Commercial legal expenses insurance

Updated:
09.10.2026

A legal dispute is expensive for a company in Germany: the losing side pays the court and the other side’s lawyer. Firmenrechtsschutz (legal expenses insurance for businesses) covers these costs up to the agreed sum insured and gives you access to a lawyer’s advice. It does not cover everything, though: in first-instance employment disputes each side pays its own lawyer, and contract legal protection is a separate module in many policies. Below I explain what the policy covers, what it leaves out and what I look at when choosing one.

What is Firmenrechtsschutz

Firmenrechtsschutz is one of the most important insurance products, as in Germany a legal dispute can be very expensive for legal entities and the self-employed. Sometimes this can even lead to bankruptcy. In most cases, if you lose, you will have to bear all the costs, including the other side’s lawyer’s fees. The exception is employment disputes: in the first instance each side pays its own lawyer, even the winner.

Firmenrechtsschutz allows you to recover legal costs. It also gives you the opportunity to receive consultations from independent lawyers and assistance in finding the best solution to a dispute. This is particularly relevant for small and medium-sized enterprises that often do not have their own legal departments. The insurance covers the company owner and employees. In addition to full-time staff, this also includes part-time workers, apprentices, interns, etc. They are only counted proportionally when specifying the number of employees. For example, with some insurers four mini-jobbers count as one employee when specifying the number of people, and if you combine Firmenrechtsschutz with private legal protection, then it will also extend to your family members.

The cost of such insurance depends on many parameters (for example, the number of employees, the industry, the desired insurance payouts). The size of the insurance coverage must correspond to potential risks, because legal costs can amount to several thousand euros, and in large disputes to tens of thousands. If your company’s annual turnover does not exceed 5 million euros, you can often get a discount for taking out at least one more insurance policy.
Bear in mind that, as a rule, there is a waiting period (three to six months) after you take out Firmenrechtsschutz. For most types of cover, the insurance only becomes active then. In this way, insurance companies want to avoid having to cover legal expenses immediately after the contract is concluded.

By the way: premiums for corporate legal protection count as business expenses.

What is included in business legal protection insurance (Firmenrechtsschutz)

Reimbursement of expenses
The insurance company shall reimburse expenses in accordance with the agreed sum insured:

Legal costs
Witness expenses
Fees for valuers and experts
Interpretation expenses
The other party’s costs (if you lose the case)
Mediators’ fees

Insurance abroad

Employees who work for your company abroad are also insured. But only if your company’s main office is in Germany. The insurance also covers you and your employees during business trips abroad.

Private legal protection

Using the optional “Private Legal Protection” module, you have the option to include your family members in the cover.

Mediation

The opportunity to avoid court and resolve disputes with the help of an independent mediator.

Consultation

Round-the-clock access to legal advice is often provided, where you can:
— Find out whether your case is covered by corporate legal protection.
— Get an initial consultation on your query
— Get recommendations for specialists near you (lawyers in different countries)

Legal contract protection for businesses

Contract legal protection helps companies in the event of legal disputes related to contracts. It provides cover for the costs of lawsuits, lawyers and consultations if issues arise with compliance with contract terms or breaches by partners, clients or suppliers. In many policies this module is added separately and is not part of the basic package, so check it in your policy.

An example where the insurance company covered the costs:

A carpenter is opening a business in a new housing estate. Residents are concerned about the noise and are demanding that work be stopped. They are taking legal action. Corporate legal protection covers the legal dispute costs.

When does corporate legal protection pay out, and when does it not?

Covered by insurance:
An employee has filed a lawsuit, contesting their dismissal (employment protection).
A legal dispute arises over a motor vehicle or from rental or repair contracts (legal protection in contract and property law).
The dispute arises over residential and commercial premises (legal protection of housing and property).
Mediators, when they are needed for the out-of-court settlement of a dispute.

Not covered by insurance:
Legal disputes arising in connection with the planning, financing and construction of new construction projects.
Name and trade mark rights disputes (sometimes may be included in an additional module).
Copyright litigation (sometimes available as an optional module).
Disputes under company law and under the service contracts of managing directors and board members (not insured under the GDV model terms).
Disputes under competition and cartel law.

