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HomeGerman FinanceWhy do you need legal protection insurance in Germany?

Why do you need legal protection insurance in Germany?

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Legal protection insurance, like any other type of insurance available in Germany, gives a great degree of peace of mind. Your insurance provider will provide you with assistance if you require legal counsel or find yourself in a legal issue.

Statistically, half of the households in Germany have legal protection insurance. For trouble with employers or landlords. Or simply because you want to enforce your rights in court without risking costs of several thousand euros. But how useful is such a contract actually?

legal protection insurance

As a rule, legal protection insurance covers the following costs up to the agreed sum insured:

  • the  legal fees of  a lawyer chosen by the insured person
  • Court costs
  • Witness fees  and  judicial expert fees
  • Costs of the opponent,  insofar as the insured person has to bear them
  • Mediation costs 
  1. In the event of partial success in court:
    If the costs are shared between the parties by the judge.
  2. If the opponent is insolvent:
    Your own legal / court costs if you win a lawsuit – but the opponent is insolvent.
  3. In the case of out-of-court disputes:
    If the opponent is not obliged to reimburse third-party legal fees.

Costs that have been assumed without a Components of legal expenses insurance obligation will not be reimbursed. These include, for example, lawyers’ fees that are above the statutory fee rates or costs of the opponent that you have voluntarily assumed.

Motor vehicles

Insurance coverage can be limited to disputes relating to the vehicle.

Self-employed

Depending on the individual situation, only the professional, only the private or both areas can be insured.

Employees

You can choose between a “large” and a “small” insurance package, take out additional insurance for rental and property matters or, as an elderly person, exclude the professional area. To this end, the insurers offer various legal protection packages that consist of different service modules.

If a process becomes necessary because of taxes or other charges, for example fees or customs duties, for example because the tax office does not want to recognize the income tax return.


Labor law protection

For disputes about the employment relationship e.g. if you are given notice or your employer owes you money. Or in the case of service and pension law claims in a public service relationship, for example disputes regarding classification in a certain salary group, promotions, transfers or benefits in the event of illness.

When you have to assert your interests as a house, apartment and property owner or as a tenant, for example in the case of rent increases, terminations or disputes over utility bills.

When in the private sector you have to assert or defend claims from contracts of everyday life, for example from a purchase contract, a repair order or a travel contract.

If you as a victim of a violent crime want to assert claims in a criminal court process as a joint plaintiff. Example: As a passenger on public transport, you are seriously injured as a result of an attack.

If there is an objection procedure before the administrative authority and in subsequent proceedings before the administrative court about your driving license, for example if your driving license is withdrawn due to a violation of traffic regulations.

If you have to defend yourself in criminal proceedings for negligent violation of criminal regulations or in proceedings to pay a fine, for example if you are accused of violating the rules in traffic or of negligently injuring someone.

When the legal situation changes in questions of family and inheritance law and you seek legal advice, for example if you want to know what claims you have after an inheritance.

For the enforcement of claims for damages, e.g. after a traffic accident.

Disciplinary and professional protection

If, for example, a civil servant is threatened with disciplinary action because of an alleged misconduct.

In litigation before a German social court, for example if the statutory health, accident, pension or unemployment insurance does not provide adequate benefits.

You should also check: Are you a member of a club or a union? Then you may already be covered in some areas.

Whether and to what extent private legal protection insurance is worthwhile also depends on your circumstances. Ask yourself if there are areas of life where you could face legal trouble. Do you commute to work by car every day or do you fear trouble at work?

Then it could be worthwhile to take out traffic or labor law protection. However, a pensioner without his own car does not need any protection in these areas.

There is also the question of how strong your tendency to legal disputes is. Is it important to you to always exhaust all possibilities? Aren’t you frightened by the time and effort involved in a legal dispute?

Then legal protection insurance can be helpful. Because by protecting against high costs, it ensures that you can enforce your rights against financially strong opponents, such as large companies.

With legal protection insurance, there are waiting times for some service modules. This means the period between the start of the contract and the start of insurance cover. The waiting period is usually three months. This is to avoid that an insurance contract is concluded shortly before a foreseeable legal dispute.


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A good legal protection insurance policy should offer protection in the following areas:

Contracts – disputes about travel, purchase, service and insurance contracts, for example if the craftsman has messed up or you ask for money back because of a lack of travel.

Compensation – Assistance in enforcing claims for compensation, for example after an accident with a car, bike or on foot.

Occupation – If the wage is not paid, no vacation is granted or a bad job reference is issued, employees can take action against this with the help of legal protection insurance. Disputes relating to a warning, termination or severance payment are also covered.

Tax – Legal dispute with the tax office, for example about the recognition of special expenses, advertising expenses or extraordinary burdens.

Social – If you want to obtain recognition of a reduced earning capacity or occupational disease or if you are in a clinch with your health insurance company, the legal protection insurance will cover the costs of a procedure.

Administration – Trouble with an authority in traffic matters, for example because your driver’s license has been withdrawn and you are not supposed to get it back.

Criminal law – the insurance cover applies to traffic offenses, administrative offenses and negligent offenses. If you are accused of having committed the act deliberately, not every insurance company pays.

Inheritance and family – advice on all aspects of adoption, maintenance issues, custody or inheritance.

