What is Car Insurance?
An insurance is an arrangement through which a company undertakes to provide a guarantee of compensation for specified loss, damage or death in lieu of payment of a specified sum. Car insurance is a motor vehicle insurance which aims to insure the vehicle and its occupants and to provide assistance in case of any accident.
Importance of Car Insurance
UAE has seen tremendous growth in the last few decades which has made it one of the most prosperous countries in the world. This prosperity has resulted in more vehicles on the road and more insurance agencies setting up base in UAE. Vehicle manufacturers from across the globe have found love in UAE, with car sales going through the roof. Cities like Abu Dhabi have seen a 700% growth in the number of vehicles in the last five years. UAE is home to the fastest and most expensive cars in the world and it becomes a necessity to insure these expensive machines. The addition of cars on the roads increases the chance of accidents, which can put lives at risk. A good car insurance policy can act as a safety net in case of any untoward incidence. Local laws make car insurance mandatory for owners and not insuring it could lead to severe punishment.
Types of Car Insurance and their Features
There are different types of motor vehicle insurance options available in UAE. The major ones are illustrated below.
- Comprehensive/Fully Comprehensive (Basic) – Insurance companies are legally obligated to provide this insurance at a price level of 3-5% of the value of the car. This covers damage to the own car.
- Comprehensive with options – Customers could choose options like dealer repair, free car hire, insurance in other GCC countries and recognition of no-claim bonuses. These will cost the consumer about 3-10% of the car value.
- Comprehensive premium level – This comes at an extra 2% value of the car and is restricted to certain conditions and limitations.
- Third Party – This policy covers damage in case of incidences with an external party. The third party needs to be insured if a claim has to be made against them under third party rules.
- Third Party fire and theft – This is the legal minimum one is required to have and is the cheapest option. In case of an accident the insurance policy will not pay for damages to the own vehicle, the insurance provider of the person who caused the accident will be required to pay for damages.
Benefits of Car Insurance
- Agency repairs – Most insurance providers ensure that policy holders are provided with agency repairs for up to 5 years from the date of registration.
- Doorstep delivery – The policy is delivered at the customers’ doorstep, saving time and money to travel to the bank to pick up the policy.
- Car registration –Most insurance providers provide customers a hassle and tension free car registration service.
- Roadside assistance – The insurance policy provides customers roadside assistance in case of vehicle breakdowns or emergencies.
- Car cash benefits – Some insurance providers offer customers courtesy car cash benefits.
- High cover – Policy holders get high third party property damage cover of up to AED 5 million.
- Off road coverage – Policy holders are provided off road coverage which provides cover for any accident which occurs off road.
- Personal coverage - Policy holders get personal belongings cover of up to AED 5,000 in most cases. One can be tension free if they lose any belongings from their vehicle.
- Free pick up and drop – Certain insurance provides offer policy holders free pick up and drop facilities to the airport.
- Emergency Medical Expenses – Some insurance providers allow policy holders to avail emergency medical expenses claims up to AED 3,500.
- Natural Calamity cover – Certain insurance providers cover natural disasters and calamities.
- Grace renewal period – Some insurance providers give policy holders a one month grace period to renew their insurance policy.
How to make a claim for Car Insurance
Making a claim can be tedious if the right process isn’t followed. The following steps illustrate how one should go about when wanting to make a claim.
- Contact the car insurance company as soon as possible after the accident/collision.
- Provide complete details to the company, including the full name, policy number, duration of policy, date and time of accident, names and contact details of all the people involved, Driver’s license and license plate number of parties involved.
- Approach the local police station for a copy of complaint. Some providers might ask for a police copy of the incident.
- Once the insurance company is contacted they will assign a professional who will work on it. This professional would discuss the case and evaluate it, which could include inspection of the car, examining injury claims and an initial payment.
- The professional would then resolve the case based on its merits and the type of coverage it has.
The insurance provider may reject the claims made on certain grounds.
- If the driver was under the influence of alcohol or drugs at the time of accident.
- If the driver doesn’t hold a valid driving license.
- If the vehicle was overloaded beyond the specified capacity.
- If the vehicle was used for any purpose other than the one specified in the policy.
- If the insurance contract was made by providing false/misleading information.
- If it is proved that the accident was intentional and deliberate.
- Insurance companies do not entertain claims filed three years after the accident.
