What does landlord legal expenses insurance cover in Germany?

Figures from published tariff examples, a court cost calculator and the German court fees act.

In Germany, tenants are well protected, and most serious landlord disputes end up in court. The landlord module covers disputes with your tenant about the tenancy and, as owner, about the property, for example with a neighbour. Every let unit must be listed in the policy schedule.

What a dispute costs depends on the value in dispute (Streitwert). For an eviction after notice it is one year's rent. For a payment claim it is the amount claimed. That is why the eviction is the case that makes the module worth it.

It pays for the dispute, not for the money in dispute. If your tenant stops paying, the module replaces none of that rent. That is the job of a separate rent loss insurance (Mietausfallversicherung). Repairs to the flat are not paid either.

The model terms exclude disputes about buying building land, planning and constructing a building and alterations that need a permit. Enforcement is also limited: from the fourth measure per court title, and after more than five years, the policy no longer pays. Against a tenant with no assets you may win the judgment and still not see your money.

Published examples start at about EUR 10 a month for one let unit. With EUR 14,000 annual rent for one flat it is about EUR 12 a month, three flats with EUR 21,600 annual rent about EUR 33 a month, ten flats with EUR 72,000 about EUR 106 a month. Commercial units, garages and land are priced separately.

You can add it to an existing private legal package or take it as a standalone policy. Some local landlords' associations also offer it tied to membership, often with a higher deductible.

If you let one flat to a long-standing tenant who pays reliably and you have savings of a few thousand euros, you can often carry the risk yourself. An eviction costs at first instance roughly as much as thirty years of premiums.

You also do not need it for the flat you live in as a tenant; that is the tenant module. And it no longer helps once the tenant is already in arrears: the waiting period and the rule that the first breach counts apply here too. Take it out before letting or in a calm phase.

With several units, the chance that one tenant causes trouble rises faster than the premium. Anyone letting three or more flats will almost certainly have a case over the years. High rents also make it worthwhile, because one year's rent sets the value of an eviction case.

As a landlord, you can normally deduct the premium from your rental income for tax purposes. Ask your tax adviser (Steuerberater) to confirm it for your case.