House and apartment – Housing legal protection covers conflicts over rent increases or utility billing, terminations due to personal use and eviction suits. Anyone who rents a property must arrange special legal protection for landlords.

legal protection insurance

A legal protection contract does not offer an all-round carefree package and is also not the “savior in need”. If a conflict existed before the contract was concluded, it is excluded from protection.

In addition, in many cases you have to wait two to three months before you can take advantage of the insurance contract. With this waiting time, the providers want to protect themselves from customers only taking out the insurance when the trouble and thus the costs are already foreseeable. But there are exceptions. In the event of a traffic accident, for example, the legal expenses insurer is right at your side.

There are also cases in which it is clear from the start that the insurance company will not pay. These include in particular:

  • Defense against claims for damages if they are not based on a breach of contract (in this case, however, you should have a liability insurance),
  • Disputes in the area of ​​construction and mortgage lending as well as house, apartment and property ownership (for example planning, building or converting a property and buying or selling a building plot),
  • Intentional criminal offenses,
  • Copyright, trademark and patent law,
  • Speculative capital investments as well as gaming and betting contracts,Trouble in connection with self-employed or commercial activities (there is special legal protection for commercial or self-employed),
  • Dispute between people who are jointly insured in a family contract, such as spouses.

Which cases are excluded from insurance cover varies from provider to provider. If you want to know exactly, you can take a look at the insurance conditions of your contract. Everything that is not insured can be found there in Section 3.

If the insurance company has promised you that it will pay for your legal dispute, it will usually cover the necessary legal fees as well

  • Court costs,
  • Fees for witnesses and experts,
  • Costs of the litigant if you lose in court,
  • For legal protection cases abroad, translation and travel costs,
  • If necessary, an interest-free loan for a bail bond.

In principle, however, the insurance company does not pay any fines or fines incurred by the insured.

legal protection insurance

In many areas, legal protection insurance not only pays for disputes in court, but also when the lawyer initially acts out of court.

All of the providers we examined also pay for a mediator. In the case of mediation, you assume the costs for cases from all insured areas of law. As a rule, this also includes cases for which only advisory legal protection has been agreed.

This means that in these cases the insurance company only pays for advice from a lawyer – but nothing more.

You also have the option of receiving advice over the phone. You can usually reach your insurer’s hotline 24 hours a day, seven days a week. In contrast to mediation, legal protection insurers also cover costs for legal advice over the phone in areas in which there is otherwise no legal protection according to the contract.

Good to know: if you use legal advice on the phone, you usually don’t have to worry that your insurer will terminate the contract as a result. We have only found one provider who also classifies legal advice over the phone as a termination-relevant legal protection case. However, this insurer also gives you a lot of leeway: only if you manage to bring more than nine cases to him in twelve months can he draw the consequences.

What to do if the insurance company does not pay

If your insurance company does not want to pay because it claims you caused the lawsuit willfully or there is no prospect of success, you can appeal this decision. This is done through an arbitration report or a casting vote. In the case of an arbitration report, an expert from the insurer assesses the case; in the casting vote, your lawyer explains the chances of success.

The result of both proceedings is binding on the insurer. The casting vote is more advantageous for customers because the insurance company pays the costs, regardless of how the decision is made. The arbitration report always pays the losing party.

Insured persons can also call in the insurance ombudsman. He examines the case free of charge and can oblige the insurance company to finance a lawsuit if it does not cost more than 10,000 euros.

Who is insured under the legal protection insurance?

As a rule, the following are insured:

• the policyholder
• the spouse or, if desired, the illegitimate partner
• all minor children
• the adult unmarried children up to the age of 25 – as long as they do not yet have a job of their own. In the traffic sector, children of legal age require their own legal protection, provided they are permitted to have a vehicle
• In the professional legal protection for the self-employed, the employed persons are also protected in their professional activity. Attention: The persons co-insured in a contract cannot take action against the policyholder or against each other

The exact scope of the insurance coverage results from the insurance contract and the general conditions of the insurer

What should I do in the event of a dispute?

In the event of a dispute, you should first contact your insurance company. It informs about:

• the insurance cover / the specific benefits
• the further procedure and
• the possibility of mediation

If necessary, the insurance company recommends a competent lawyer.

Who bears the costs?

• If the insurance company agrees to cover the costs, it will assume the costs directly as part of the commitment. The insurance customer does not have to advance any money.
• If the insurance company refuses to cover the costs, the refusal can be checked – out of court via the insurance ombudsman. By the way: A rejection due to a lack of prospects of success or willfulness can also be checked out of court by the insurance customer in a special procedure.

How can you save on insurance premiums?

In order to keep the insurance premium as low as possible, a deductible can be agreed with the insurer. It is usually 150 or 200 euros per insured event. The insured person then pays this portion himself in the event of a dispute. Exception: The opponent is defeated and must reimburse the entire costs of the legal dispute.

How long is the waiting time in legal protection insurance?

With legal protection insurance, there are waiting times for some service modules. This means the period between the start of the contract and the start of insurance cover. The waiting period is usually three months. This is to avoid that an insurance contract is concluded shortly before a foreseeable legal dispute.

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Michelle Halterman
USA, China, South Africa and now Munich - Michelle has come a long way in the world. She is an outdoor person and loves to be in nature with friends and on her mountain bike. Or she meets up with friends for pasta, vino, cappaccino & Co.
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