Car Insurance Online
With the world moving to the digital platform almost all banks and individual providers now have an online presence. A customer could apply for and get a policy online without even having to go to the office. Company representatives come to check the vehicle at the doorstep in most cases. Renewing the policy is also a simple affair, with just the form needing to be filled out online. One can compare the best prices and the services offered online, making the internet a one stop destination for car insurance.
How to choose the best Car Insurance
- Understand ones needs – It pays to know what coverages and amenities one is looking for in a policy.
- Reputation and financial standing - Check the reputation and financial standing of the insurance provider.
- Compare quotes and prices – Comparing quotes could help get a better policy at lesser rates.
- Evaluate the coverage – It pays to periodically evaluate the coverage one is getting. Companies can reduce the premiums in certain cases and keeping an eye out for them would result in tremendous savings.
Top Car Insurance providers in UAE
- ADCB Car Insurance
- ADIB Car Insurance
- CBI Car Insurance
- CBD Car Insurance
- Dubai Islamic Bank Car Insurance
Abu Dhabi Commercial Bank provides car insurance from leading carriers at extremely competitive rates starting as low as 2.35%. Policy holders are provided with agency repairs for up to 5 years from the date of registration and doorstep delivery of their policy. The insurance policy also provides high third party property damage cover of up to AED 5 million along with off road coverage for certain vehicles. The policy also allows for free airport pick up and drop facilities and personal cover of up to AED 5,000.
Abu Dhabi Islamic Bank offers customers a car insurance policy based on the Islamic Shari’a Law. The ADIB Motor Takaful Protection programme offers customers easy finance options to contribute to the Takaful contribution. The policy covers unlimited bodily injuries as per UAE laws and provides a personal accident cover up to AED 150,000 per person. Fire and theft cover is also provided by this plan.
Commercial Bank International offers customers car insurance based on their individual needs. The premium for CBI car insurance starts as low as 2.5% and it offers them agency repairs for up to five years from the date of registration. The personal accident benefit covers both the driver and passengers in case of accidents. The auto gap feature covers new vehicles for the first six months. Registration of the car is also taken care of under the policy.
The Commercial Bank of Dubai offers an AutoCare insurance policy which is in line with the vehicle insurance laws of UAE. This policy provides a natural calamity cover against disasters and any natural calamity. A high third party damage cover of up to AED 2,500,000 is provided to policy holders. A personal effects cover of up to AED 1,000 protects against loss of personal effects. The insurance policy covers both UAE and Oman, allowing protection in case of cross country accidents.
DIB provides its customers a Takaful insurance at extremely low rates. This follows Shari’a law and allows customers to choose from different packages based on their needs. They provide third party cover up to AED 3,500,000, protection from natural calamities, 24x7 accident and breakdown recovery service, off-road cover and agency repairs up to 3 years.
Frequently Asked Questions - FAQs
- Who is eligible for Car Insurance in the UAE?
- Can my insurance premium be affected by any factors?
- Do I receive cover for damage caused off the road?
- If I decide to sell my car during the tenure of the policy, can I transfer the policy to the buyer?
- Are there any major differences between third party liability and comprehensive insurance?
- Why should I get a car insurance?
- What is a Third Party Liability insurance?
- What is a Comprehensive Insurance policy?
Car Insurance can be availed by anyone in the UAE provided they qualify as residents, are at least 25 years old and not more than 65 years of age, have held a driving license for a minimum of one year in the UAE, or for a minimum of two years if they have transferred from another country. The vehicle insured must be registered in your name for the purpose of personal loan.
There are many different factors that may affect your insurance premium. These include the driver’s age, location, type and value of the vehicle, claims history and the length of the driver’s driving experience.
Yes, the insurance policy will cover vehicles with off-road capability when it is used off-road. However, insurance can only be claimed if the vehicle is not being used in competitive or race events. The terms and conditions for off-road coverage vary from insurance provider to insurance provider so make sure to read the offer document carefully before signing it.
No. The insurance premium calculated for you is unique and based on your own profile, so you cannot transfer the policy to another driver’s name. If you wish to sell your car, you will have to first cancel the insurance policy and the new owner of your car can take out a new insurance policy.
Yes. Policies taken out against third party liabilities are designed to cover bodily injuries or death of any third party and damage to property caused by the vehicle of the insured. The insured vehicle will not be covered against any loss or damage under this policy. UAE laws have made it mandatory for vehicle owners to take out policies against third party liability.
Comprehensive insurance policies, on the other hand, cover the vehicle against damage or loss caused by either third parties or by the driver himself. Losses arising from theft, burglary, external explosions, fire, self-ignition, accidental collisions, lightning, etc. as well as losses caused by third parties are covered under these policies.
