Every person who owns a vehicle in the UAE has a car insurance. But, very few know how the companies calculate the price of the car insurance premium. There are various factors that affect the car insurance premiums that you need to know so you can get the best car insurance rate.
Factors affecting car insurance premium
Following are the factors that affect the car insurance premium:
- Base rate:
Every car insurance company in the UAE will have a base rate. The base rate is the percentage which is applied to the vehicle value so the starting price of the premium can be determined. Different rates are applied for regular vehicles, 4x4, SUV’s and luxury vehicles. For a sedan the rate can be as low as 2.25%. If your car is worth AED100,000, your insurance premium will be AED2,250 per annum. Insurance providers also charge a minimum premium which will be at least AED850 per annum. The minimum premium is based on the vehicle’s classification. If your car is worth AED20,000, you will still be paying the minimum premium.
- Age, nationality and experience:
If the driver is between the ages of 23 and 25, the insurance premium will go up by 25%. If the driver is between the ages of 25 and 30 the insurance premium will increase by 15%. If the driver is more than 30 years old but less than 60, 10% will be deducted. If the driver’s UAE license is less than a year old and there isn’t a convertible license from the home country, the insurance premium will increase by 25%. Even the nationalities are taken into consideration while deciding the insurance premium.
- Agency repairs:
A basic car insurance coverage will not include agency repairs. This means that you cannot go to your dealer to fix the car in case of an accident. If you wish to add agency repairs to the insurance, an additional 0.4-0.5% is added to the premium rate. You will have to watch out for restrictions on the agency repairs option. Some insurers will cover dealer repairs for the first 2- 3 years of the car’s life.
- Optional benefits:
There are other optional benefits available, such as roadside assistance, car rental, etc. A fixed amount will be added to the premium if you choose the optional benefits. Roadside assistance will cost an additional AED30. Replacement vehicle for 6 days will cost you AED200. Car hire can cost anywhere from AED150 to AED450. Personal accident cover will cost you AED60 to AED120. Geographical coverage will cost you around AED500. Windscreen cover will cost you AED10. Some insurers also offer dent repair benefits.
- Sports vehicles:
Insurers will increase the premiums of sports cars by 15-25%. Depending on the engine size some insurance companies increase the premium by a fixed amount.
- Claims free deductions:
If you have had a claims free year, you can get deductions provided you can prove it. 5% deduction for 1 year no claims certificate. For a 2 year no claims certificate you get 10% deduction. 15% deduction is offered for a 3 year no claims certificate. 20% discount is offered for a 4 year no claims certificate. For 5 year and more than 5 year no claims certificate, you get 25% discount.
The above rates and percentages aren’t set in stone. Every insurance company uses a different model of pricing. This is why it is crucial that you speak to an insurance expert before you decide on an insurance policy. Take the quotes from various providers and then make sure you compare the benefits that are being offered to you before you decide on an insurance policy.