Court cases in Germany are expensive: as a rule, the losing party pays the court fees, experts and the lawyers' fees of both sides. The exception is the first instance at the labour court, where each side pays its own lawyer. Legal expenses insurance reduces the financial risk.

The four basic modules

A policy is usually made up of modules: private legal protection (disputes over purchases and contracts), employment (for example over a dismissal), housing (disputes with your landlord over deposits or repairs) and traffic.

Waiting periods (Wartezeit)

Insurers protect themselves against customers who take out a policy once a dispute has already arisen. Most modules, especially employment and tenancy, have a three-month waiting period. Disputes that arise before it ends are not covered.

What the insurer pays for

The policy covers legal advice, pre-trial correspondence, expert reports, court fees and lawyers' fees. You usually pay only a fixed deductible (Selbstbeteiligung) of €150 to €300.

Free choice of lawyer

A good policy guarantees your right to choose any licensed lawyer in Germany. Avoid policies that restrict you to advice from the insurer's call-centre lawyers.

What to check

  • Take out the policy early so that the three-month waiting period runs out.
  • If you rent a flat, include the employment and housing modules.
  • Agree a deductible of €150 to lower the annual premium.
  • Ask for written confirmation of cover (Deckungszusage) before seeing a lawyer.

Example situation

An employee challenges an unexpected dismissal at the labour court; the insurer pays the lawyer's fee of €3,200, and he obtains a severance payment of €18,000.

Next step

Legal expenses insurance reduces the financial risk of legal disputes; take it out in good time because of the waiting period.

Official information on this topic

Checklists and examples are organisational recommendations. Requirements depend on the procedure, the city and your situation; check them with the relevant office before you act. Please discuss legal and tax questions with an authorised professional.

This article was prepared with the help of AI. The example illustrates the approach and does not describe a client case.