Driving in Germany: Why is car insurance getting more expensive?

The Local Germany
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Driving in Germany: Why is car insurance getting more expensive?
A set of car keys lies on top of a car insurance agreement. Photo: picture alliance/dpa/ADAC SE | _ADAC Autoversicherung

The average cost for car insurance in Germany has risen by nearly nine percent in the last year, and is expected to rise further by the end of the year.


According to the car insurance index of the comparison and broker portal Verivox, car policies across all types of insurance currently cost an average of 8.8 percent more than last year.

Motor policies in Germany are offered in three forms: third-party liability, which is mandatory for all car owners, as well as partial and fully comprehensive insurance. The price increase of 8.8 percent so far applies to all these types of insurance. 

The surge in car insurance costs can be attributed to several factors, including rising prices in car repair shops and the impact of the end of the coronavirus pandemic on driving behaviour.

This current price increase aligns with what was predicted in the insurance industry last autumn when the coronavirus pandemic initially led to a brief period of reduced driving and lower accidents, resulting in slightly cheaper car insurance premiums.

However, as driving activity resumed, the number of accidents increased, contributing to the current upward trend in car insurance costs.

Looking ahead, both Verivox and the Association of the German Insurance Industry (GDV) expect further noticeable price increases this year, especially for already existing car insurance contracts.

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The GDV estimates that insurers are likely to face a total loss of over €2.5 this year as, despite drivers paying approximately €30.2 billion for vehicle insurance, insurers are expected to spend over €32.8 billion on damages and administration, leading to increased financial pressure.


The primary driver behind these rising costs is the inflationary effect on both spare parts and labour in car repair shops.

According to the GDV, customers must prepare for rising premiums due to the threat of billions in losses for car insurers.

"Of course, there is a connection between the development of losses and the premiums for a motor vehicle insurance policy," GDV Chief Executive Jörg Asmussen announced on Tuesday.

Whether and to what extent insurers will adjust premiums, however, is a decision for the individual companies "and not a matter for the association," he said.



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