A UAE national is mandated by the law to insure their car. But apart from that, a car insurance provides financial security and damage cover to your car. You will be able to claim benefits in case of accidents, loss or theft of vehicle, and other damages.
Under Third Party Liability (TPL) coverage, you are covered against any damage to a third party if your car is involved in an accident. It covers loss of life, bodily injuries, and damage to another’s car or property because of your car. It does not cover any damage to your own vehicle. This is the cheapest form of insurance you need to adhere to the law.
A Comprehensive Insurance policy includes all the benefits of a Third Party Liability policy and more. It offers coverage on the cost of repairs to your own vehicle and property due to an accident. Accidental collisions – whether they are caused by others or by yourself – are also covered in a comprehensive policy.
The following instances are also covered:
- External explosion
- Burglary and theft
- Intentional damage to vehicle by third parties
Because of the additional benefits, the premium on Comprehensive Insurance policies are higher than for a TPL plan. The comprehensive plan is available only if your vehicle is less than 7 years old.
You can choose to add some extra benefits to your car insurance. Accident or death cover for the driver and other passengers, extension of area where the claims are valid, coverage on rental or alternative vehicles, are also available.
The amount of premium you have to pay on your car insurance depends on several factors, which include:
- Age of the driver
- The driver’s experience
- Model and make of the car
- Age of the car
- Value of the car
- The number of years you have driven under insurance but without making a claim
- The type of insurance policy and additional covers you choose.
You can get a car insurance in the UAE only if you have a valid residence visa and driver’s licence. In the UAE, car insurance, like the driver’s licence, has to be renewed annually. This means your vehicle insurance is valid for 12 months with a 1-month grace period.
News about Car Insurance in the UAE
Car insurance cost up by 40% in the UAE
The cost of car insurance has increased by 40% on certain models in the UAE which has made the motorists to look for a cheap third party policy. The motor insurance has risen by 15% since January, 2017. Drivers pay an average of 14.88% towards the fully comprehensive car insurance. The insurers in the UAE have to pay a minimum of AED1,300 for saloon cars and for the SUVs the minimum to be paid is AED2,000. The SUV drivers are paying 40.59% more when compared to last year. The drivers of saloon care are paying 9.53% more than what they were paying last year. Most of the customers are buying third party policies instead of fully comprehensive insurance.
15th March 2017
UAE calls for ban on heavily damaged old cars
UAE has decided to ban the registration and insurance of severely damaged used cars from May 1, informed a senior authority. The ban will be applicable on non-repairable and rebuilt cars, burnt out and water-damaged vehicles and cars that come with significant manufacturing defects, director-general of the Emirates Authority of Standardization and Metrology (ESMA), Abdullah Al Maeeni said. He added that the idea behind this move was to prevent manufacturers from rebuilding damaged vehicles and also to stop them from selling such vehicles to unsuspecting buyers. It will also stop importers from importing heavily damaged vehicles.
He also explained that salvage title vehicles are dangerous as they go through severe accidents and when they come to the manufacturers, they try to rebuild and repair it which doesn't really reduce the impact of the accidents on these vehicles making them vulnerable to many more.
In several cases, rebuilt cars have several important parts that get salvaged from different vehicles. These parts are both, non-mechanical as well as mechanical. After they have been assembled, the vehicles are given a salvage title. After being restored completely, they are called rebuilt.
Al Maeeni informed that starting May 1, importers will be needed to make sure that the vehicles they are buying are defect and damage-free. They will also have to make sure that vehicles that are imported to get dismantled parts are in a good condition.
23rd February 2017
Impact of 2017 Car Insurance rules
The Insurance Authority recently implemented a new set of car insurance rules in the UAE. The changes have led to an increase in prices and the mandatory benefits have increased. The benefits of protecting drivers have increased as well. The increased mandatory benefits are, free replacement of car provided you are not at fault, extension of liability coverage to the members of your family, and the property damage cover has increased to AED2 million. The new rules also provide clarity on rules when the car has been declared as a total loss, clarity on policy, and maximum specific premiums. The new minimum rate for a sedan has been set at AED1,300, which was previously AED1,050. The new rate for an SUV has been set at AED2,000.
10th January 2017
Insurance Firms in UAE Should have a Central Repository of Customer Information
The 62 insurance companies currently operational in the UAE should share customer information among themselves to prevent false claims from being made, according to experts.
