The decision in favour of legal expenses insurance should be carefully considered in advance. It is worth also thinking about alternative sources for enforcing legal claims, such as trade unions, property owners’ associations or tenants’ associations, as well as liability insurance.

If you do decide on a private legal expenses insurance policy, we advise you to compare providers and insurance products extensively. The quality of a legal expenses insurance policy often shows in the detail. Make sure that the applicable general insurance conditions for the legal expenses cover contain no provisions that are less favourable from a consumer perspective than the „General Conditions for Legal Expenses Insurance“ (in German „Allgemeine Bedingungen für die Rechtsschutzversicherung“, ARB for short) published on a non-binding basis by the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft e.V.). Written confirmation from the insurer is recommended.

In addition, you should pay attention to the following clauses:

1. Sum insured:

The sum insured should be at least EUR 300,000, and the so-called objection procedure should be contractually agreed. The background is that some insurers reserve the right to pay only once a dispute goes to court. In such cases it is important that the legal fees for the preceding so-called objection procedure are covered, in order to avoid going to court at all.

2. Waiver of the pre-contractual defence:

A clause covering legal disputes that arose before the start of the contract is advantageous. The condition is often that the contract has already been in place for at least five years.

3. The arbiter’s decision (Stichentscheid):

The so-called arbiter’s decision (Stichentscheid) as a contractual component also provides legal certainty in your policy. Where there are doubts about the prospects of success of a legal dispute, the insurer may refuse to assume cover. Agreeing an arbiter’s decision can help to obtain cover after all. It is binding on both parties and can be drawn up by your own lawyer. The costs for this must be borne by your insurer regardless of the outcome of the decision. Should this arbiter’s decision turn out negatively for you as the policyholder, you nevertheless still have the right to bring a coverage action against your insurer.

4. Waiting periods:

Last but not least, you should also take the insurance-specific waiting periods of the providers into account in your choice. It is quite common for waiting periods to apply before the legal expenses benefits can be claimed. These vary from insurer to insurer. In most cases the waiting period is three months from the start of the contract. It is important to note that the cause of the legal dispute may only arise after this waiting period has elapsed.