Legal expenses insurance in Germany – superfluous or valuable?

Legal disputes quickly cost a lot of money. Therefore, legal protection insurance supports you financially in enforcing your claims in court. But: Legal protection insurance does not pay for every legal dispute. Check whether legal protection insurance makes sense for you.

Quick overview:

Legal protection insurance makes it easier for you to access the law and makes some lawsuits financially possible in the first place. It covers the costs of legal disputes up to the agreed insured sum.

However, providers do not cover some substantial risks or only inadequately. You should, therefore, carefully examine whether legal protection insurance makes sense for you.

If you decide to take out a legal protection policy, it is vital that no legal dispute exists or is foreseeable at the start of the contract. In principle, the cause of a legal dispute may only arise after a waiting period of three months from the beginning of the contract.

And: Don’t necessarily go for complete protection. With individual legal protection packages such as “Private,” “Occupation,” “Traffic,” and “Property and Rent,” you can put together insurance coverage to meet your needs.

Legal protection insurance with GETSAFE

GETSAFE is an insurance provider that is perfect for expats, as it also offers its services in English. GETSAFE is a platform that offers insurance completely digitally. Simple, transparent & easy to understand. You can buy legal protection insurance from the provider for as little as 15,12€/month.

Your advantages of legal protection insurance with GETSAFE:

  • Everything is completely digital via an app
  • 24/7 Free Legal Hotline
  • Unlimited cover
  • Free initial consultation with a lawyer
  • You can choose your lawyer

The following costs, among others, are covered:

  • Costs for your lawyer within the limits of the legal fee schedule
  • Court costs and costs for the bailiff
  • Costs for witnesses and experts
  • Costs for the objection, which you have to reimburse

For whom legal protection insurance can be useful

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Legal expenses insurance does not protect you from all costs in legal disputes. For example, there is usually no – or only minimal – legal protection:

  • In the event of a divorce,
  • In the case of inheritance disputes,
  • In case of a dispute in connection with the construction of a house, the purchase or sale of a building plot, and construction financing,
  • For speculative investments and gambling and betting contracts,
  • in disputes concerning investments, if you as an investor have been wrongly advised (these are often excluded in the newer contracts),
  • If you want to defend yourself against claims for damages by others.

However, we recommend that you consider whether you need legal expenses insurance, for example, if you:

  • want to cover yourself for legal disputes with your employer if the latter issues a lousy reference, issues a warning, or threatens to terminate your employment,
  • regularly participate in road traffic as the owner, renter, or driver of a vehicle, for example, as a commuter,
  • fear disputes about insurance benefits from health or occupational disability insurance (then legal protection insurance can become as important as health/occupational disability insurance itself),

You cannot rule out conflicts with your landlord over cosmetic repairs, utility bills, or rent increases.

But beware: you will not receive insurance coverage if you are already involved in a legal dispute before you sign the contract. It also applies if a legal dispute is imminent shortly after. The prerequisite for insurance coverage is that the cause of the legal problem does not occur until after the waiting period has expired (exceptions: gap-free legal protection pre-contract and in traffic legal-protection).

What does the legal protection insurance in Germany pay?

The legal protection insurance pays lawyers and the court fees, the compensation for witnesses, the costs of the expert and the bailiff. Travel expenses to a foreign court are also paid. The costs are covered up to the amount of the agreed sum insured. Therefore, you should agree on at least 300,000 euros when concluding a contract.

Remember: The waiting periods

The waiting periods are not uniformly regulated. Most insurers require a waiting period of three months from the beginning of the contract, and some insurers insist on a waiting period of six months. As a general rule, the cause of the legal dispute must not have occurred until after the waiting period has expired.

Agree on a run-off decision

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If the insurer thinks that the legal dispute does not promise success, it can refuse to assume the insurance coverage. There are then two options: You can either instruct your lawyer to issue a reasoned opinion on the prospects of success. It is followed by the so-called “stab decision,” binding for both parties. The insurer bears the costs. Or there is an arbitration procedure. In this case, the insurer appointed a lawyer, and the arbitrator’s decision is binding only on the insurer.

The arbitration decision is the better alternative for you since the insurer must bear the costs, regardless of the decision. It is also advantageous that your lawyer can judge your case exceptionally well. When concluding an insurance contract, make sure that the defense decision is agreed upon.

Waiver of the defense of pre-contractual

It means that insured events that occurred before the contract’s start are also insured. The prerequisite with most insurers is that the contract with the risk in question has already existed for at least five years. This clause can be relevant, for example, for people who have taken out occupational disability insurance: benefits may be refused because you did not answer the health questions truthfully. If a legal dispute arises, the legal protection insurer is obligated to pay the costs with the “pre-contractual” clause, even though the cause of the legal disagreement occurred before you took out the legal protection insurance.

Opposition proceedings in social, tax, and administrative law

Insurers do not pay for various legal expenses in social, tax, and administrative law until the dispute goes to court. You must cover the legal fees for the preliminary objection procedure. Thus, the legal conflict in court can be avoided because, with the help of a lawyer, the preceding tax objection procedure is successful, and the tax office amends the tax assessment.

