How does car insurance work in Germany?

  1. Types of Vehicle Insurance in Germany
    1. Kfz-Haftpflichtversicherung (Liability Coverage)
    2. Teilkaskoversicherung (Partial Coverage Insurance)
    3. Vollkaskoversicherung (Comprehensive Insurance)
  2. Factors that can Affect Car Insurance Cost
  3. What is Schadenfreiheitsklasse (SF Class)?
  4. Switching car insurance
  5. Insurance of Rental Cars
  6. International Green Card
  7. Multi Vehicles Insurance
  8. Acquisition of SF Class from a Third Party
  9. Transfer of SF Class from Motorcycle to Car
  10. Carsharing Experience

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1. Three Categories of Cars Insurance in Germany

The German word for vehicle insurance is Versicherung. Vehicle insurance is translated as Autoversicherung / Kraftfahrzeugversicherung or abbreviated as Kfz-Versicherung. Basic vehicle insurance, that covers liabilities is mandatory in Germany. The insurance company issues an electronic insurance number eVB (elektronische Versicherungsbestätigung). This number is mentioned later on vehicle registration papers (Fahrzeugbrief and Fahrzeugschein).

There are three categories of car insurance in Germany:

  1. Kfz-Haftpflichtversicherung (Third-party liability coverage)
  2. Teilkaskoversicherung (Partial coverage insurance)
  3. Vollkaskoversicherung (Comprehensive insurance)

1.1 Kfz-Haftpflichtversicherung in Germany (Liability Coverage)

Haftpflichtversicherung or in short, Haftpflicht is the most basic and mandatory insurance to register a vehicle. In case of an accident, the driver at fault is legally obliged to cover all the damages to other vehicles or property, and also the medical bills in case of an injury.

Haftpflicht covers all damages to other vehicles and property as well as any injuries caused to another person in case of an accident with your vehicle. However, it does not cover any damage to your car or your medical bills, if an accident happens due to your fault.

1.2 Teilkaskoversicherung (Partial Coverage Insurance)

Partial coverage insurance or comprehensive insurance is not required by law. It includes all the benefits of the above described Haftpflicht and adds certain coverage to your vehicle. For example, damages due to weather (hail damage, thunderstorm, lightning or flood, etc.), wild animals, glass damage, fire or explosion, theft, and robbery.

Teilkasko and Vollkasko are recommended only for comparatively newer vehicles.

1.3 Vollkaskoversicherung (Comprehensive Insurance)

This is top of the line coverage and of course expensive. The comprehensive insurance also covers damage caused by own fault or a third party like vandalism and damage by unknown third parties.

If you buy a brand new vehicle through third-party financing for example bank, they often have a condition of Vollkasko (comprehensive coverage). In general, owners of brand new vehicles are advised to have comprehensive insurance.

2. Factors that can Affect the Cost of Vehicle Insurance

The cost of insurance is not the same for everyone, rather it depends on many factors, which are described as follows.

2.1 Record of Road Accidents

A driver who causes an accident and is found liable would pay more insurance in the future. In case of minor damages, it is advisable to settle the payment on the scene or without involving the insurance company.

Each driver has a class history of his/her vehicle insurance, 'Schadenfreiheitsklasse' or in short 'SF-Klasse'. This class is lowered after an accident with liability. SF class (Schadenfreiheitsklasse or SF-Klasse) is discussed in detail below on this page.

2.2 Past Driving Experience

If you are a new driver and have just got a fresh driving license in Germany without any previous record of driving at home country, you would have to pay more insurance cost than normal, because new drivers pay more than the experienced ones.

These extra costs normally last for one year for a novice driver, who is driving a vehicle on road. If a person after getting his/her driver's license is not practically driving, he/she would be considered inexperienced until his/her license is three years old.

After one year of driving, you can talk to some other insurance company and if they offer a lower price, sign a new contract with them. Don’t sign a contract longer than a year in the beginning. The German word for the contract is “Vertrag”. Be careful while signing any “Vertrag” and do not sign any document, unless you know it fully.

2.3 Foreign Auto Insurance Record

German insurance companies usually accept insurance records from foreign insurance companies. This can decrease the insurance cost and the driver would not be considered a beginner or immature driver. If a particular company is not accepting your previous insurance record, try with some other company.

2.4 Type of Car

German Insurance Association (GIA) has accident data of all models of different vehicles. Car models with higher accident ratios have expensive insurances. Smaller models that are popular among new drivers, often have higher insurance costs.

Similarly, a car with greater horsepower or money value costs more insurance.

2.5 Area of Driving

Drivers in urban areas have to pay more insurance than countryside drivers. Also, areas with comparatively higher crime rates have higher insurance costs.

2.6 Number of Drivers

Depending on the company, insurance cost increases with the number of drivers. If a second driver from your family causes an accident and his/her name was not shared with the insurance company, it can cause problems.

