Insurance: What Do You Really Need?
The German insurance environment can be confusing to incoming expats. After all, Germans have - on average - more than 5 insurance policies per person. Deciding on specific insurance coverage will depend on your wants, needs, circumstances and - of course - German legal requirements. Your decisions on insurance will probably depend on your reasons for moving to Germany; your family status; how long your expected stay in Germany will be; your housing situation; your type of employment; your age and other factors.
There is coverage for just about every eventuality at multitudes of price points. An incoming expat should be prepared for the fact that certain types of insurances and their coverage in Germany may be quite different from those of their home country. Sorting through them can be daunting. Fortunately, help and advice in English is available - from English speaking brokers and insurance company representatives.
Here's a summary of insurances that an expat is required to have, should probably have and may want to consider having depending on their circumstances.
Health Insurance - required
This is the most talked about insurance for expats. The options boil down to having a German State Health Insurance (GKV - Gesetzliche Krankenversicherung) or private insurance. The GKV (also referred to as public or national health insurance) insures the overwhelming majority of German residents.
The GKV is normally provided through an employer and the premium is based on a percentage of income and the cost is split between the employee and employer. Self-employed, freelancers and those in similar circumstances often use private insurance. But, they can voluntarily join the GKV.
Private health insurance is less expensive when you're young, but is normally much more expensive as you get older.
You can switch from public to private any time, but switching back is not allowed. Rare exceptions apply, but even leaving the country for 5 years and coming back means you're stuck with private insurance.
Children and (non-working) spouses are included in coverage under the public insurance while with private insurance they need separate policies.
Benefits under the public insurance may be viewed as quite good (depending on your perspective and what country you come from). Private insurance may offer a few extra benefits not available in a standard public policy. But, there are reasonably priced private supplemental insurances on the market that be used to fill in any gaps in coverage.
Private liability insurance - highly recommended
Ask any German and they'll tell you that of course they have a "Haftpflichtversicherung", and that it's very important, and that you should get one, too. But they won't actually be able to tell you why!
And it's NOT because Germans love insurance (they do), but because the law works slightly differently in Germany. Compared to other countries there is a lot of "watching out for other people", paying into social systems, free university, etc. And one of these things is being held liable for accidental damage to others.
Example (in many other countries)
Suppose you absentmindedly cross the street - listening to your favorite song - and a motor bike has to dodge you and crashes. The motorcyclist is unlucky and has to spend the rest of his life in a wheelchair - the claim for damages is in the millions. You don't have this money (and no insurance), so declare bankruptcy. You lose any excess money you have, but get a fresh start.
Same Example (in Germany)
Suppose you absentmindedly cross the street - listening to your favorite song - and a motor bike has to dodge you and crashes. The motorcyclist is really unlucky and has to spend the rest of his life in a wheelchair - the claim for damages is in the millions. You don't have this money (and no insurance), so according to German law you will be held liable with all the money and possessions you currently own as well as any future income!) This is why this insurance is such a no-brainer in Germany>
Car and Vehicle Insurance - mandatory
Rates are determined by a variety of factors. The mandatory insurance includes personal injury and damage liability. Most full collision coverage is optional. You may be able to get a reduced rate for a history of claims free driving.
Other useful insurance
Here are some other insurances that may make sense based on your situation. Some you may consider a must have - others perhaps not.
Life: Protects your family if you die. Premiums and plans vary depending on a number of circumstances.
Job: (often called "disability insurance"): Protects you and your family if you can't work any more due to illness / accident.
House: Contents cover for your house or apartment.
In other cases these can also make sense:
Legal: Covers the cost of legal proceedings (often already covered by other insurances)
Freelancers legal: If you work in IT and do a lot of freelancing this can be good to have.
Pet: If you have pets - especially dogs - this can be great
There are plenty more that make sense in specific situations. An insurance advisor can help you out with these.
What you probably don't need
Whoever invented these probably had a great use case - but these are sold far more than they should.
Glasbruchversicherung: This covers the glass in your house. Replacing a broken window is cheaper than this costs in a year - how many windows are you expecting to break?!
Cheap gadget insurance: This will sound like a great deal - until you try to claim. Then you read that they will only replace your phone with a like-for-like model, and not a new phone. Often loss/theft is not covered either. If you want to skimp on this one, don't even bother.