Refugees". There, you can also read about the health-related options you can benefit from, in case you do not have any papers.
The German Tax System
Each time we go to a supermarket or café, drop by at a gas station or receive a payroll, we are paying taxes. Taxation is the primary source of revenue for the state and enables the government to perform its duties. The German state is responsible for funding Kindergartens and schools, universities and hospitals, construction of roads, the salaries of teachers, police officers, firefighters, politicians and much more. Without tax revenues, the state could not fulfil such responsibilities.
Collecting revenue, however, is not the only reasons for taxation. There are, in fact, two other grounds for taxation. Through the taxation of harmful things, such as cigarettes, the state tries to improve behaviours. The cigarettes are expensive as a result of the tobacco tax; so that some give up smoking due to its high cost. Furthermore, social justice should be promoted through taxation: those who earn more must pay more taxes than people with less income.
Schufa
While renting an apartment, your landlord will most probably ask for a Schufa statement. If you ask Banks for a loan, they will make a Schufa inquiry before they decide your request. Even if you buy a cell phone or lease a car, your contract usually includes a Schufa-related clause.
All this has to do with a company called "Schufa Holding AG". Schufa Holding AG is a credit investigation company which collects information from consumers and companies involved in the lending process. Schufa Holding will review your past payment history, and forecasts your payment behaviour in the future in the form of figures ("Schufa score"). This process is called credit rating.
Schufa Holding AG demands money for the credit report. However, according to German law, you are entitled to receive a free Schufa report once a year. Doing so will help you check what information is stored, where it came from, and to whom it was forwarded. We have created an animation video to show you how to get a free Schufa in a few steps.
Important: Some loan sharks may offer you money without a Schufa inquiry in newspaper ads or on the Internet. Do not fall for it! A majority of these offers are fraudulent.
The Costumer Protection Center protects the consumers' rights. Read about food, insurances, mobile contracts and much more on their portal.
Here you find more tips regarding the university application process and your professional options in Germany.