Car Insurance in Germany: The Complete Guide

What is Kfz-Versicherung – and why is it mandatory?

Anyone who drives a motor vehicle on German public roads must have it insured. This is a legal requirement under §1 of the Compulsory Insurance Act (PflVG): every registered vehicle must have at minimum a third-party liability insurance (Kfz-Haftpflichtversicherung). Without valid insurance, vehicle registration at the road traffic office (Straßenverkehrsamt) is simply not possible.

The reasoning is straightforward: road accidents can cause enormous damage – to other vehicles, to property, and most importantly to people. Liability insurance guarantees that injured parties are compensated regardless of whether the person at fault can pay.

The Three Types of Car Insurance in Germany

1. Third-Party Liability Insurance (Mandatory)

Kfz-Haftpflicht is the only legally required insurance. It covers damage you cause to third parties – other people, their vehicles, or their property.

What is covered:

• Personal injury to other parties (medical costs, loss of earnings, pain and suffering)
• Property damage to other vehicles and objects
• Financial losses resulting from the accident

What is not covered:

• Damage to your own vehicle
• Injuries you yourself sustain in the accident

The minimum coverage amounts required by German law are: €7.5 million for personal injury, €1.22 million for property damage, and €50,000 for pure financial losses per incident. Many policies offer significantly higher limits.

2. Partial Comprehensive Insurance (Teilkasko)

Teilkasko is optional and protects your own vehicle against certain events not caused by human error.

Typical coverage includes:

• Theft of the vehicle or its parts
• Fire and explosion
• Natural hazards: storm (from wind force 8), hail, lightning, flooding
• Glass breakage (windscreen and side windows)
• Collisions with animals
• Short-circuit damage to vehicle electronics

Note: a collision you cause yourself is not a Teilkasko claim. Teilkasko claims do not affect your no-claims bonus class.

3. Fully Comprehensive Insurance (Vollkasko)

Vollkasko includes everything in Teilkasko and additionally covers self-caused damage and vandalism.

Additional coverage compared to Teilkasko:

• Accidents you cause yourself (e.g., rear-end collisions, parking damage)
• Vandalism and malicious damage by third parties
• Hit-and-run incidents where the other party cannot be identified

Important: a Vollkasko claim for a self-caused accident results in a downgrade of your no-claims bonus class (SF-Klasse), which increases your premium the following year.

The No-Claims Bonus System (SF-Klassen)

German car insurance uses a bonus-malus system: safe drivers pay less over time, those who cause accidents pay more. This is managed through the Schadenfreiheitsklasse (SF class, or no-claims class).

Classes range from SF 0 (no prior insurance history) to SF 35 and beyond. Each accident-free year moves you one class higher and reduces your premium percentage. Causing a claim moves you several classes back down.

Upgrading and Downgrading

Upgrade: One accident-free year = one class higher, automatically.

Downgrade: Every fault claim (Haftpflicht or Vollkasko) causes a downgrade at renewal – sometimes by several classes at once.

Example: A driver in SF 10 causes an accident and could drop to SF 5, meaning a significantly higher premium for several years until the lost classes are recovered.

Transferring Your No-Claims Bonus

The SF class belongs to the policyholder, not the vehicle. When switching insurers, you take your accumulated class with you. Your previous insurer will provide a written SF class certificate upon request. In many cases, the class can also be transferred between spouses or from parents to children – conditions vary by insurer.

Vehicle Type Class and Regional Class

Type class (Typklasse): Every vehicle model is annually classified by the German Insurance Association (GDV) based on actual claims statistics. Sportier or more powerful vehicles typically fall into higher type classes, meaning higher base premiums.

Regional class (Regionalklasse): Your place of residence also affects your premium. Rural areas with low accident and theft rates have lower regional classes than urban centers. This is based on the vehicle registration district.

Neither class is within your control – they are determined by the vehicle model and your address.

Key Policy Features to Compare

Excess / Deductible (Selbstbeteiligung)

The Selbstbeteiligung is the amount you pay out of pocket when you make a claim. A higher excess generally means a lower annual premium. Common options for Vollkasko: €150, €300, €500, or €1,000. If you plan to handle minor damage yourself to avoid downgrading your SF class, a higher excess may make financial sense.

Approved Repair Shop Clause (Werkstattbindung)

Some tariffs require you to use an insurer-approved repair shop in the event of a claim. In return, you receive a discount on your premium. If you prefer choosing your own workshop, you can opt out of this clause – at a higher cost.

Named Drivers (Fahrerkreis)

The policy must specify who is permitted to drive the vehicle:

• Policyholder only – lowest premium, most restrictive
• Policyholder and partner – moderate cost, covers the common household situation
• All drivers aged 25 and over – flexible, slightly higher premium
• All drivers including under-25s – most expensive option

Special Considerations for Newcomers to Germany

Recognition of Foreign No-Claims History

You do not have to start at SF 0 if you have been driving abroad without accidents. Many German insurers accept foreign no-claims certificates. Key points:

• EU countries: Certificates from EU member states are widely accepted. You will need an official document from your previous insurer stating the number of accident-free years.
• Non-EU countries: Recognition is possible but less consistent. Some insurers cap the starting class (e.g., maximum SF 3 or SF 5).
• Documents should ideally be in German or English, or accompanied by a certified translation.

Foreign Driving Licences

• EU driving licences are fully recognised in Germany with no time limit.
• Licences from certain non-EU countries can be exchanged without a test within six months of entry (the list of recognised states is available from the KBA).
• All other licences require a formal exchange process, potentially including a test.

Common Mistakes When Taking Out Your First Policy in Germany

• Accepting SF 0 without submitting foreign no-claims evidence
• Not listing all regular drivers in the policy
• Choosing too low an excess and paying a higher premium unnecessarily
• Not having the eVB number (electronic insurance confirmation) ready before registration – your vehicle cannot be registered without it

Summary

German car insurance is logically structured: third-party liability is mandatory, everything else is voluntary and depends on your vehicle's value and your own risk assessment. Understanding the SF class system, the difference between Teilkasko and Vollkasko, and key policy features like the excess and approved-workshop clause puts you in a strong position to ask the right questions before signing any contract.

Editorial note: This article is for general informational purposes only and does not constitute personal insurance advice. eev24.de is an independent information portal and not a licensed insurance intermediary under §34d GewO. For personalised advice, please consult a licensed insurance broker (Versicherungsmakler).