Does legal insurance pay the court costs if I lose in Germany?
In short
Yes. If you lose a covered lawsuit in Germany, legal insurance (Rechtsschutzversicherung) pays the court costs, your lawyer and the other side's lawyer, as far as the court orders you to reimburse them. In a EUR 10,000 dispute that is about EUR 4,780 in total. You only pay your deductible, often EUR 150 to 300. The condition is a confirmation of cover (Deckungszusage) for a covered case.
Cost of a lost lawsuit under the German fee laws RVG and GKG as amended on 1 June 2025, first instance with a hearing, including the EUR 20 expense allowance and 19 percent VAT. Plus the premium for the cover.
Example
Typical range
EUR 5,000 lawsuit lost, everything
about EUR 2,668
EUR 10,000 lawsuit lost, everything
about EUR 4,776
Court costs alone at EUR 5,000
EUR 511.50
Court costs alone at EUR 10,000
EUR 849
Legal insurance package for private life, work and traffic
usually about EUR 300 to 500 a year
Worked examples without experts or appeal, October 2026.
The EUR 150 deductible in the example is a guide value from quoting practice.
Worked example
EUR 10,000 claim against a seller, lost
You want the purchase price of a faulty device back. The insurer has confirmed cover, the court dismisses the claim after a hearing.
Your lawyer (2.5 fees, allowance, VAT)
EUR 1,963.50
Other side's lawyer, same calculation
EUR 1,963.50
Court costs (3.0 fees)
EUR 849.00
Total
EUR 4,776.00
Your deductible
EUR 150.00
The insurer pays EUR 4,626, you pay EUR 150. Without legal insurance you would have paid the full EUR 4,776.
What legal insurance pays when you lose
In a German civil lawsuit the losing side bears the costs under section 91 of the Code of Civil Procedure (ZPO): the court, its own lawyer and the other side's lawyer. That is exactly the risk legal insurance covers. The insurers' model conditions name the court costs, including compensation for witnesses and experts called by the court, and the opponent's lawyer and court costs if a court order obliges you to reimburse them.
The insurer pays up to the agreed sum insured and at the statutory fee rates (RVG). A higher hourly fee agreed with your lawyer is usually not covered. The deductible is taken off per insured event; if several events are linked, only once.
Cost item
EUR 10,000 lawsuit lost
Does legal insurance pay?
Your own lawyer
EUR 1,963.50
yes, at statutory fees
Other side's lawyer
EUR 1,963.50
yes, if the court orders you to pay
Court costs
EUR 849.00
yes
Court appointed expert
depends on the case
yes
Your deductible
for example EUR 150
no, you pay it
Settlements and partial losses
If you win only in part, the court splits the costs under section 92 ZPO. Your share is paid by the insurer just as for a lost case.
A settlement works differently. The insurer pays only the share of costs that matches the gap between what you claimed and what you got. The model conditions give an example: if you claim EUR 10,000 and settle for EUR 8,000, you get 20 percent of the costs. If you accept more costs in the settlement than that ratio, the rest stays with you. Always clear a settlement with your insurer first.
When the insurer still does not pay
Costs are only covered if the dispute is insured at all. Typical gaps are building projects, family law and disputes that arose before the policy started or within the waiting period of usually three months. Costs you take on without being legally obliged are not paid either.
If the insurer thinks the lawsuit has no prospect of success or is frivolous, it may refuse cover. It must then offer you an arbitration opinion or a binding opinion from a lawyer (Stichentscheid). If you sue without confirmation of cover and lose, the whole cost risk is yours.
Labour court and social court
At the labour court of first instance each side pays its own lawyer, even the winner, under section 12a of the Labour Court Act (ArbGG). So if you lose there, there is no opposing lawyer to reimburse; legal insurance pays your own lawyer and the court costs.
Before the social court (Sozialgericht), proceedings are free of court fees for insured persons and benefit recipients under section 183 of the Social Court Act (SGG). Legal insurance mainly pays your lawyer there, and only from the court stage onwards.
When you do not need insurance for this risk
On a low income you can get legal aid (Prozesskostenhilfe) for your own costs. If you lose, you still have to pay the other side's lawyer, as section 123 ZPO states. Only legal insurance covers that particular risk.
If you rarely go to court, sue only for small sums and have a few thousand euros saved, you can carry the risk yourself. For a EUR 1,000 lawsuit the loss is a few hundred euros, for EUR 10,000 almost EUR 4,800.
Step by step
Get a confirmation of cover from the insurer before suing.
Work out the amount in dispute and the full cost risk with your lawyer.
Agree the cost ratio with the insurer before any settlement.
Forward the court's cost order (Kostenfestsetzungsbeschluss) to the insurer at once.
If cover is refused for lack of prospects, ask for the binding opinion or arbitration.
Checklist
Written confirmation of cover
Dispute falls into an insured area
Case arose after the start and the waiting period
Sum insured enough for two instances
Deductible known
Settlement only after talking to the insurer
Common mistakes
Suing without confirmation of cover and losing
Accepting all costs in a settlement without asking the insurer
Agreeing an hourly fee and assuming the insurer pays it all
Sitting on the cost order until interest accrues
Questions and answers
Frequently asked
What happens if I lose without confirmation of cover?
Then you bear all costs yourself: the court, your lawyer and the other side's lawyer.
Always get confirmation before you sue.
Does legal insurance pay for an appeal?
Yes, if it sees a prospect of success and confirms cover again.
The insurer checks each instance separately.
Does it pay damages I am ordered to pay?
No.
Legal insurance only pays legal costs.
Damages owed to others are a matter for liability insurance.
Can the insurer cancel after a lost case?
Under the model conditions both sides may cancel if at least two insured events occur within
twelve months.
One case alone is not enough.
Do I have to advance the costs?
Not necessarily.
The insurer reimburses once you show you are obliged to pay;
in practice it usually pays advances to court and lawyer directly.
