# Business legal expenses insurance in Germany: what it pays and what it leaves out

> Firmenrechtsschutz pays lawyers, court fees and experts when your business is involved in a legal dispute. It is common in Germany, where fees follow a statutory scale and the loser generally pays both sides. The most important thing to know before buying: disputes with customers over contracts and invoices are excluded from standard cover.

Quelle/Source: https://www.nammert.com/en/insurance-broker-business-legal-expenses.php  
Updated: 2026-09-18

## What does business legal expenses insurance cover in Germany?

Standard cover pays for disputes with employees before the labour court, criminal and regulatory defence, damages claims your business brings against others, and cases before social and administrative courts. It does not cover disputes with customers or suppliers about contracts, such as unpaid invoices or defects, unless you add business contract cover, which only some insurers offer and usually with a dispute value cap. Disputes between shareholders are almost always excluded.

## At a glance

- **Compulsory?:** No
- **Waiting period:** usually three months for employment and contract disputes
- **Fee basis:** statutory scale under the Lawyers' Remuneration Act (RVG)
- **Labour court rule:** at first instance each side pays its own lawyer, even the winner (§ 12a Labour Courts Act)
- **Free choice of lawyer:** guaranteed by law (§ 127 Insurance Contract Act)

## Labour court: why employers in Germany buy this cover

German dismissal protection is strong, and employees challenge dismissals in the labour court more often than in many other countries. At first instance each party pays its own lawyer regardless of the outcome (§ 12a Labour Courts Act). An employer who successfully defends an unfair dismissal claim still pays its own legal fees.

Employer legal expenses cover pays exactly these costs. The waiting period matters: the dispute must arise after it has ended. Buying the policy because a difficult dismissal is coming will not help with that case, and the warning letter, the dismissal and the reference that follows are usually treated as one event.

## Contract disputes: the gap international founders do not expect

In some countries legal expenses cover for businesses routinely includes contract disputes. In Germany the model conditions of the insurers' association provide contract cover only for private life. For businesses and the self-employed, disputes arising from their own contracts are excluded as an entrepreneurial risk.

Some insurers sell separate business contract cover, with a cap on the value in dispute, a higher deductible, a longer waiting period and often a restriction to German courts. For collecting undisputed invoices, a collection agency or the German court dunning procedure (Mahnverfahren) is usually cheaper than insurance.

## Criminal defence for owners and managers

After a workplace accident, an environmental incident or a tax audit, German prosecutors often investigate the owner or responsible managers personally. Standard criminal cover pays for defence against allegations that can be committed negligently; if intent is established in the end, the insurer reclaims the costs. Offences that can only be committed intentionally, such as fraud, are not covered.

Special criminal legal expenses cover (Spezial-Straf-Rechtsschutz) goes further: it pays for defence against intent-based allegations until a final conviction and accepts hourly fees above the statutory scale, which experienced defence lawyers usually charge. For managing directors it complements D&O insurance.

## What is covered

- Employment disputes as employer, before the labour court and often before
- Damages claims the business brings against others
- Criminal and regulatory defence for owners and employees
- Social court proceedings, for example against the Berufsgenossenschaft
- Tax court proceedings
- Disputes about rented or owned business premises, if included
- Traffic disputes for company vehicles, if included
- Business contract disputes with some insurers, with limits

## What is not covered

- Disputes that began before the policy or within the waiting period
- Disputes between shareholders or with the company's own directors
- Defending damages claims against you, which is the job of liability insurance
- Competition, trademark, patent and copyright law
- Commercial agency law and company acquisitions
- Objection proceedings with the tax office, usually covered only from the tax court
- Contract disputes with customers and suppliers under standard cover

## Who needs it

- Employers of any size, because of labour court costs
- Owners and managing directors in sectors with investigation risk, such as construction, transport, healthcare
- Businesses with vehicles on the road
- Commercial tenants with long leases

## Who can do without

- Solo freelancers whose only realistic disputes are unpaid invoices, if no contract cover is available

## What it costs

Premiums depend on the sector, the number of employees and the modules chosen. Employer cover is often priced per employee, contract cover by turnover. A higher deductible lowers the premium noticeably.

**What drives the premium:**

- Sector and activity
- Number of employees
- Turnover, especially for contract cover
- Modules: premises, vehicles, special criminal cover
- Deductible
- Previous legal expenses claims

_Published comparisons for business legal expenses are rare and vary by sector, so we do not give sample premiums. Your premium is fixed only in the quote._

## The policy levels on the market

- **Core:** Employer, damages, criminal, social and tax court cover. Handles the most common disputes of a business with staff.
- **Extended:** Adds premises, vehicles, out-of-court employment advice and telephone legal advice.
- **Comprehensive:** Adds business contract cover, special criminal cover, higher limits, mediation and cover abroad.

## How to recognise a good policy

| Criterion | Minimum standard | Strong policy | Why it matters |
| --- | --- | --- | --- |
| Limit per case | EUR 300,000 | EUR 1 million or unlimited | Several instances with expert reports quickly reach six figures. |
| Employment advice before court | only once proceedings start | from warning letter and settlement talks | Most employment disputes are settled, and early advice shapes the outcome. |
| Business contract cover | not included | included with an adequate value cap | Invoices and defects are the everyday conflicts of a business. |
| Special criminal cover | not included | intent-based allegations and fee agreements covered | Defence lawyers rarely work at the statutory scale. |
| Waiting period on switching | new waiting period | waived when moving from previous cover | Switching insurers should not create a gap. |
| Insured persons | owner and employees acting for the business | also managing directors, family members working in the business and temporary staff | Investigations often target people not named in the policy. |

## Insurers on the German market

Business legal expenses insurance in Germany is sold by specialist legal expenses insurers and the legal expenses arms of large groups. The list describes the German market and says nothing about who we work with.

