insurances for freelancers in germany
Finance,  Expat Hacks,  Work in Germany

6 Ways to Stay Financially Stable as a Freelancer in Germany

AKA how not to go broke as a business owner or freelancer in Germany. 😉 Here are some of my top recommendations for staying one step ahead of natural calamities, freak accidents, non-paying clients or sudden sickness. Some may call them necessary evil – but these essential insurances for freelancers in Germany can really keep you afloat in times of crisis. 



*Sigh*, I should’ve planned for it!

Every freelancer or small biz owner has had this moment at least once in their career. 

The whole idea of being a business owner is to be your own boss. You get to do what you want, for however long you want, who to work with and when. But the biggest blessing of being self-employed is also its biggest curse. You are on your own.


five important insurances for freelancers in Germany


Self-employment tests your adulting skills to its limits. You are your own CEO, COO, CTO, CMO, CFO and what not. Wearing that fancypants CFO hat, you gotta make all financial and legal arrangements,  – in case you are ever hit by an emergency.


Take a moment and think about what could happen in one single lifetime.

  • What happens if you are incapacitated for a long time by an illness or an accident?
  • What if you have burnout or a mental illness that prevents you from working?
  • Or when the economy suddenly takes a nosedive and clients start cost-cutting measures?
  • Or as is the situation now, the coronavirus is causing a huge loss of income for freelancers and small businesses all over the world. 


A robust safety net should be one of the top priorities of anyone even thinking about freelancing. Having a financial cushion becomes even more important if you have a family or dependents. Then it is not just vital for your survival, but also for the wellbeing of your spouse and your children.



Here is a little fact about freelancing in Germany — self-employed people get little or no entitlement to statutory benefits in Germany if they become unable to work. Therefore, the stakes are very high for them.


This is why when I became a freelancer in Germany a few years ago, it was under the assumption that I should be able to survive financially for at least 12 months without any projects or income stream lined up. 

And now that we have a sudden financial crisis triggered by Corona pandemic, I’m so thankful I did. Sure, there are Corona-Soforthilfe (emergency aids) for freelancers by the German state. But I truly think these unique financial challenges would’ve landed me in big trouble if I didn’t have that emergency funds and proactive measures to count on.


Here are five very important insurances for freelancers in Germany that can protect you from bankruptcy and tons of stress in the future.


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1. Verdienstausfallversicherung (Loss of Earnings Insurance)


Any responsible freelancer in Germany should have a Verdienstausfallversicherung.

Verdienstausfallversicherung basically covers you financially during a temporary loss of income caused by accident or long sickness. 

You should always treat this one as a basic necessity – simply to keep your finances stable and plannable under any circumstances. Major health-related disruptions are rare, but when they happen, they can easily cost a few months of income. 

There’s no reason to burden yourself with a financial risk when you can easily get yourself covered by an insurance company.

Verdienstausfallversicherung for freelancers with statutory health insurance:

Self-employed persons are free to decide whether they want to receive sickness benefit from the statutory health insurance after six weeks of absence from work due to illness. In this case, they have to pay a monthly contribution depending on their profit.

Some optional tariffs also offer to pay sickness benefit earlier. It is also possible to take out additional Verdienstausfallversicherung, which pays out an individually pre-determined daily sickness benefit.


Ottonova - reduced to the best


Verdienstausfallversicherung for freelancers with private health insurance:

Many private health insurance providers offer  Verdienstausfallversicherung for freelancers in Germany. However, as self-employed persons suffer a loss of income from the first day of an illness, it can be agreed that the daily sickness allowance is paid earlier, from day four of an illness.

Ottonova is a well known German private health insurance provider for expats. They also offer customer care in English.


Click here to calculate your monthly health insurance premium with Ottonova.



2. Berufsunfähigkeitsversicherung (Occupational Disability Insurance)


Berufsunfähigkeitsversicherung (BU) is another very important insurance for any freelancer in Germany. Whether due to an accident or long term illness (and, it can happen very quickly) — you can one day find yourself permanently unable to work.

And just like that bye-bye self-employment!


What insurances freelancers in Germany need


If you suddenly become too disabled to work, your option will be either to live off on your personal savings or your life insurance. In these situations, Berufsunfähigkeitsversicherung is a life-saviour for freelancers in Germany.

In the case you are facing a permanent physical or mental disability, the BU pays a previously agreed monthly pension. This can help you maintain your standard of living and protect you against social relegation.

Private Berufsunfähigkeitsversicherung pays a monthly pension if at least 50% of occupational disability has occurred. This is paid until the end of the insured period or until the end of the occupational disability. The amount can be determined individually when taking out a policy.

There are many Berufsunfähigkeitsversicherung providers in Germany. However, you should pay attention to certain clauses when making comparisons online.

CosmosDirekt, for instance, offers immediate Berufsunfähigkeitsversicherung without any waiting period. You can calculate your monthly premium with CosmosDirekt here.



Difference between Verdienstausfallversicherung and Berufsunfähigkeitsversicherung


Verdienstausfallversicherung covers the loss of income and other damages caused by temporary health issues. The flu or a broken leg or something like that.  Berufsunfähigkeitsversicherung protects from a social and financial decline caused by long-term or permanent disabilities.
Pays a daily allowance plus whatever damages the policy covers. Pays a predetermined monthly pension, independent from the actual damage. In permanent cases insured receives a lifelong pension.
Covers temporary loss of income  Covers long term permanent loss of income




3. Privathaftpflichtversicherung (Personal Liability Insurance)



Nearly 85% of the German population has personal liability insurance also known as Privathaftpflichtversicherung. So there must be a pretty good reason for this eh?

Accidents can have huge consequences in Germany. 

