Too Expensive, Too Little Coverage: Consumers Can Safely Skip Some Insurance Policies, Say Consumer Advocates – An Overview
Nearly anything can be insured. There’s even stadium insurance that kicks in if you miss your favorite team’s away game due to a train delay. You can also insure your own wedding—though the insurer typically only covers cancellation costs in cases of serious illness, not if the couple simply changes their minds. Still, you’ll find a supposed insurance solution for nearly every life situation.
“Not every insurance policy on the market is actually necessary,” says Bianca Boss, spokesperson for the German Association of Insured Persons (BdV). “Our basic principle is: Only take out insurance policies that protect you from serious financial risks.” That applies, for example, in situations where someone is injured in an accident or where major property damage occurs. In situations like these, private liability insurance is essential, as highlighted by the German Federation of Consumer Organizations (vzbv). Anyone who causes damage to another person is legally required to compensate them—including pain and suffering. If this amount isn’t insured, it could seriously threaten one’s financial stability.
Unnecessary Insurance: Stadium Visits, Weddings, and Other Events
For homeowners, building insurance is a must. And if you’re traveling abroad, a travel health insurance policy is strongly recommended—it covers emergency medical repatriation and other costs not included in standard health insurance. While these policies are essential, cancellation insurance for events like stadium visits or weddings—events that are already budgeted for—are generally not worth the money.
Paying into an insurance policy only makes sense if the potential cost of a loss is so high that you couldn’t cover it from your regular household budget. Losing a smartphone, for example, is rarely financially devastating—even if you can’t immediately replace it with the latest and priciest model. Furthermore, mobile phone insurance rarely reimburses the full cost of a new device. You usually have to pay a deductible, and the value of your phone is often downgraded based on its age.
Money Wasters: These Insurance Policies You Can Skip
Example: Glass Breakage Insurance
According to the BdV, the premiums for this type of policy are disproportionately high compared to the potential damages.
Overlapping Coverage
Some policies cover items already included in other insurance plans—making them redundant. For instance, travel luggage is often covered under household contents insurance, depending on the circumstances.
Unnecessary Add-ons in Household Insurance
Household contents insurance makes sense if you own valuable items you couldn’t easily replace. However, many providers offer add-ons that are often not needed. One example is insurance for “domestic emergencies,” such as heating failures. But: “Renters aren’t responsible for damages to rental property unless they caused them,” says Boss.
Be Careful with Coverage: What’s Really Included?
Always check the actual coverage details. For example, with glasses insurance, the full cost of new glasses is rarely reimbursed. For high-end lenses, even with insurance, you’ll often have to pay out-of-pocket. That’s why the BdV advises against insuring such specific items.
Double Coverage
An insurance policy is also “unnecessary” if you’re paying for it twice. For instance, if two people move in together and both have their own household or liability insurance, one of the policies can be canceled. One partner can be added to the other’s policy, saving money. But keep in mind: typically, claims caused by the co-insured partner are no longer covered under the joint policy.
Your Insurance Needs Depend on Your Life Situation
For self-employed individuals and those with private health insurance, daily sickness benefit insurance can make sense to compensate for lost income during illness. However, employees in public health insurance already receive this benefit, so a separate policy isn’t needed. Be careful not to confuse this with hospital daily benefit insurance, which only pays out during a hospital stay—not if you’re recovering at home.
To avoid being locked into a long-term contract that doesn’t suit your needs, the vzbv gives one key tip: Compare not only the costs of different providers, but also make sure the policy can be canceled annually.
Insurance Against Drought: Affordable Policy on the Horizon
Weather-related crop losses continue to rise for German farmers. Starting in 2021, drought insurance could become available to cover these losses.
Buying Insurance: Online or Through a Broker?
When it comes to buying insurance, consumers can choose between going online or using a broker. Both options have pros and cons.
Switching Can Pay Off
Car insurance premiums have been rising for years, but that trend may now be coming to an end. It’s worth comparing policies to see if switching saves money.
How Much Does the Insurance Pay in Case of Damage?
When a claim is filed, insurers typically pay either the current value, the replacement value, or the new value of an item. But when does each apply? And why should consumers keep receipts or records of the value of their belongings?
