Business insurance in Germany: A guide to protecting your company

What insurance do I need for my business?

Running a business always involves a degree of risk. The level and type of risk depend on your industry, the size of your company, and the services or products you offer. From liability issues to property damage or professional mistakes, even small incidents can have major financial consequences. That’s why taking the time to identify potential risks and choosing the right insurance coverage is crucial for long-term stability.

Whether you’re a sole proprietor, liberal professional, or managing director of a GmbH, suitable business insurance helps protect your company from unexpected losses and legal disputes. It also safeguards your personal assets in many cases. The following overview highlights the essential types of insurance that every founder in Germany should consider.

📌 Always seek professional advice before finalising your insurance plan. And remember: As your business grows, so do your risks. Review your coverage regularly to make sure it still fits your company’s needs.

Public liability insurance

Public liability insurance protects you if you are sued for damages. There are two main categories of insurance:

• Business liability insurance Third-party damage or injury is called Personenschaden Dritter. Betriebshaftpflichtversicherung
• Professional liability insurance 💬Berufshaftpflichtversicherung or financial loss liability 💬Vermögenschadenhaftpflicht

Business liability insurance

This insurance covers personal injury and property damage caused to third parties by you or one of your employees in the course of a business activity. Let’s unpack two examples from the everyday life of a founder.

Third-party injury

Here is an example for third-party damage or injury 💬Personenschaden Dritter:

📌 A customer falls down the freshly wiped stairs of your shop and breaks her hip. She claims compensation for all the costs she incurs as a result of the accident, such as medical expenses and travel costs as well as some follow-up costs after the accident.

Business liability covers physiotherapy or compensation for pain and suffering due to physical impairment. Being liable for personal injury can even mean paying a pension to the injured party. Such claims can quickly be a threat to the survival of your fledgling business.

Third-party property damage

Here is an example for third-party property damage 💬Sachschaden Dritter:

📌 Your employee meets with a customer. During the conversation, your member of staff accidentally knocks a glass of juice onto the customer’s lap. The fluid leaks into the customer’s phone and causes irreparable damage. Soon after, the customer claims the costs for replacing his phone and dry-cleaning his suit.

Business liability insurance will cover this kind of damage.

Professional liability insurance

Professional liability insurance covers you if your mistake causes financial damage to a third party.

Direct financial loss

An direct financial loss 💬echter Vermögensschaden occurs when you caused financial damage to a third party—without causing injury or damage to others, or their property. In other words, it is a pure pecuniary loss.

📌 Your marketing agency misses an important deadline on a project, resulting in a significant sales drop for your customer. Now, they can hold you liable and demand compensation for the financial loss.

Consequential financial loss

A consequential financial loss 💬unechter Vermögensschaden, on the other hand, results from damage to property or personal injury.

📌 Your freelance publicist takes a fall on your construction site and has to spend a week in the hospital. As a consequence, she suffers a loss of income from her own freelance business. She may claim a financial loss for personal injury as well as the potential income she has lost.

Contents insurance in Germany

Contents insurance 💬Inhaltsversicherung covers you in the event of damage to your own property, e.g. your business premises or assets.

As a founder, you should protect your business inventory, goods or supplies. This insurance kicks in if your business property stolen or burglarised, or damaged by fire, water, hail etc.

If a fire causes a business interruption, many insurers offer an additional component to the contents insurance in the form of business interruption insurance. This additional layer will cover the loss of revenue. Some insurers include electronics insurance as well to cover damage to technical equipment.

Insure against cyber risks

A majority of companies in Germany are the targets of cyber attacks. Hackers are targeting SMEs and startups as well as multinationals. One click on an email can result in a cyber incident can spark a flame causing a financial disaster or even a case of ransom.

That’s why it’s never too early to take out cyber insurance to cover the costs of personal and intellectual property damage. Some insurers also offer immediate assistance and preventative support.

How to find the right insurance

As a founder, you must have a clear head as you build your company. A lack of insurance coverage can result in consequential costs that could jeopardise the very existence of business and your livelihood.

Insurance comes at a price and premiums can be daunting, especially for a new company. Make sure to weigh up risks and costs carefully before you decide. Many insurers also offer discounts for new companies.

Insurance packages are never a fit-for-all solution. Many insurers offer tailor-made policies for specific industries. During a consultation, you can describe your business activities in detail so they can tailor your insurance policies to suit your company best.

📌 The insurance market is huge, so it’s normal to be a bit overwhelmed. Take your time, shop for the best offers and get professional support, if needed. Always seek independent advice and remember: A few hundred euros for a consultation will pay off in the long run and put your mind at ease.