With large number of fraudulent claims being made, especially in the field of motor vehicle insurance, it is vital for insurers to share customer information database that would help the companies understand the risk profile and adjust the premium accordingly. Having access to a would-be client’s driving history can help identify the chances of fraudulent claims being made by them in the future.
Out of the 62 insurers in the UAE, 45 provide motor insurance. However, only 21 of these share customer information database.
According to Pascal Persoon, the CEO of eData, accident prone people often change insurance companies to get as low a premium as possible. They usually target those insurers who are not stringent about background checks. eData gathered information regarding 1.5 million claims of motor insurance in Dubai to analyse the possibility of fraudulent claims.
Mr Sidani, a former CEO of Abu Dhabi National Insurance Company believes that a shared repository would also complement the pricing parameters put into effect by the Insurance Authority.
Mr. Persoon added that insurance firms’ loss ratio will also drop by 20% to 30% at least if they share information and adjust the premium to mitigate the risk. The government would also benefit here as the number of vehicular accidents would come down.
25th December 2016
UAE releases new tariff system for car insurance
The Insurance Authority of the UAE has released a new tariff system for motor vehicle insurance premiums. A source from an insurance firm said that the premiums will decline from AED 100 to AED 150.
An insurance professional said that this new system is great as it is helpful to a party who is less responsible for an accident. Under this new system, when an accident happens, an insurance company has to give a car to the blameworthy person for 10 days when his or her car’s damages are being fixed. Otherwise, the company will have to pay AED 300 to the person every day.
The new system has unified motor vehicle insurance policies for loss and damage and third party liability. The maximum premium for a four-cylinder private saloon car for a third-party liability insurance policy is AED 1,300 and the minimum is AED 750.
19th December 2016
UAE drivers prefer to buy the best car coverage plans
According to a survey from compareit4me.com, more than two-thirds of UAE drivers prefer to buy the best car insurance coverage rather than the cheapest. The study also revealed that over 69.7% of the UAE residents search for the best car insurance coverage when shopping around for a car insurance policy. The UAE residents are prepared to pay extra for peace of mind. The premiums for car insurance has gone up over the last few years. Having a car insurance coverage is not a legal requirement in the UAE and despite that most people opt for one and choose the best that is there in the market for them. Majority of the UAE residents are satisfied with the car insurance cover that they have.
24th November 2016
UAE motor insurance to offer more benefits
The UAE motor insurance companies will offer more benefits but the premiums are likely to increase as well. With the increased third party cover, customers can transfer more risk to the insurance companies. This will directly impact the average claim cost and the reinsurance cost. With over 91 registered insurance companies in the UAE, the competition is high and it has led to the drop in the price of the insurance. Though this is a good news for the customers, many insurers have suffered great loss. This increase in benefits and increase in premiums could benefit both the customers and insurers. Under the new guidelines, discount will be offered to good drivers and the drivers with poor record will have to pay more premium.
04th October 2016
Unified system has been approved for motor insurance
Insurance Authority has approved the unified system for motor insurance policies. The new system will increase the coverage related to any claims arising from accident which causes damage to property from Dh250,000 to Dh2 million. The new rule will include two documents, that is a third party vehicle insurance policy and insurance for vehicle against loss or write off. The vehicle insurance has been categorised according to the insurance type through two separate documents. The third party vehicle insurance policy is compulsory while the loss or written off vehicles is not. This system aims to achieve transparency in line with demands of the national economy and local market.
29th September 2016
Increase in auto insurance premiums in the UAE
There has been increase in the auto insurance premiums for both compulsory 3rd party cover and own damage cover in the UAE. The average price for motor insurance policy for a sedan has been raised to 2.55% of the total value of the card during the 3rd quarter of the year. An increase of about 12% has been reported. The premiums are increasing to stop loss and to correct pricing. More hikes are to be expected in the future. The average premium rate for motor insurance in the UAE will reach 3% of the value of the car by the end of this year.
21st September 2016
Insurance premium for risky drivers set to increase
Car insurance firms have been permitted to charge a higher premium for risky drivers in Qatar. The Qatar Central Bank issued a circular to all the insurance and reinsurance companies to calculate the premiums based on the records of the motorist. The insurance policies will be more expensive for vehicles that belong to the drivers who have caused accidents or violated traffic laws. This move will make the roads safer for the drivers. The Qatar Central Bank also imposed a requirement for the insurers to provide reports on the black spots in the country where there are frequent accidents taking place and the reason for the accidents taking place.
25th July 2016