German labor law offers strong protections for employees—but asserting your rights often means going to court. Whether you’re dealing with an unfair dismissal, a dispute over your work certificate, or unpaid wages, legal action can be stressful and expensive. That’s where legal expenses insurance comes in. Known in German as Rechtsschutzversicherung, this type of insurance can cover the legal costs of employment disputes, giving you the confidence to defend your rights without worrying about financial risks. This guide explains how legal expenses insurance works in the context of employment law in Germany, what it covers, and how to use it if you’re facing a workplace conflict.
1. What Is Legal Expenses Insurance?
Legal expenses insurance is a private insurance policy that covers the costs of legal disputes, including:
- Lawyers’ fees
- Court costs
- Expert opinions (if required)
- Costs of the opposing party (if you lose)
In employment law, this can be a lifesaver—because even a basic claim like unfair dismissal (Kündigungsschutzklage) can cost hundreds to thousands of euros.
📌 Many Germans have legal insurance to protect themselves against unexpected legal costs—not only in employment law but also in traffic, rental, or family disputes.
2. What Does Legal Expenses Insurance Cover in Employment Law?
The employment law module (Arbeitsrechtsschutz) of a legal expenses policy typically covers:
✅ Legal consultation and representation in disputes with your employer
✅ Court proceedings for unfair dismissal
✅ Wage or overtime payment claims
✅ Defense against disciplinary actions (e.g. warnings or formal complaints)
✅ Conflicts over references (Arbeitszeugnis) or contract clauses
✅ Negotiations over severance pay or termination agreements
📌 Not all policies automatically include employment law—you often need to explicitly add it when buying your policy.
3. What Is Not Covered?
Legal expenses insurance does not cover:
🚫 Pre-existing disputes that started before the policy began
🚫 Fines, penalties, or damages you are ordered to pay
🚫 Conflicts arising from self-employment (unless specified)
🚫 Cases not approved by the insurer (some need prior authorization)
🚫 Intentional misconduct (e.g. provoked termination)
📌 Most insurers require a waiting period (typically 3 months) before you can use the policy for employment matters.
4. How Much Does Legal Expenses Insurance Cost?
Premiums for a private legal expenses policy in Germany typically range between:
💶 €15–35 per month for individual coverage
💶 €25–50 per month for family coverage
💶 €5–10 extra per month to add employment law protection
Prices vary based on:
- Coverage areas (employment, tenancy, traffic, etc.)
- Insurer
- Deductible options (e.g. €150, €300, €500)
Many insurers offer:
- Annual contracts
- Discounts for multiple modules
- Optional legal hotline services
5. How to Use Legal Expenses Insurance
Step 1: Contact Your Insurer
Notify your legal insurance provider as soon as a dispute arises.
- Provide a brief summary of the issue
- Ask whether coverage applies
- Get confirmation in writing
Step 2: Choose a Lawyer
You are free to choose your own lawyer. Some policies include a lawyer hotline or recommended network—but you’re not required to use them.
Step 3: Get Cost Approval (Deckungszusage)
Before your lawyer takes legal action, they must request authorization of coverage from your insurer.
📌 Once approved, your lawyer can proceed—and the insurer will cover the costs.
6. What If I Don’t Have Legal Expenses Insurance?
You still have the right to file claims or defend yourself—but you must pay:
- Your own lawyer (according to the German Lawyers’ Fee Act, RVG)
- Court fees (based on the value in dispute)
- Potentially the opposing party’s costs if you lose
In labor law, even first-instance cases (e.g. dismissal claims) require each party to pay their own legal fees, win or lose.
📌 That means you risk losing thousands of euros without insurance—even if the court rules in your favor.
7. Why Legal Expenses Insurance Is Especially Important for Expats
Expats working in Germany may face additional risks:
- Contracts in a foreign language
- Limited knowledge of German employment law
- Dependence on visa or residence status tied to employment
- Higher likelihood of discrimination or wrongful dismissal
Legal expenses insurance provides peace of mind, allowing you to:
- Assert your rights
- Challenge unfair treatment
- Negotiate fair severance pay
- Avoid legal debt
8. Recommended Insurers and Comparison Tools
Popular legal expenses insurance providers in Germany include:
- ARAG
- D.A.S.
- Roland
- DEVK
- Allianz
You can compare policies on platforms like:
- Check24
- Verivox
- Finanztip.de
📌 Make sure the policy includes employment law coverage (Arbeitsrechtsschutz), has a reasonable waiting period, and covers free lawyer choice.
Conclusion
Having legal expenses insurance in Germany can make the difference between defending your rights—and walking away because you can’t afford legal support.
For employees and expats alike, it is a valuable safety net in an employment system that relies heavily on legal enforcement. If you work in Germany, securing legal protection insurance is one of the smartest financial and legal decisions you can make.
