How to protect your home and family in Germany

Moving to a new country with a family can be both exciting and overwhelming. Seamus Wolf from fintech Horizon65 explains how you can protect your family and your property in Germany when it comes to both little mishaps and major life events. 

There’s lots to figure out when you’ve just moved to a new country: from finding a good school for the kids to finding a great place to live within easy distance from your work. But once the dust has settled and you’ve unpacked the moving boxes and navigated the first cryptic letters from the Finanzamt and the Rundfunkbeitrag, it’s time to start thinking more long-term and putting stuff in place to protect your family and your future. 

You’ll need to consider the major differences between the German system and what you’re used to back home when it comes to less frequent but still important events that can affect your home, your family, and your finances - and what Germans typically put in place to protect themselves from events like: 

• When the main income earner can no longer work
• When a family member dies
• When you or a family member gets hurt in an accident
• If a family member causes damages to other people
• In case your belonging are damaged or stolen

If you plan to settle in Germany long-term then you should also consider potential future scenarios and whether the German social security system provides adequate cover for your family - for instance, after you retire, if you have an accident and become unable to work, or if you should pass away.

When the main income earner can no longer work

Most people depend on their monthly income to finance their day-to-day living expenses. The government in Germany only offers a limited amount of coverage in the event that the main income earner can no longer work.

Expats who just recently came to Germany might have no coverage at all apart from Bürgergeld. This is barely enough to cover the normal living expenses of a family. Many Germans therefore opt for a private solution called “Berufsunfähigkeitsversicherung” (BU) to protect themselves against this risk. It’s advisable to cover around 80 percent of your monthly income to protect your lifestyle.

Since the insurance covers the risk of being unable to work, you have to pass a health check which is performed by answering a few questions. Your age, educational background and profession also influence the price. The younger and healthier you are, the cheaper the coverage gets.

Once you have been accepted by a provider, adjustments based on your age increasing and your health changing don’t cause you to pay more over time. Your initial situation is locked in and remains intact.

When a family member dies

In Germany, if someone dies, the state is the default executor of their estate. This means that, if you do not have a will specifying otherwise, the German government will put somebody in charge of your finances, pending the resolution of your inheritance. Things get complicated quickly if you are an expat and your family members are not able to communicate with civil servants on very complicated legal matters.

For this reason, I would recommend taking out legal insurance - which often includes getting a will put in place - to ensure you have a clear setup while living in Germany.

You could also take out life insurance. Banks often require you to have this before approving a mortgage application. A life insurance payout can ensure that your family will be taken care of in the tragic event that you lose your life. Typically three to five years of salary are used as the coverage amount and typically coverage is chosen to last until age 67.

When you or a family member gets hurt in an accident

Accidents can happen in the blink of an eye, and may leave you with more than just an unpleasant memory. In Germany, state-provided accident insurance only covers accidents that happen at school, at your place of work or vocational training, or on the way to these places. It does not protect against accidents that happen during after-school activities (usually separately insured) or accidents that happen at home.

Although the health insurance covers most of the medical associated costs, not all costs that occur because of an accident are covered. In the event of an accident, private accident insurance covers medical expenses at a higher level like cosmetic surgery and dental treatments, and provides financial assistance.

If your kid has an accident while riding their bike and gets hurt so badly that they will never be able to have a normal life and work, an accident pension is a good way of protecting the kid's future and helping you to finance their care. This is an add-on you can add to your private accident insurance, and it will start paying out a monthly pension to the injured person for life.

If a family member causes damages to other people

If you have kids then you know they can cause damage to third parties unintentionally. Although not legally required to have, most Germans have liability insurance that covers damage they cause to others. This can be damage to third party property, others’ assets or even personal damage. Personal injuries especially can result in very high costs and protecting yourself against such claims is highly advisable and cheap to do.

When you have kids, you need to make sure that “Deliktunfähige Kinder” is covered. This means that your kids are covered even for events where they are legally not held accountable. You as a parent, however, could be. Some cheaper insurance providers like to exclude them and typically do not cover damage caused by children under the age of seven (or 10 for traffic incidents). Even though you don’t have to, it would be common courtesy to pay anyway to ensure good social relationships. The insurance has you covered.

In case someone files a claim against you, your insurance also takes measures to defend those claims for you.

Even if you don’t have kids, getting liability insurance is a no-brainer, as it is a very cheap kind of insurance. Hopefully, you will not need it, but if you do need it you will be very grateful you have it. Liability insurance costs around five to nine euros per month. If you have a car then you need to have car liability insurance. This kind of liability insurance does not include private liability.

In case your belongings are damaged or stolen

Fire, water damage or theft: A lot of things can happen to your property and your belongings. Protecting what is important to you is a smart thing to do.

Imagine your home is a doll house and you remove the roof and flip it upside down. Everything that falls out is your belongings. Imagine this being damaged or stolen. A simple way to protect it is household insurance. In case you live near water, you should make sure to include damage caused by floods.

Very valuable things like expensive watches or paintings should be covered separately. Your car will need coverage of its own.

Want further advice on protecting yourself financially in Germany? Exclusively for IamExpat readers, Horizon65 is giving away a free consultation with one of their experts to go through the options available to you to secure your family’s future.