The system in Germany is structured so that all cars, and other vehicles, which are registered in Germany must carry suitable liability insurance. This is a compulsory requirement for which there are no exceptions. For vehicles registered outside of Germany there are other particular temporary regulations, which will depend on the registering country and the length of the stay in Germany. The third party liability insurance covers only the legal minimum insurance required and is enforced in order to compensate any third party involved in any potential accident. Other insurance options exist to provide greater cover, for example against damage or theft on your own vehicle.
Insurance policies will vary in the cover provided, and in the price. Other variables that can affect the cost of insurance can include the length of time the driver has been driving without any previous insurance claim; the age of the driver; the kind of vehicle driven; and the place of registration. The choice of payment method, which can be on an annual, monthly, or even weekly basis, will also make a difference to the premiums required by the insurance companies.
On the positive side of the balance sheet, all insurance companies offer some form of discounted prices, with discounts offered for such things as parking the car in a garage, or discounted costs for family drivers, or for infrequent drivers. The discounts offered are not standardised and will vary from company to company, so it’s worth shopping around to suit your personal needs.
In Germany cars are classified according to the probability of accident or damage and this register of car classes is published by the German Insurance Association (GIA). All German insurance companies are bound by these classifications, and the class in which your vehicle falls will be part of the calculation which determines the amount your insurance will cost you.
In addition to the classification of the vehicle itself and the other mostly unchangeable elements such as the age of the driver, and the location of the car, the no claims discount accounts for a significant portion of the varying insurance costs, and is one of the few elements that can be readily influenced by the driver. The no claims bonus reflects the safety of the driver by evaluating the time elapsed since any previous accident or insurance claim. A record of safe and incident-free driving can make for considerably lower premiums. For new drivers this unfortunately means a higher tariff as the insurance company has, as yet, no evidence of the kind of driver they will become; for experienced and safe drivers their sensible driving is rewarded with the lowest premiums.
In case of minor accidents it is not inevitable that the no claims discount will be lost. For a small and inexpensive incident it may be more cost effective to pay the damages without involving the insurance company and keep the discount for future years. Another possibility is the “discount-saver”, a small surcharge paid on top of the standard premium which means the company will take care of minor costs without loss of discount.