How mandatory insurance for small vehicles affects medium-sized companies

The good news: First of all, the majority of federal states have spoken out against the bill. The proposal by Justice Minister Marco Buschmann (FDP) provides for mandatory insurance for small vehicles such as lawn mowers, snow blowers and forklifts, both for professional and private use.

The bad news: The mediation committee is supposed to clear up the case later this month.

Martin Limbeck is the founder of the Limbeck® Group, serial entrepreneur, investor, Economic Affairs Senator (EWS), member of the BVMW Federal Economic Senate and one of the leading experts in sales and sales leadership in Europe. In addition to his business activity, Martin Limbeck lectures and is an ambassador of Kinderlachen eV for sick and needy children in Germany. He passes on the knowledge he has acquired over 30 years of business activity in his intellectual group “Gipfelswärtser”.

Why is the legislative project a wrong signal in times of recession and resignation?

To get right to the point: this bill is complete nonsense. Everyone is talking about cutting red tape, and at the same time, a new insurance requirement is coming, which will bring with it forms, processes, and the like. On this point I can only agree with Manfred Pentz, the German prime minister for debureaucratization. He described the idea as “increased harassment and bureaucratic burden on innocent citizens and businesses.” That's all. Especially in the current tense economic situation, even a seemingly small amount of additional insurance can be the last straw for some small businesses.

There is one thing we must not forget: when we started, the traffic light coalition promised us less paperwork, regulations and standards and therefore lower costs by reducing bureaucracy. Like almost all previous federal governments. There is little left of that, and the current debate is the crowning glory of it all. To put it in concrete terms: according to the latest report of the National Regulatory Control Council, which, among other things, determines the bureaucratic burden, last year there was an annual compliance cost of 25.9 billion euros. It refers to the costs derived from government regulations for citizens, companies and administrations. And that means that a new record level has been reached, which I find absolutely shocking.

What role does compulsory insurance for small vehicles play in the current economic situation and how could it be optimized?

A large part of the economically relevant laws are now decided in Brussels. However, that doesn't automatically mean the federal government should simply approve it. And above all, you don't need to put in extra effort just to overcorrect. The current project of the Minister of Justice, Marco Buschmann (FDP), goes beyond what the new EU directive actually provides for. Isn't it more important, especially now as a federal government, to keep an eye on the German economy and see how EU laws can be implemented without even greater burdens?

These are vehicles that rarely travel on the road. Its main purpose is to perform work, not transport people. Why should individuals purchase insurance for their ride-on lawnmowers that they use exclusively on their property? Especially since on closed private land it is also allowed to drive completely different vehicles without registration or permit, for example mini quads for children.

All of this seems quite arbitrary and overly meticulous to me. Until now, vehicles traveling at a maximum speed of 20 kilometers per hour could be insured at a flat rate in a company or private liability insurance policy. What speaks against leaving it like this? Just because it is possible for them to cross a public road?

What long-term impact could compulsory small vehicle insurance have on society?

In Germany, motor vehicle liability insurance is required by law. It also makes sense, after all it covers any damage caused to third parties by your own vehicle. Of course, accidents can also occur during work due to carelessness or technical defects. However, the liability insurance of the company that owns the small vehicle usually applies here as well. A look at the statistics also shows that sparrows are being shot here: the number of cases in which assistance to victims of traffic accidents has had to intervene is extremely small because there was insufficient liability protection. According to traffic accident statistics, in the last five years there have been eight cases of damage to self-propelled vehicles, with an average amount of 3,500 euros.

First, if the bill passes, it will hit our economy again. Many small and medium-sized businesses, such as horticulture, for example, will take a closer look at whether the operation of their numerous machines is still profitable, whether it is therefore necessary to adjust prices or whether it is even possible to eliminate vehicles. And forklifts? Virtually every large company with its own warehouse needs these devices to move goods from A to B. Above all, it will again cost business owners hours of work to make inquiries, apply for insurance, etc.

How can policy support small and medium-sized businesses to reduce the economic burden?

What we need is not more taxes and unnecessary insurance regulations, but really sensible measures, such as lowering tax rates for medium-sized businesses. Or, alternatively, the introduction of tax incentives to promote investment and growth or, under current conditions, discourage entrepreneurs from migrating or selling abroad.

To remain competitive, we ultimately need to simplify bureaucratic processes and reduce administrative burdens. What happens after the insurance requirement for forklifts, lawnmowers and the like? A risk tax for staplers and hole punches in the company? If things continue like this, all economic activity in our country will be completely suffocated by excessive regulation. And sooner rather than later.

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