Germany is a land of insurances. One can almost insure anything that one can think about. When it comes to insurances, Germany is unique in many ways–there are tons of insurance products available,and the average cost of these insurances are minimal as compared to the rest of the world. Perhaps, majority of the German population opt for all kinds of insurances, be it mandatory or voluntary, and that brings the cost down.
While Health insurance is universal, insurances like private liability is indigenous to Germany. Some of them are nice-to-have, though not mandatory. However, one insurance which any law-abiding citizen will feel superfluous is LEGAL INSURANCE.As an expat, one would be oblivious to it. What is the need to have one when I am going to comply with the law? Why would I ever need a lawyer if I never needed them in the past?These questions lose their relevance once we realize its importance. And this article attempts to underscore the importance of Legal Insurance.
What is Legal Insurance?
Legal insurance (Rechtsschutzversicherung) gives you free access to the lawyers. You can consult your lawyer for advice or support with respect to any kind of litigation; if you get sued or want to sue anyone. With legal insurance, all this comes free of cost. Thus, it protects your rights and from the expensive legal costs in Germany.
Do we really need to have one?
About 50% of the population have legal insurance which is quite high. It implies that, ifneeded, Germans will exercise their right. It is a known fact that Germany and its people respect law, have their own line of action when it comes to procedures. This can be better understood with the importance attached to enormous paperwork for getting anything done.
Legal disputes aren’t as rare as one may think.As per latest report, there were as high as 1,300,000 civil court cases.Thus, with a legal insurance, Germans can move to the courts what may seem trivial to the expats.Disagreement and misunderstandings are bound to happen with employer, neighbors, landlord, day care, the tax office, other administrative authorities etc.As an expat, one may not be aware of the local rules. In an unfamiliar land and an unfamiliar language, expats may feel lost and may end up spending a lot.Having a legal insurance will ensure they can get legal help in times of need and not lose sleep about it.
What comes under Legal Insurance
Legal insurance covers legal expenses like the court, lawyer, witness and translation costs. In case of losing the case, your legal insurance will cover the expenses of the opposite party.
It includes the following:
- Disputes with landlords and neighbors
- Disputes with the tax authorities
- Employment law
- Claims for compensation (property damage or physical injury)
- Consumer protection and private contracts
- Traffic violations,accidents, unwarranted loss of driver’s license
- Family law (divorce is included by certain insurers only)
- Advice on inheritance issues (excludes disputes between beneficiaries)
What is not covered under Legal Insurance
- Fines,tickets, or compensation for damages that you must pay
- Any claims during waiting period (duration of time until which the insurance doesn’t come into force. This is to discourage those non serious customers who purchase only when they anticipate a trouble).For job or landlord related issues, the waiting period is for 3 months. There is no waiting period for traffic legal protection insurance.
- Any legal issue that happened before the purchase of your legal insurance
- Majority of the legal insurance policy do not cover up for the costs involved in divorce. It can be included as an add-on separately.
- Deductibles/general excess–It is the amount that you pay before the legal insurance provider pays. For e.g., if the total legal fees worth is 800€ and your deductible is 300€,then you first pay 300€ and the insurance provider will pay the remaining 500€. Some providers also decrease the deductibles every year in case no claim is filed.
A thorough reading of your legal insurance is a must before signing it. Anything which is not specified will not be covered by your insurance plan. Always go for a specialized legal insurance policy depending on the risks involved in your profession. For self-employed and those in senior management positions, there are tailor-made policies suited for them. Business Legal insurance is recommended when your business makes more than 22,000€/year.
Types of legal insurance
Broadly speaking, there are four types of legal insurances.– Private, professional, traffic and renters legal insurance. For e.g., a homemaker may not have the need to buy insurance related to profession,buying these insurances is purely need-based. Your insurance company will customize the contract according to your needs. Given below, highlights each type of legal insurance and the scenarios that explain the need to have one.
Private legal insurance
- Private contracts such as buying/selling, travel.
- Dispute with a handyman
- Dispute with tax authorities. The tax office need not be always right. And if you disagree with the tax assessment, you can sue the tax office.
- Disagreements with administrative office. For e.g.,includes residence permit issues with immigration office. The maximum ceiling up to which you can claim is 700€.
- Legal indemnity protection. Compensationfor damages caused by, or to a third party, after an accident.
- Dispute with your health insurance to cover any medical expense.
- Cyber protection including identity theft and data protection.
- Other legal support, if you are victim of a crime orcommitted negligent offense and incur loss of pay due to this. Your private legal insurance can help you claim for the damages and compensation.
Professional Legal Insurance
- Being fired without a justifiable reason
- Negotiating for a better severance package. A lawyer can help you to get a year’s salary whereas most of the companies just offer a 6-month package.
- Ensure equal pay for equal work
- Claim your outstanding salary and vacation days
- Gender disparity among the workforces
- Refusal to give you a positive reference letter, which you are legally entitled to.
- Denial or procrastination of monthly salary.
Traffic Legal Insurance
- Claims and compensation for the damages in case of an accident
- Dispute when buying/maintenance of a car. For e.g., with car dealers, warranty claims or repair
- Violating parking rules.
- Dispute with the administrative authorities, cancelling your driver’s license or imposing fines for misdemeanor
Home Rental Legal Insurance
- Neighbors getting offensive for petty issues can drag you to the court. Having a decent neighbor is a matter of luck, and if you are not lucky enough, then renters insurance comes in handy.
- Dispute with landlord evicting the tenants without valid reason or prior notice, refusal to pay back the deposit or acting against the rental contract.
- With respect to any real estate purchase, legal insurance can pay for the lawyers to review the purchase contract.
- You will have legal protection, in case, the seller increases the price after signing the contract or you nullify the contract if you foresee any defects.
Cost of legal insurance Vs Cost of lawyer in Germany
Legal insurance, on an average, cost anywhere between 10- 40€/month, depending on the type of insurance you purchase, insurance company and the coverage level. However,in case of a claim,one is also required to pay his/her deductibles which may go up to a few hundred euros, depending on policy.
The fee structure of legal experts is regulated in Germany. Nevertheless,a lawyer can charge high sighting the workload of the case. And the legal cost in Germany is in proportion to amount in dispute. The higher the amount in dispute, the more expensive will be the legal fees.
Finally, the cost of legal insurance is more affordable and reasonable in comparison to the huge legal fees involved. Conflicts are all around us and legal issues can pop up anytime and anywhere. So, it is always better to opt for a legal insurance beforehand instead of inviting oneself to rude shocks or surprises.
How to choose your Legal Insurance provider?
Usually, these companies do not offer one-size-fits-all coverage.They come in different packages with additional add-on. Based on your individual situation and futuristic aspirations, decide which legal insurances you will need. For example, are you a freelancer or employed? If you own a car? Planning to invest in real estate? You can always customize your choice of legal insurance in consultation with the service provider.
One can find a lot of reliable insurance providers in the market today. The best thing is that many of them provide their services in English (suitable for expats) and are 100% digital(sign up hardly takes few minutes) . Also,they extend their coverage worldwide i.e., outside Europe when it comes to settling disputes.
Some of the reliable names are Arag, Feather etc. However,it is highly recommended to always seek professional expertise that suits you. You are welcome to book an appointment with our insurance professionals to buy your Legal Insurance