It is better to use individual legal protection packages

If you decide to take out a legal protection contract, do not necessarily go for complete protection. Try to protect yourself in line with your needs and at a reasonable price by selecting individual legal protection packages. These packages may be of interest to you:

Traffic legal protection

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It covers disputes in connection with participation in road traffic. You are insured as the owner, holder, driver, or passenger of all vehicles registered to you during the contract term and the renter of a rental car, driver of third-party cars, pedestrian, cyclist, and passenger in public and private means of transport. In addition, all authorized drivers and passengers of the insured vehicles are insured.

However, insurance coverage may not apply in the event of driving without a driver’s license, lack of authorization to drive the vehicle, driving of unlicensed vehicles. Also excluded are, among other things, stopping and parking violations, criminal offenses committed intentionally out-of-court tax disputes and defense against claims for damages. In addition, legal expenses insurance does not pay fines or penalties.

Legal protection for owners and tenants

Disputes arising from tenancy and lease relationships and so-called rights in rem to land, buildings, and parts are insured. Rights in rem include ownership, heritable building rights, disputes under the German Condominium Act, and neighboring rights. In addition, tax disputes in court are insured due to tax and levy-related matters. Furthermore, legal disputes are also insured due to a rent increase, defects of the rented property, eviction, or termination.

Depending on your contract, you as the policyholder are covered as a tenant, leaseholder, usufructuary, owner, lessor or lessor of land, buildings, or parts of buildings designated in the insurance policy.

Private and professional legal protection for non-employed persons in Germany

Employees can only take out this legal protection. Self-employed activities with an inevitable turnover (tariff-individual limit, often 6000 EUR or 10,000 EUR per year) are not covered. There is no insurance coverage for these disputes.

The insurance coverage includes, among others: 

  • the enforcement of claims for damages, 
  • disputes arising from employment relationships, 
  • the enforcement and defense of claims arising from obligations under private law, e.g., a purchase contract, 
  • insurance contract or other agreements in everyday life, 
  • tax disputes in court, 
  • arguments before the social court, 
  • defense in criminal proceedings and proceedings for fines, 
  • for example, for speeding or failure to observe a red light, 
  • and a one-time initial consultation after a change in family and inheritance law (for example: contesting a will, accepting or rejecting an inheritance).

The following are not insured, among others:

  • defense against claims for damages that are not based on a contractual basis (these claims fall under the scope of benefits of liability insurance), intentionally committed criminal offenses and misdemeanors, 
  • so-called collective labor law (collective bargaining law, industrial action law in the event of strikes and lockouts), 
  • construction financing issues, 
  • disputes arising from rental agreements, 
  • the objection procedure in social, 
  • tax and administrative law that precedes litigation in court, 
  • court disputes in family and inheritance law, 
  • and also purely precautionary advice.

The insurance covers the policyholder, their spouse/life partner, minor children, and adult unmarried children up to 25, but no later than when they first take up a permanent paid occupation.

Private and professional legal protection for self-employed persons

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This personal legal protection can be agreed upon if the policyholder, the spouse/life partner, or both are engaged in a commercial, freelance, or other self-employed activity. In addition to legal cases in the private sphere (with the options mentioned earlier, such as personal, traffic, and legal tenancy protection), legal interests in connection with the exercise of a self-employed activity can be insured. If the cost risk of the self-employed activity is included, then the trade or freelance activity stated explicitly in the insurance policy is insured.

Insured persons are listed in the personal and professional legal protection for non-self-employed persons. The employees working in the business are also insured.

Should I now take out legal expenses insurance?

Consider whether you need legal protection insurance: Ask yourself whether you fear disputes in the areas covered by a legal protection policy and, if necessary, get quotes from different insurance companies.

Also, note that in some cases, you may be able to get the same benefits from another source:

  • If you are a member of a labor union, you can take advantage of union legal protection, which includes legal advice, legal assistance, and legal representation in:
  • Disputes arising from members’ advocacy of their union rights and strikes and lockouts,
  • Disputes arising from the employment relationship,
  • claims arising from social security.
  • Legal protection is free of charge for members.

As property owners ‘ association members, owners of houses or condominiums receive sound legal advice on all issues. Tenants receive this service as a member of the tenants’ association. As members of these associations, you can also take out discounted legal expenses insurance.

Under any liability insurance policy, you are covered against unfounded or excessive claims for damages by third parties.

If you dispute with the insurance company, you can turn to the insurance industry ombudsman. The ombudsman can settle the dispute with the company out of court.

How to recognize an excellent legal protection insurance

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The terms and conditions of insurance vary considerably in some cases. Be sure that the General Insurance Conditions for Legal Expenses Insurance used by your insurer do not contain any provisions that are less favorable for you than the “General Conditions for Legal Expenses Insurance” (ARB 2012) published without obligation by the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft e.V.). Have the insurer confirm this in writing.

Insurers will cover the legal dispute costs up to the agreed sum insured, and the sum should be at least 300,000 euros.

Ensure that the opposition procedure is agreed to avoid litigation in court in social, tax, and administrative law.

The clause “waiver of the defense of pre-contractual” should be agreed upon.

You are not entitled to benefits until the waiting periods have expired. It is advantageous if there are either no waiting periods or short waiting periods.

The insurer may refuse to provide insurance coverage due to poor prospects of success. Make sure that the decision is part of the contract.