Insurance for homeowners: what you need

As a tenant you may have needed only liability and contents insurance. With your own home that changes: if it burns, water comes through the ceiling or someone slips on your icy pavement, you pay – not the landlord. At the same time, banks and brokers like to sell more than you need.

This overview sorts German home insurance by importance.

Essential: buildings insurance

It pays when the building itself is damaged – by fire (including lightning and explosion), water from pipes and storm or hail. The biggest claims don't come from fires but from burst and leaking water pipes: according to the insurers' association GDV, almost half of all buildings insurance claims costs over the last twenty years were water from pipes.

Without it you won't get a mortgage: the bank requires it as security. For a single-family house it usually costs a few hundred euros a year, depending on location, size, age and fittings. Premiums rise almost every year automatically with construction prices – by just over 4% in 2026.

What to look for:

• New-for-old, not current value. A good policy pays what rebuilding costs today ("gleitender Neuwert"), not the value of the old house.
• No argument about the sum insured. Many policies are priced by living space and in return waive the right to claim underinsurance after a loss. State the area and fittings correctly.
• Gross negligence covered. Otherwise the insurer may cut the payout if, say, a candle was left burning.
• Solar panels are usually not included automatically, but can often be added as an extra.

Strongly recommended: natural hazards cover

Standard buildings insurance does not pay for flooding after heavy rain, river floods, sewage backflow, snow load, landslides or earthquakes. For that there's the natural hazards add-on (Elementarschadenversicherung).

Heavy rain can fall anywhere, not just by a river. Yet according to GDV only about 59% of residential buildings are insured against natural hazards – with big differences between states: 94% in Baden-Württemberg, which had compulsory cover until 1993, and only 33% in Bremen.

What's set to change: at the end of September 2026, Federal Justice Minister Stefanie Hubig presented key points for a reform. Every newly taken-out buildings insurance policy is to include natural hazards to a defined extent; existing customers are to be offered an extension. Anyone who doesn't want the cover is to be able to opt out – compulsory insurance as for cars is not planned. A draft law is expected in the first quarter of 2027. Until then, you only have natural hazards cover if you take it out explicitly.

In a low-risk location the add-on often costs around €100 to €150 a year extra, much more in high-risk areas. Many insurers require a working backflow valve (Rückstauklappe) in the cellar to pay for backflow damage.

Essential: liability

As an owner you have a duty of care (Verkehrssicherungspflicht): you must clear snow, secure loose roof tiles and keep an eye on the tree in the garden. If someone is hurt because you didn't, you're liable – in theory without limit.

• A house or flat you live in yourself: most personal liability policies already include this. Check yours and tell your insurer you're now an owner.
• A rented-out granny flat: can often be added to personal liability for a surcharge.
• A rented flat, an apartment building, an empty plot: you need separate property owner's liability insurance.

Oil tank: water pollution liability

If you heat with oil, you need it, full stop. If heating oil leaks and pollutes soil or groundwater, you're liable under the Water Resources Act without any upper limit – one litre of oil can contaminate around a million litres of water. Some personal liability policies include smaller tanks for owner-occupied houses, often up to 5,000 or 10,000 litres. Ask rather than assume.

Sensible: contents insurance

Contents insurance pays for everything you'd take with you when moving: furniture, clothes, devices, bikes – after fire, water from pipes, storm, burglary and vandalism. Buildings insurance only covers the building and fixed installations. The natural hazards add-on exists here too.

During building or renovation

• Builder's liability (Bauherrenhaftpflicht): if you build or renovate on a larger scale, you're responsible for the site's safety. Personal liability often covers smaller projects up to a certain construction cost; above that you need separate builder's liability.
• Construction insurance (Bauleistungsversicherung): protects a new building under construction against storms, theft and vandalism.
• Tell your buildings insurer: larger conversions and longer vacancy can affect your cover. Report both in advance.

For your family: if an income stops

A mortgage often runs 25 to 30 years. The biggest risk to the financing is usually not a fire but the loss of an income.

• Term life insurance: if a borrower dies, it pays the survivors a fixed sum they can use to repay the loan. For young, healthy people it's cheap. A version with a decreasing sum insured follows the shrinking loan balance and costs even less.
• Disability insurance: pays a monthly income if you can no longer work in your profession for health reasons. It's dearer, but it protects what the loan payment comes from. It's cheapest the younger and healthier you are when you take it out.

Usually not needed

• The bank's payment protection insurance (Restschuldversicherung): often offered with the loan. It's usually dearer and less flexible than your own term life insurance. You don't have to buy it from the bank that lends you the money.
• Glass insurance: pays for broken panes. The damage is usually small enough to pay yourself.

If you buy a flat

The owners' association insures the building; you pay your share through the house money. Ask to see the policy and check whether natural hazards are included. Yourself you need:

• personal liability (usually enough for a flat you live in),
• contents insurance,
• if you rent it out, property owner's liability for your flat.

In short

• Buildings insurance with natural hazards cover and liability belong with every home you own.
• An oil tank in the cellar? Then water pollution liability, no exceptions.
• You can cancel the seller's buildings insurance within one month of your land register entry – comparing pays.
• Term life and disability insurance protect the mortgage better than the bank's payment protection.
• Budget the premiums with your running costs – more in After you buy: the costs that come next.

This guide is a general overview, not insurance advice. What a policy covers is set out in its terms.