If you ever end up hurting someone or causing any property damage in Germany, you have the legal obligation to compensate that party. 

Not only this. You can be held liable for an unlimited amount for any damages you cause. This means even a once-in-a-lifetime freak accident could potentially put you in a lifetime of debt.

Privathaftpflichtversicherung protects you from the financial consequences of any unusual (or usual) accidents.




Personal liability insurance also safeguards you against any legal expenses if someone wrongfully accuses you of damaging their property.

As a freelancer, you should absolutely make sure that you cover all your bases using a comprehensive Privathaftpflichtversicherung coverage.

Coya, an expat-friendly and English speaking private liability insurance provider based in Berlin offers personal liability insurance starting as low as €4.99/month and can save you hundreds and thousands of euros.


Click here to get your own personal liability insurance plan with Coya starting at €4.99/month



4. Berufshaftpflichtversicherung (Professional Liability Insurance)


In Germany, just like a private person, companies (businesses) can also be held liable for damages caused to an unlimited extent. Professional liability insurance is, therefore, one of the most important insurances for freelancers in Germany.

Berufshaftpflichtversicherung covers losses incurred by third parties in the course of business activities. Depending on the extent of the damage, this may well mean the financial ruin for you or your company. Without a professional liability cover, that is!




Professional liability insurance for freelancers works in three ways:

  • Firstly, if damage occurs, the liability insurance for self-employed persons first checks whether the liability claim is actually justified — both in terms of the reason and the amount.
  • If the claim is justified, it will be covered by the liability insurance for self-employed persons and the entrepreneur will be saved from financial expenses.
  • If the insurer finds that the claim is wholly or partially unjustified, it protects itself from its customers. The professional liability insurance for freelancers rejects the claims and, if necessary, takes legal action.

In addition, the liability insurance for freelancers fends off unjustified claims by any miffed clients.

Hiscox is an insurance provider specialising in professional liability insurance in Europe.

They insure freelancers, small and medium-sized companies with tailor-made coverage for their industries ranging from online shop ownersIT consultantmarketing agency owners to creatives such as bloggers or, freelance photographers and so on.


Click here to find a professional liability insurance cover for your freelance business!



5. Rechtsschutzversicherung (Legal Protection Insurance)


Legal protection insurance (Rechtsschutzversicherung) protects you from unexpected legal costs. Just like the professional liability insurance, rechtsschutzversicherung is also amongst voluntary insurances for freelancers in Germany as well.

But if you are one of those people who keep getting in trouble, then this one might be totally worth it.

With Rechtsschutzversicherung you pay a monthly premium to your insurer and oblige them to save your arse whenever you find yourself in the middle of a shitstorm — such as a dispute with your neighbours from hell, or when you leave a libellous review for a business or get in a car accident.




These are by no means just court fees. Legal expenses insurance also provides the following benefits:

  • Attorney’s fees
  • Compensation of experts and witnesses
  • Costs of the other party, if they are to be reimbursed
  • Prosecution bonds
  • Partly also for costs of mediation by a neutral third party to resolve the dispute without legal proceedings

In a 2018 survey conducted by Roland Rechtsschutzversicherung, a leading professional liability insurance provider in Germany, only 27 per cent of those surveyed stated that they had been involved in one or more court cases in the last ten years – either as plaintiff, defendant or witness.


Related: How to Legally Protect Yourself as a Freelancer in Germany


6. Emergency Funds


Everyone should have an emergency fund. But it’s even more important for freelancer and business owners, who generally have limited entitlement to state benefits. No amount of insurances for Freelancers in Germany will do for you what your private emergency funds could do.

Basically, an emergency fund is money tucked away in a current or savings account that you can access immediately. But it’s set aside for…emergency situations.

When I started to freelance, one of the most important things for me was that — in the emergency situations —  I should be able to manage and survive dry months without depending on anyone or any insurances or pension funds.

There was no specific monthly amount set for my emergency funds. I just saved a lot during the good months and whatever I could during the not-so-good ones.



But how can you start building up an emergency fund?

A general rule-of-thumb is to have at least enough to cover at least three to six months of household expenses like rent, groceries, insurances, utilities, phone, medications, etc. However, you should also consider the following:

  • What other financial resources you have in case of an emergency?
  • Can your significant other support you if needed?
  • Are your close family members willing/able to help if needed?
  • How many people depend on you and your income?

You can set aside a small % of whatever you earn towards your emergency funds. It’s easy to set automated monthly payments with most bank accounts.

Freelancers in Germany can easily open online business bank accounts with Holvi or Kontist. These modern mobile banks offer super easy and convenient online banking options at very minimal monthly rates (or even for free!)


Holvi - Einfach. Sicher. Papierlos.



Read: How to Choose a Business Account in Germany as a Freelancer (2020 Edition)


Many of us think of insurances as necessary evils. However, for self-employed people, they are necessary to ensure a smooth day to day existence.

No matter how hard you work, as a freelancer, you cannot count on a steady monthly income. That’s why it is so important for your mental and financial wellbeing to have a backup plan.

Especially if you live in a foreign country (where you will not automatically qualify for any state benefits). As a responsible freelancer in Germany, get proactive and protect yourself from any shitstorm caused by unforeseen events.


So these are my tips for surviving potential financial disasters in Germany. Do you have any other insurances for freelancers in Germany besides the mandatory health insurance? Did I miss anything essential here? Please let us know your experiences in the comments below. 

Hi there, I am the human behind this blog. If you could not tell by my photo, I am fueled by tea. My expat journey started at the age of 19. Germany has been my home for several years. I hope you will find some helpful insights if you are considering moving to Germany or already live here.

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