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3. What is Schadenfreiheitsklasse (SF Class)?

Schadenfreiheitsklasse, or in short SF-Klasse, can be translated as a no-claim class in English. The SF class indicates the number of years without damage or the damage history of the contract. A driver with a newly got license and with no insurance history has SF class 0 and his/her membership cost (Beitragssatz) would be above 100% (that means he/she has to pay the full membership fee without any discount).

The longer a driver keeps his/her drives accident-free, the cheaper and higher is the SF class (up to a maximum of SF 35). Also, the membership cost decrease (from 100%) with each new accident-free year. In the first year of accident-free driving, a driver can gain SF class 1, and the membership cost (Beitragssatz) may drop from above 100% to somewhere between 65%-100%.

Important! There is a difference between membership costs among different insurance companies. The following table gives general information.

For exact rates, you can ask current details sheet from your company.

Membership cost (Beitragssatz) according to the SF class:

On small screens, please drag the below table left or right to see the full width.
SF Class Condition Membership cost in %
M Novice drivers after an accident caused by own fault Over 100%
S After downgrading from SF 1 Over 100%
KL 0 Novice drivers (with a driver's license under 3 years old) Over 100%
SF½ At least 3 years old driver's license from the EU Over 100%
SF1 After 1 year of accident-free driving Approx. 65 – 100%
SF2 After 2 years of accident-free driving Approx. 60%
SF3 After 3 years of accident-free driving Approx. 55%
SF4 After 4 years of accident-free driving Approx. 50%
SF5 After 5 years of accident-free driving Approx. 45-50%
And so on till SF class 35

The last SF class is SF 35. That means, after 35 years of accident-free driving, a driver has to pay only 20% of the actual insurance cost. After an accident, however, he/she will be downgraded to one or more levels.

A person who has caused large numbers of accidents can be classified in the M class (malus class). In this lowest class, an insurance premium has to be paid, sometimes with a high surcharge.

4. Switching car insurance

It is possible to switch car insurance contract to another company under the following circumstances:

It is worth comparing car insurance providers once a year to make sure you are getting the coverage you need. Many helpful sources of information about switching and comparing car insurance providers are available online.

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5. Insurance of Rental Cars

Cars from rental companies are already ensured for the time a customer is driving a car. It’s better to clear the terms and conditions of insurance in advance.

6. International Green Card

This card can be used outside Germany as proof of vehicle insurance. Most insurance companies issue this card. If your company hasn’t given this card to you, talk with them about this card. This card is helpful outside Germany in case of a road accident.

7. Multi Vehicles Insurance

If you own more than one vehicle or your family owns more than one vehicle, every other vehicle can be insured as a “second car” under the same insurance policy and with the same company (in German “Zweitwagenversicherung”). The insurance cost of the “second car” is considerably low.

Parents can also register cars of their children as their own Zweitwagan (second cars), even if they don’t live with them. In this case, children can save extra costs which they have to pay as new drivers. Parents do not have to worry about the deterioration of their SF class of the first car (Schadenfreiheitsklasse) if the child crashes with the second car. The downgrading, in this case, would only be for the second car.

8. Acquisition of SF Class from a Third Party

SF class can be bought/overtaken from life partners, parents, grandparents, or other relatives. When overtaking a no-claims discount, the old policyholder loses all his/her SF classes in this contract. That's worth it only if a contract is no longer needed. For example, if an old driver of your relatives decides not to drive in the future, you can take advantage of this and take over the relatives' accident-free years.

Transfer of accident-free year also depends upon the year of issuance of the driver’s license of the recipient (age of driver’s license). For example, a 23-year-old driver, who has a driver's license at the age of 18, can take over a maximum of five SF classes, because his/her driver’s license is just five years old.

9. Transfer of SF Class from Motorcycle to Car

SF class can also be transferred from motorcycle or scooter to car. The only condition is that the motorcycle or scooter must have at least a 50cc engine capacity. If you have been driving a motorcycle for more than six months and now want to buy a car, SF class of motorcycle insurance can be transferred to a car. Similarly, if you have a car model with higher insurance and now you bought a second car model that can have cheaper insurance, you can swap the SF classes of your vehicles. You can choose the model with higher insurance as a second car “Zweitwagan”.

Also, if you have been driving a motorcycle in your home country and have insurance proof, it can be presented to the insurance company in Germany to improve the SF class. Chances are that the insurance company would award one level downgraded SF class as that of the motorcycle, but anything higher than class 0 or SF 1/2 saves a lot of money for new a driver.

10. Carsharing Experience

Insurance companies also accept driving experience from carsharing companies. For example, you got a new driving license in Germany and have been driving a car with a carsharing company for at least six months and now, if you want to own a car, you can get written confirmation about your driving experience from your carsharing company and present it to your insurance company for a discount.

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