What’s with compulsory insurance (Pflichtversicherung) for the self-employed & freelancers?

updated on 5. April 2022 6 minutes reading time
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Almost every type of insurance imaginable is on offer in Germany. Many policies are not necessary bar special circumstances. But, there is an insurance called Pflichtversicherung which is compulsory for certain endeavours. Here we explore what this insurance is and whether you’ve properly protected your business from the slings of arrows of the market place.

Compulsory insurance for the self-employed and freelancers

In certain professions, the risk of damage is particularly high. And, because of this risk, for many self-employed people and freelancers liability insurance is a prerequisite for practising their profession.

How can you find out whether this applies to you? Check the relevant regulations laid down either in federal or state laws or by the relevant professional chamber (eg IHK). In other words, it depends on your profession and the federal state you operate out of.


Which professions need compulsory insurance?

If you start working for yourself, your profession determines whether compulsory insurance is necessary. A compulsory professional or public liability insurance concerns, among others, consulting, health and planning professions. In the event of an error in your freelance or self-employed activity, professional indemnity insurance will cover you.

For example, faulty planning by an architect can have expensive consequences. A doctor’s or dentist’s incorrect diagnosis or treatment can endanger the patient’s health and result in claims for damages. Incorrect legal information can also quickly become expensive.

Other professions for which liability insurance is required by law include engineers, notaries or tax advisers. Those who want to become self-employed as real estate or property managers must also provide proof of professional indemnity insurance.


Compulsory insurance is only part of the picture

You must take out compulsory insurance for these special professions to be able to start working at all. However, this doesn’t protect you from all professional risks that come with self-employment.

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Take cyber risks, for example. Let’s say hypothetically you’re a doctor who has a practice which stores sensitive data digitally, including patient information, diagnoses or X-ray images etc. If your practice comes under cyber attack, you can suffer enormous damage. Even your diagnostic equipment is not immune. It’s easy to see how cyber insurance makes sense for most doctors as it extends the protection provided by the compulsory insurance.

This risk doesn’t solely affect doctors. Hardly any industry today can do without computers or the internet. Therefore, cyber insurance is recommended for all self-employed persons and freelancers – regardless of whether they belong to the occupational groups for which compulsory insurance is required.

Another supplement to compulsory insurance for the self-employed is contents insurance. Among other things, it protects your business equipment against destruction and burglary.


Get protected even if it’s not compulsory

Even if you start a business that doesn’t require compulsory insurance for the self-employed, it makes sense to take out cover. From the very beginning, you should protect the specific risks of your business. After all, every activity involves risks. If there is no compulsory professional or public liability insurance, you should still take care of the necessary insurance cover as a founder – ideally with a specialist insurer.

Professional liability insurance for self-employed persons and freelancers

For example, there is no professional and public liability insurance obligation for an IT service provider. However, if you are planning to form an IT business, you should be aware of the professional risks. You are liable for errors that occur in the course of your work. If, for example, you make a programming error that causes considerable financial damage, you may be liable for high claims for damages.

Of course, mistakes can happen in most other professions too. Whether you are a craftsman, retailer or management consultant – when forming a business, prospective self-employed persons and freelancers should include professional liability insurance in their business plan. The same applies to business liability insurance, which covers property damage and personal injury if these occur in the course of your work.

Business as well as professional liability insurance not only pays for damages but also includes passive legal protection. This means that the insurance covers legal defence of unjustified claims and, if necessary, also covers court costs.


The information published on our site is all written and checked by experts with the utmost care. Nevertheless, we cannot guarantee its accuracy, as laws and regulations are subject to constant change. Therefore, always consult a specialist in a specific case – we will be happy to put you in touch.

firma.de accepts no liability for any damage caused by errors in the texts.


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