The main benefit for the organisation is financial protection against unforeseen circumstances and critical expenses. When concluding the agreement, pay attention to additional risk coverage. Of course, different insurance products will suit different companies. We are ready to help you find legal expenses cover that suits your type of business and your circumstances.

Frequently asked questions about Firmenrechtsschutz

Does Firmenrechtsschutz protect the managing director of a GmbH, and disputes between shareholders?

Not for corporate disputes, as a rule. The GDV model terms, drawn up by the German insurance association, exclude disputes arising from company law and from the service contracts (Anstellungsvertrag) of the legal representatives of legal entities, for example the Geschäftsführer (managing director) of a GmbH (private limited company) or the Vorstand (management board) of an AG (public limited company). A dispute between Gesellschafter (shareholders), or between a managing director and their own GmbH over their contract, normally falls under that exclusion. Everyday conflicts with employees and customers are not affected, provided the policy includes them. For managing directors themselves, some insurers offer a separate Manager-Rechtsschutz (executive legal expenses cover). Read the exclusions before you sign.

An employee sues over a dismissal: who pays my lawyer if I win?

In the first instance before the labour court (Arbeitsgericht), each side pays its own lawyer, even the winner. The usual rule that the loser reimburses the other side’s costs does not apply there. On appeal, before the Landesarbeitsgericht (state labour court of appeal), it applies again: the losing side also pays the winner’s lawyer. That is why employment legal expenses cover can make sense even when you are in the right: if it is part of your policy, the insurer pays your lawyer up to the statutory fee under the RVG (the German lawyers’ fees act), minus your excess (Selbstbeteiligung). The Wartezeit (waiting period) still applies to it: under the model terms of the GDV (the German insurance association) it is three months from the start of the contract.

Gewerbliche Rechtsschutzversicherung: is that the same as Firmenrechtsschutz?

As the name of an insurance product, yes: Firmenrechtsschutz is also called that. In legal language, though, gewerblicher Rechtsschutz (industrial property protection) means the protection of intellectual property such as patents, Gebrauchsmuster (utility models), trade marks and designs; the German Patent and Trade Mark Office (DPMA) calls them gewerbliche Schutzrechte. The model terms of the GDV (the German insurance association) exclude such disputes, and disputes under Wettbewerbsrecht (competition law) as well. An accusation of copyright infringement online appears there only as an optional extra. If you want to protect a brand or a patent, ask the insurer directly whether it offers a separate module.

Can I choose a Russian-speaking lawyer?

Yes, you choose the lawyer yourself. The insurer only picks one if you ask it to, or if you name nobody and immediate action seems necessary. Under the model terms, what is reimbursed is at most the statutory fee under the RVG (the German lawyers’ fees act) for a lawyer based where the competent court sits. If your Russian-speaking lawyer works elsewhere or agrees a fee above the RVG, everything above that limit stays with you. The insurer pays for translating documents when your interests are being pursued abroad. Which language the helpline uses depends on the insurer, so ask beforehand.

What determines the price of Firmenrechtsschutz, and what should I compare besides the premium?

There is no honest price without details: the insurer asks about your industry, annual turnover, number of employees, sum insured, the modules you want and the excess (Selbstbeteiligung). When I compare offers, I first look at the sum insured per case, the waiting period, the exclusions and whether contract, employment and criminal law cover (Vertrags-, Arbeits- and Straf-Rechtsschutz) is part of the policy, and only then at the premium. The higher the excess, the cheaper the premium, but every dispute starts with your share; if disputes are connected, it is deducted only once.

Does Firmenrechtsschutz apply if the dispute is with a business partner abroad?

That depends on which court has jurisdiction. Under the model terms of the GDV (the German insurance association), there is cover if a court or authority in Europe, in the countries bordering the Mediterranean, on the Canary Islands or on Madeira is competent. Tax and social-court legal expenses cover, where your policy includes it, applies only before German courts. Proceedings before a court in the USA, the United Arab Emirates or China fall outside those terms; for those you would need a policy with a wider territory, if the insurer offers one. Keep this apart from the question of whether your employees are insured abroad: with some insurers they are, if your head office is in Germany. Check how your policy defines “Europe”: only the EU or more.