Versicherungen: What types of insurance do I need if I'm self-employed in Germany?

Suppose you’re a business owner in Germany. In that case, you probably already know that although employees are covered by their employers, business owners and the self-employed must make their own insurance arrangements. To help you, we’ve compiled an overview of the insurance coverage you’ll need in Germany.

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Protect yourself & your business
Choosing the right type of insurance
Important insurance policies
A quick guide to business insurance
Insurance for different sectors
Important types of private insurance
A quick guide to private insurance
Self-employed & part-time employed?
Social security & managing directors
Compare insurance offers regularly

Protect yourself & your business

Unlike employees, the self-employed bear business and personal risks to secure their livelihood. Absence due to illness, damage to business property or legal disputes and their associated costs can put your business at risk. If you employ staff, accidents can happen, especially in high-risk occupations. Thus, it’s essential to protect not only yourself but also your business.

What to consider when choosing insurance

When determining your insurance needs, you should identify the risks that are specific to your business and that you need to cover, depending on the industry and size of your business. It is important to assess which types of insurance are relevant to the business and which are relevant to you.

What type of coverage is important for me to have?

Some types of insurance should be taken out at the start of a business, while others can be taken out later when the financial situation of the business allows it.

However, you should start by insuring yourself against the risks that can cause the most financial damage to your business. To do this, you can rank all the risks in order of probability.

Ask yourself the following questions to assess your business’s insurance needs:

What are my business risks?
How likely are these risks to occur?
What is the financial impact of these risks?

A quick guide to business insurance

The following table gives a rough ranking of business insurance needs for most businesses. However, you should create your own priority list based on your circumstances.

	Type of insurance	What does it cover?
Very important insurance coverage	Betriebsversicherung / Berufshaftpflicht-versicherung Business insurance / Professional liability insurance	Damage caused by the business (including employees) Personal injury and property damage, e.g. due to consultancy or medical treatment This insurance is compulsory and is suitable for doctors, lawyers, accountants & all commercial businesses.
	Berufs- als Vermögensschaden-Haftpflicht-Versicherung Professional indemnity insurance to cover financial loss	Financial loss Useful for anyone who works professionally with others’ assets, e.g. tax advisers, notaries, architects or lawyers
	Betriebsunterbrechungs-versicherung Business interruption insurance	Damage to machinery and equipment Loss of revenue due to business interruption caused by operational damage
Important types of insurance	Firmenrechtsschutz-versicherung Business legal protection insurance	Legal fees in the event of criminal prosecution Ensures competent legal assistance
	Risikolebensversicherung für Unternehmer Term life insurance for entrepreneurs	Safeguarding the continuation of the business in the event of death Funds paid in are used to find a qualified replacement immediately
	Sachversicherungen Property insurance	Various operational risks Building and contents insurance against fire, storm, water damage, etc. Burglary, glass or business car insurance
Means-tested insurances	Produkt-Haftpflichtversicherung Product liability insurance	Damage to third parties due to product defects or faults
Means-tested insurances	Umwelt-Haftpflichtversicherung Environmental liability insurance	Soil, water & air pollution caused by the business This type of insurance is usually included in professional and public liability insurance, but can also be purchased as part of a bespoke insurance package.

Insurance policies designed for different sectors

Every industry has its own special features. Insurance needs are no exception. For example, if you have a business in one of these sectors, seek out industry-specific insurance:

Expert advice is recommended for all insurance coverage. Perhaps an insurer specialising in occupation-specific policies will give you the protection that other more generic coverage cannot.

What types of private insurance are important?

The self-employed need to insure themselves personally as well as their business. No matter how good your business insurance is, if you have an accident and become partially incapacitated, even the best business insurance will not help you.

A quick guide to private insurance

	Type of insurance	Details
Compulsory insurance coverage	Krankenversicherung & Pflegeversicherung Health insurance & long-term care insurance	In Germany, health insurance is also compulsory for the self-employed Self-employed people can choose between private health insurance (PKV) and statutory (public) health insurance (GKV) It is important to do your homework before making a choice, as switching from PKV → GKV can be very difficult or even impossible Changing from GKV → PKV is possible in principle
	Krankentagegeldversicherung Daily sickness allowance insurance	Self-employed people are generally not entitled to Krankengeld (sickness benefits) or Krankentagsegeld (daily sickness allowance) Thus, daily sickness allowance insurance often makes sense
	Auslandsreisekranken-versicherung Travel health insurance	Makes sense if you often travel abroad on business Avoids the high cost of treatment abroad
Very important insurance coverage	Rentenversicherung Pension insurance	Separate pension rules apply to the self-employed Depending on your occupation, you are obliged to pay into the statutory pension insurance scheme, e.g.: Artists Craftsmen Lecturers plus more All other occupational groups can choose between private and statutory (public) pension schemes
	Directors & officers insurance	Specifically protects directors and officers, but not the company itself Protection in the event of a breach of duty of care
	Berufsunfähigkeits-versicherung Occupational disability insurance	Ensures the same standard of living in the event of occupational disability Check the level of benefits before taking out the policy: the sum insured is often only paid in the event of total disability. If the self-employed person is not totally disabled, the insurer may require the business to be restructured.
	Unfallversicherung Accident insurance	Recommended for all occupations with an increased risk of accidents Covers accident risks and the resulting health & business risks Voluntary accident insurance is possible through a Berufsgenossenschaft (employer liability insurance association) The cover provided by the Berufsgenossenschaft is equivalent to that of private accident insurance

State subsidies for the self-employed

Maternity benefit
Parental allowance for the self-employed
ALG II for the self-employed

Full-time self-employed & part-time employed? What you need to know when taking out insurance

If you have a second job while being self-employed, you may encounter issues with insurance, particularly health insurance.

When assessing your insurance obligation, the insurer will check whether you are really self-employed as your main job and what the relationship is between the side business and your employment.

Is social security insurance compulsory for managing directors & board members?

If you’re a managing director of a GmbH or UG, you may be wondering whether you’re liable for social insurance contributions. The answer is not so simple as it depends on several factors. The social and labour courts have been debating this issue for some time. For directors of an AG (stock company), however, the situation is somewhat clearer: they are generally required to pay social insurance contributions.

A friendly reminder to compare insurance offers regularly

It’s important to not only compare prices and benefits when you first get insurance but also regularly. It’s a good idea to review your policy whenever it’s about to expire or if you ever feel like the coverage isn’t enough. Keep yourself and your business protected!

It’s always a good idea to take a look at your insurance documents now and then and ask yourself a few probing questions:

Do I still need all the insurance I have?
Has my business grown? Is everything I’m doing still covered?
Has my risk profile changed? (If so, let your insurance company know and make any changes to your policy that you need to.)

Starting a business is an exciting venture. However, understanding the not-so-exciting things such as the different types of insurance available to you will put you ahead. In the beginning, your income may not always be stable, which can cause financial pressure. That’s why it’s so important to understand the optimal level of insurance that will protect you and your business. Getting this delicate balance right will help you weather the storms of the market while freeing up more money to invest in growing your business.