- **ARAG**: family-owned legal expenses insurer based in Düsseldorf
- **ROLAND**: legal expenses specialist based in Cologne
- **D.A.S.**: legal expenses brand of ERGO, part of Munich Re
- **ADVOCARD**: legal expenses insurer of the Generali group
- **AUXILIA**: legal expenses specialist based in Munich, sold through brokers
- **ÖRAG**: legal expenses insurer of the public-sector insurers and savings banks
- **Allianz**: business legal expenses through agents and brokers
- **HDI**: part of the Talanx group, cover for businesses and professions

60 insurers supervised by BaFin, the German regulator, are licensed for this class of insurance. (Rechtsschutz). Source: BaFin company database, retrieved 2026-09-18. Insurers from other EU countries selling through a branch or without a German office are not included.

## Typical claims and who pays

- **Dismissed employee sues at labour court** (usually a few thousand euros): Employer legal cover pays your lawyer and the court. Any settlement payment to the employee stays with the company.
- **Client refuses to pay your invoice** (four to five figures, depending on the amount): Contract disputes are not in the standard package. A contract module covers them up to a set amount in dispute.
- **Office landlord sues over repair costs** (four to five figures): Disputes over rented business premises need a separate property module. Many packages leave it out.
- **Co-founder sues over company shares** (five to six figures): Disputes between shareholders are excluded everywhere. A clear shareholder agreement is the only protection.
- **Police investigate a warehouse accident** (defence costs, four to five figures): An allegation of negligent injury falls under criminal defence cover. It protects owners and staff in their work roles.
- **Competitor sends a cease-and-desist** (a few hundred to several thousand euros): Competition and trademark law are excluded. German warning letters come with fee demands, so check your website texts and images.

## Myth or truth

- „In a German civil case, the loser pays both sides' legal fees." ✔ True, the losing party pays the court and the other side's statutory lawyer fees. Legal cover pays both if you lose.
- „The same loser pays rule applies at the German labour court." ✘ False, in the first instance each side pays its own lawyer, even the winner. Only court fees follow the outcome.
- „German lawyers can work on a no win, no fee basis like in the US." ✘ False, success fees are allowed only in narrow cases. Most lawyers bill statutory fees or an hourly rate.
- „Statutory fee tables let you estimate the cost of a German lawsuit in advance." ✔ True, court and lawyer fees follow the amount in dispute. That is what makes the risk insurable at a fixed premium.
- „You can buy legal cover today and use it for a dispute that starts next week." ✘ False, most modules have a waiting period of three months. What counts is when the dispute arose, not when you go to court.

## Common mistakes

- Expecting unpaid invoices to be covered under a standard policy
- Buying cover when a dispute is already on the horizon
- Instructing a lawyer before the insurer has confirmed cover
- Relying on the owner's private legal expenses policy for business disputes
- Not updating the policy after converting to a GmbH

## FAQ

### Does business legal expenses insurance cover unpaid invoices?

Not under standard cover, because contract disputes of businesses are excluded. Only business contract cover pays, usually up to a cap on the value in dispute. For undisputed claims, the court dunning procedure is often faster and cheaper.

### Who pays legal costs in a German lawsuit?

In civil courts the losing party pays the court fees and both sides' statutory lawyers' fees, in proportion if the result is partial. In the labour court at first instance each side pays its own lawyer. Legal expenses insurance covers your share of this risk.

### Can I choose my own lawyer, including an English-speaking one?

Yes, free choice of lawyer is guaranteed by § 127 Insurance Contract Act. You can instruct any lawyer admitted in Germany, including one who works in English. Some insurers reward using their recommended lawyers with a lower deductible.

### Is the managing director covered?

For acts on behalf of the business, usually yes, for example in a criminal investigation after an accident. Disputes between the director and the company, such as over removal from office, are excluded and need separate employment contract cover.

### What is a cover confirmation (Deckungszusage)?

The insurer's written confirmation that it will pay for a specific dispute. Obtain it before costs arise. Many lawyers request it directly from the insurer.

### Do I need legal expenses cover if I have business liability insurance?

They do different jobs. Liability insurance defends and pays claims made against you. Legal expenses insurance funds your own claims and your defence in criminal, employment or social court matters.

### What does business legal expenses insurance cost?

It depends mainly on sector, headcount and modules. A trade business with employer cover pays much less than a trading company with contract cover. We quote from your details.

### Why use a broker for legal expenses cover?

Because the value lies in choosing the right modules for your real disputes. We compare contract cover caps and criminal cover terms, explain them in English and help if the insurer declines a case.

## Legal basis and sources

- [Insurance Contract Act (VVG, German)](https://www.gesetze-im-internet.de/vvg_2008/)
- [BaFin company database (licensed insurers)](https://portal.mvp.bafin.de/database/InstInfo/)

## Request quotes

We obtain quotes and come back with a comparison. Free of charge and without obligation: the insurer pays our commission. You can write in English. https://www.nammert.com/en/insurance-broker-business-legal-expenses.php#anfrage

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NAMMERT Assekuradeur GmbH, insurance broker licensed under section 34d(1) of the German Trade Regulation Act, broker register no. D-C08Q-TOSD4-37. For boat and yacht insurance we act as underwriting agency, not as broker.

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