Increase in car insurance premiums looming for millions of German motorists

In the upcoming year, car insurance premiums in Germany might experience significant changes, with some drivers facing increases of up to 20%, while others may see reductions. This shift is largely due to the annual risk assessments conducted by the German Insurance Association (GDV), which evaluates approximately 410 local registration districts across the country.

The GDV recalculates and publishes the regional classes yearly, based on the most recent damage and accident data from all insurers. These classes play a crucial role in determining premiums, as they reflect the risk profile of each area. Areas with above-average damage costs and frequent accidents receive higher regional classifications, leading to higher premiums for drivers registered there. Conversely, regions with fewer or less costly claims have lower regional classes, which can help reduce premiums.

The regional class of a vehicle is determined by the area of its registration, not where it is driven or where accidents occur. This means that even if a driver frequently travels to high-risk areas, they may still benefit from a lower premium if their vehicle is registered in a lower-risk region.

Large urban centres tend to have the worst risk profiles and therefore higher premiums. For instance, the Thuringian city of Jena is one such region where around 40,000 drivers can expect higher premiums due to a worse regional classification. Similarly, several cities in the Ruhr region as well as Hamburg and Munich also report high damage rates, placing them among the most expensive areas for car insurance.

However, not all news is grim. Many areas, particularly in more rural and less densely populated regions, are seeing improvements in their regional class ratings, resulting in potential premium reductions in 2026. Regions in Germany expected to have improved (lower) auto insurance region classes in 2026 include 51 districts where about 5.3 million drivers will benefit from better classifications. Notable improvements can be found in parts of Thuringia such as Weimarer Land, Saale-Holzland, and Schmalkalden-Meiningen.

Insurance companies are not strictly bound to use the regional classes, but most adopt them as a reliable way to estimate risk. They may apply the new regional classifications immediately for new contracts or at policy renewal for existing customers. For those seeking guidance on the changes, the ADAC, Germany's largest motoring organisation, offers drivers a complete list of changes to regional classes.

It's worth noting that the regional classes are based on the damage and accident history in each district, including factors like the frequency of claims, the severity of damages, and the number of accidents involving wild animals or weather-related incidents. This means that even seemingly minor factors can contribute to a region's risk profile and, consequently, its insurance premiums.

In light of these changes, some Germans may choose to register their cars in certain districts to take advantage of lower premiums. However, it's important to remember that such practices may not always be legal or ethical, and could potentially lead to complications down the line.

In conclusion, the annual risk assessments conducted by the GDV will result in shifts in car insurance premiums across Germany in 2026. Drivers are encouraged to familiarise themselves with the changes in their local regions and consider their options carefully when renewing their policies.