How high should the sum insured for contents insurance be?

How the sum insured feeds into the premium, based on published examples.

The quick way is the flat rate: living space times the agreed amount per square metre. It suits an averagely furnished home and has one big advantage: many insurers then agree not to check whether your belongings were worth more (Unterversicherungsverzicht).

The precise way is a list room by room, often done with the insurer's valuation form (Wertermittlungsbogen). It pays off if you have a lot of value in little space, such as an expensive kitchen, musical instruments, art or camera gear. It also shows when you need less than the flat rate suggests.

Many people moving to Germany rent furnished or arrive with a few suitcases, then buy furniture, a kitchen and a bike within the first year. A sum insured set on day one quickly becomes too low. Check it again once you have settled in.

If you shipped furniture, art or electronics from home, do not use what you paid years ago or what it would sell for. Count what it would cost to buy the same items new in Germany. German contents insurance pays replacement value (Neuwert), not used value.

If the sum insured is below the real replacement value and there is no underinsurance waiver, the insurer cuts every payment in the same proportion under section 75 of the German Insurance Contract Act (VVG). That applies to small claims too, not just to a total loss.

Example: your belongings are worth EUR 80,000 and insured for EUR 60,000, so you are insured for three quarters. A water damage claim of EUR 8,000 then brings only EUR 6,000.

Jewellery, cash, coins, watches and art are only covered up to certain limits, often a share of the sum insured, and lower still if they are not kept in a safe. Cash is often covered only for a small amount.

If your valuables exceed these limits, a higher total sum alone does not help. You need a higher limit for valuables or a safe that meets the insurer's requirements.

Many policies raise the sum each year in line with prices. That keeps pace with inflation, not with what you buy. After moving to a bigger flat, moving in together, an inheritance or large purchases, raise the sum yourself.

When you move, report the new living space. Otherwise the flat rate no longer fits and the underinsurance waiver can fall away. If you leave Germany, the policy does not simply follow you abroad, so plan to cancel it for the move.