Why does my German building insurance premium keep going up?
In short
Usually because of the sliding replacement value factor (gleitender Neuwertfaktor). The adjustment factor rose to 27.63 for 2026, 4.22 percent more than in 2025. Since your sum insured grows by the same step, there is no special right to cancel. If the insurer raises the rate itself without improving cover, section 40 VVG gives you one month to cancel.
Figures from published German premium breakdowns and official index values, as of September 2026.
Example
Typical range
Detached house of 120 square metres in Dresden, previously EUR 238
now about EUR 262 a year, of which EUR 18 adjustment and EUR 6 building age
Apartment building of 230 square metres in Duisburg, previously EUR 2,178
now about EUR 2,392 a year, of which EUR 163 adjustment and EUR 51 building age
A premium of EUR 450, adjustment factor 2026 only
about EUR 19 more a year
Average adjustment over recent years
about 4.3 percent a year, with 14.73 percent in the peak year 2023
The example houses come from publicly quoted premium breakdowns,
the factors from the published adjustment factor tables.
The figure for a EUR 450 premium is calculated, not quoted.
Single surcharges in the worked example are guide values from quoting practice.
What your contract costs depends on the property, the location and the cover;
as insurance brokers we obtain the exact quote for you.
Worked example
Detached house, premium so far EUR 450 a year
How a typical increase splits up. Only the second part can trigger a right to cancel.
Premium 2025
EUR 450.00
Adjustment factor 2026, plus 4.22 percent
plus EUR 18.99
Discount for year of construction dropping away
plus EUR 12.00 (guide value from quoting practice)
Premium 2026
EUR 480.99
Sum insured
rises by the same 4.22 percent
About EUR 31 more a year. Some EUR 19 of that is pure sum adjustment, and your payout in a claim rises with it. For the remaining EUR 12 the letter has to say whether you may cancel within one month under section 40 VVG.
What the sliding replacement value factor does
Almost every German building policy (Wohngebäudeversicherung) is written as a sliding new value policy. Your house is converted once into the so-called 1914 value (Wert 1914), that is its building cost in 1914 marks. Every year a factor scales that figure up to today's building prices, so the sum would still pay for a full rebuild.
The factor is set by the German insurance association. It consists of 80 percent construction price index for residential buildings and 20 percent wage index for the building trade. When materials and tradespeople get more expensive, the factor rises, and your sum insured and your premium rise with it in the same step.
For 2026 the adjustment factor (Anpassungsfaktor) stands at 27.63 and the sliding replacement value factor at 27.8. The construction price index for residential buildings rose to 22.636 on 1 January 2026, a little over three percent more than the year before.
Year
Adjustment factor
Change on the previous year
2026
27.63
plus 4.22 percent
2025
26.51
plus 2.47 percent
2024
25.87
plus 7.52 percent
2023
24.06
plus 14.73 percent
2022
20.97
plus 5.54 percent
2021
19.87
plus 2.63 percent
Sum adjustment or a real premium increase?
This is the one distinction that decides what you can do. If your premium went up only because the adjustment factor went up, your sum insured grew as well. You pay more and you get more, which is why there is no special right of cancellation.
If instead the insurer raises the premium under an adjustment clause without the scope of cover changing accordingly, section 40 of the German Insurance Contract Act (Paragraf 40 VVG) applies. You may then cancel within one month of receiving the notice, with effect at the earliest when the increase takes effect. The insurer has to inform you at least one month in advance and must tell you about this right. The same applies if cover is cut without the premium going down.
So put two pairs of numbers side by side: old and new sum insured, old and new premium. If the premium rises faster than the sum, there is more than the annual adjustment in the letter.
Case
What happens
Right to cancel
Adjustment factor rises
sum insured and premium rise by the same percentage
no
The rate itself is raised
premium rises, cover stays the same
yes, section 40 VVG, one month
Cover is cut, premium stays
less protection for the same money
yes, section 40 VVG
Discount for a young building drops away
premium rises as agreed in the contract
stated in the letter, often no
You report an extension
sum insured and premium rise
no
Claims and weather push the rates up as well
On top of the factor, insurers recalculate their rates when claims get more expensive. In 2024 natural hazards accounted for about a quarter of all claims costs in German building insurance.
