Some are mandatory, others you can decide freely. But what insurance do you really need? An expert explains.
Bicycles, sunglasses and even your own pet. It feels like everything can be insured. And German consumers spend a lot of money on their policies. Private households spent an average of 1,596 euros on insurance in 2022, the
Federal Statistical Office
announced at the beginning of 2024. But is that really necessary? Which insurance policies are a must, what can be additionally useful and what can you safely save?
Risk check: An expert explains which insurance you need
Regardless of whether it is statutory or private: health insurance is mandatory in Germany. Motor vehicle liability insurance is also required by the state. In addition, you can decide freely. But how do you know which insurance policies to take out? Dr. Peter Grieble, insurance expert at the
Baden-Württemberg Consumer Center. V.
, explains to IPPEN.MEDIA: “You should ask yourself the question: Which risks would hit me the hardest financially if they came to fruition?” Following this guide, you can work your way down from the risks with the highest potential for damage.
Like Dr. Grieble further explains that it is primarily biometric risks that absolutely need to be insured. These are risks that can have an impact on the life expectancy or course of life of the insured person. It is impossible to predict when they will occur and whether at all. These include illness, accident or need for care.
Which insurances are a must?
Private liability insurance:
Damage in everyday life can occur unexpectedly and be very high. In the worst case, you cause an accident in which someone dies. Private liability insurance is therefore a must. Dr. Grieble says: “Private liability insurance covers damage that could potentially affect me to an unlimited extent and therefore result in financial ruin.”
Occupational disability insurance:
No matter what job you do, ultimately, in all professions there is a risk of becoming unable to work at some point. Young employees in particular still have 30 to 40 professional years ahead of them. In the event of occupational disability, this basis of income can be lost permanently. “Incapacity for work offers a high potential for damage – means high prioritization – means finishing first,” says Dr. Grieble.
Which insurances are important?
Child disability insurance:
If your child becomes seriously ill or has an accident and remains severely disabled, this usually turns the life of the entire family upside down. In case of doubt, the child will not be able to earn any income for the rest of his life. If one parent stays at home to care for the child in need of care, part of the family income is lost. Such financial matters can be covered or cushioned through child disability insurance. Like Dr. Grieble explains that the frequently offered child accident insurance would not be sufficient: “Most cases in which children become disabled are not due to accidents, but to illnesses. Child accident insurance does not cover this.”
Term life insurance:
If the main breadwinner dies in a family, it can mean financial ruin. Due to the loss of income, rent payments, property installments and everyday costs become a financial burden. In a partnership with children, term life insurance is therefore recommended.
Which additional insurance policies might be useful?
Residential building insurance:
Residential building insurance makes sense for homeowners and is usually the rule. This covers damage caused by fire, storms and hail. “After the biometric risks, the focus is on large assets, especially real estate,” says Dr. Grieble.
Natural hazard insurance:
In order to cover yourself against damage from flooding, insurance against natural hazards is recommended.
Household contents insurance:
It protects against damage to household contents. Although these are usually smaller amounts, if the entire household contents have to be purchased new after a fire or water damage, large sums can quickly add up.
Comprehensive insurance:
If you drive a particularly expensive car, you can cover possible damage with comprehensive insurance. However, this is no longer absolutely necessary for older cars. Damage to it hardly leads to financial ruin.
Which insurances are rather unnecessary?
“At the lower end of the importance are glass breakage insurance or insurance for smartphones,” says Dr. Grieble. These would only be worthwhile for extremely expensive purchases or if particularly extensive insurance coverage is desired. “Such things are nice to have, but are not that relevant because of the limited financial amount. If I lose a smartphone, I won’t be financially ruined.”
But are there also unnecessary insurance policies that are not recommended? Basically, the decision lies with the consumer himself. If you have enough money, you can get insurance against anything. For most consumers, however, it is a financial question and saving and prioritizing must be made when choosing insurance coverage. Dr. Grieble recommends asking yourself where you can substitute. If you lose a smartphone, you can get a cheaper model. If you lose your luggage, you can get a new one. “You cannot substitute biometric risks. If you’re unfit for work, you’re unfit for work.”