German property insurers paid around 4.4 billion euros for natural hazards in 2024. 2025 was milder, around 1.4 billion euros, of which roughly one billion went on storm and hail across about 479,000 claims, at an average of some 2,100 euros per claim.
Then there is your own house. Every year raises the risk of a burst pipe (Leitungswasserschaden), so many tariffs slowly remove the discount you once got for a recent year of construction. In published premium breakdowns this part came to 6 euros for a 120 square metre house and 51 euros for a larger 230 square metre building.
What you can do about it
The fastest lever is a deductible (Selbstbeteiligung). It lowers the premium noticeably, but it costs you real money when you claim, so only pick an amount you can pay out of savings without stress.
Report anything that lowers the risk: new water pipes, a new roof, a backflow valve (Rückstauklappe), an alarm system, an old oil tank taken out of service. Many insurers price this in, but only if they know about it.
And read your own policy. Is the living space still correct, are you paying for a garage or an extension that no longer exists, is a solar installation insured twice? Mistakes like that cost money every single year, with no cancellation needed.
When switching will not help
The adjustment factor is the same at every insurer. If you switch purely because of the annual sum adjustment, you take it straight into the new contract.
Switching also gets expensive if you reported claims in recent years, if the house is old or if it sits in a flood zone. New applications are checked strictly, natural hazard cover (Elementarschutz) costs more or is not offered at all. Never cancel before a new policy is confirmed in writing.
Honestly: on a premium of around 450 euros, an increase of about 19 euros rarely justifies the effort. A comparison is worth it when the contract has not been reviewed for years, when natural hazard cover is missing, or when the insurer clearly raised the rate itself.
Step by step
Keep the insurer's letter and write down the date you received it.
Put the old and the new premium next to the old and the new sum insured.
Check whether only the adjustment factor moved or whether the rate itself was changed.
Look for the notice about a right to cancel under section 40 VVG and diary the one month deadline.
Report any renovation work, ask for the discount, then calculate a deductible.
Only then compare offers, with identical cover and identical natural hazard protection.
Checklist
Date the notice arrived written down
Old and new premium compared with old and new sum insured
Letter searched for the section 40 VVG cancellation notice
Living space, extensions and outbuildings in the policy checked
New pipes, new roof or backflow valve reported to the insurer
Deductible calculated properly, not just estimated
Common mistakes
Filing the letter unread and letting the one month deadline under section 40 VVG run out
Cutting the sum insured to push the premium down and ending up underinsured
Cancelling over 20 euros and losing natural hazard cover in the new contract
Not reporting renovation work and leaving a possible discount on the table
Questions and answers
Frequently asked
Can I cancel because of the premium increase?
Only if the insurer raised the premium under an adjustment clause without the cover changing
accordingly.
Section 40 VVG then gives you one month from receiving the notice.
For the plain annual sum adjustment there is no such right.
How much does the premium rise in 2026?
The adjustment factor went from 26.51 to 27.63, an increase of 4.22 percent.
On a premium of EUR 450 that is about EUR 19, as long as the insurer does not also raise the rate.
Can I opt out of the annual adjustment?
Some policy conditions allow you to object, usually within a month of the notice.
We advise against it: your sum insured then stops growing,
and in a claim the insurer may cut the payout for underinsurance (Unterversicherung).
Why does it rise when I have never claimed?
Because the premium follows building prices, not your own claims record.
On top of that come the costs of the whole line:
natural hazards made up about a quarter of claims costs in German building insurance in 2024.
Does a deductible help against the increase?
Yes, it is the quickest lever and lowers the premium noticeably.
Just pick an amount you could pay without difficulty when something happens.
The letter is only in German. What do I have to read?
Three things: the new sum insured, the new premium,
and any paragraph mentioning Kündigungsrecht or Paragraf 40 VVG.
The German wording is what counts legally, so send us the letter if a clause is unclear.
Is switching worth it?
Often not.
You carry the adjustment factor into the new contract,
and after claims or with an older house a new policy costs more.
Comparing pays off when the contract has not been reviewed for years or the rate was clearly
