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What is Car Insurance?

Car insurance is a type of insurance policy that protects car owners against financial losses due to accidents or theft. The insurance company agrees to compensate for losses involving the insured vehicle in return for premium payments by the policyholder. Car insurance pays for expenses such as:

Repairs and replacement (of parts) in the damaged vehicle

Loss due to theft of the vehicle or its components

Legal liabilities arising due to bodily injuries to other people or damage caused to their properties by a car accident

What is the Penalty for Not Having Car Insurance in the UAE?

The UAE motor laws make it mandatory for car owners to purchase third-party liability insurance for their vehicles. This policy protects car owners against lawsuits and legal expenses arising due to car accidents.

Penalty for No Insurance:

Driving without car insurance in the UAE is a punishable offence, attracting a penalty of AED 500, four black points, and a seven-day retention of the vehicle. Most traffic violations in the UAE attract certain black points, and the driver’s license is suspended if a person earns 24 black points over a 12-month period.

How Much Does Car Insurance Cost in Dubai?

The exact car insurance cost in Dubai depends on various factors such as the type of the vehicle, its price, age, and the driver’s claim history. However, recent studies have reported that the annual cost of comprehensive car insurance ranges between AED 1,200 to AED 5,000. The third-party car insurance price typically ranges between AED 450 to AED 1,000 per annum.

Types of Car Insurance Plans in the UAE

Insurers in the UAE offer two types of car insurance plans. The details of both these car insurance types are as follows:

1) Comprehensive Car Insurance

As the name suggests, a comprehensive car insurance plan offers extensive protection. It meets statutory requirements and also offers additional protection to car owners. The policy covers loss or damage to your vehicle due to accidents, fire, theft, and third-party claims arising due to an accident involving the insured vehicle. 

A policyholder can also purchase several car insurance add-ons along with a comprehensive car insurance plan.

2) Third-Party Liability Insurance

Basic third-party car insurance is mandatory under the UAE laws. This ensures car owners have adequate financial resources to compensate third parties affected by car accidents. The policy pays for the consequent lawsuit damages and legal expenses. However, it does not compensate car owners for loss or damage to their own vehicles.

How to Save Money on Car Insurance Premium?

Here are some great tips to help you save big on car insurance premiums.

Explore :

The insurance premiums usually vary between companies. Try to get car insurance quotes in Dubai from at least three insurance providers. Research these companies and get feedback from existing policyholders.

Check Before Buying :

The car insurance premiums depend on the vehicle type, price, age, and safety features. The premiums are high if vehicle repairs and replacement are expensive. Check the safety rankings of the vehicle before buying, as many insurers offer attractive discounts for cars with high safety rankings.

Drive Safe :

Drivers with a clean driving history (having no record of traffic violations and accidents) signify lower risk to insurance companies. So, drive cautiously and avoid getting entangled in legal hassles. Install anti-theft devices to safeguard your vehicle against theft and burglary.

Choose Higher Deductibles :

A higher deductible can reduce the premium as it lowers the burden on the insurer. If you are a safe driver with little or no claims in the past, you can opt for a higher deductible on your car insurance premium.

Avoid Frivolous Claims :

Many policyholders lose the benefit of a no-claim bonus (NCB) due to minor claims. Smaller defects can be fixed at a local garage by the owners themselves to accumulate the NCB benefit and save a significant sum on premiums.

Avoid Major Modifications :

Insurers generally levy higher premiums on vehicles with modifications such as alloy wheels, tinted glasses, and other sophisticated gadgets. Please avoid making such changes if you wish to pay a lower premium.

Timely Renewal :

Renew your car insurance every year before expiry and never let the policy lapse. This saves penalty charges and ensures that you do not lose out on your accumulated NCB benefit.

Add-On Covers in Car Insurance

Car insurance add-ons offer additional benefits to policyholders. They expand the scope of coverage beyond the basic plan and address specific issues. The major add-on covers in car insurance have been listed below.

Engine Protection Cover :

The car’s engine may get damaged due to electrical or mechanical breakdown, oil spill, or water ingression. The engine protection cover pays for the expenses of replacing the car’s engine or its parts.

Roadside Assistance Cover :

Vehicle breakdowns are quite common during long journeys. The roadside assistance cover provides services such as emergency onsite repair, changing flat tyres, car towing, fuel delivery, and battery jumpstart.

Zero Depreciation Cover :

Insurers usually settle car insurance claims by deducting a depreciation charge for the vehicle and its components. A zero depreciation cover helps policyholders to claim the full amount without suffering any depreciation loss.

Return to Invoice Cover :

Due to depreciation, car owners do not receive the invoice value as compensation in the event of total loss or theft of the vehicle. This add-on cover enables policyholders to claim their car’s invoice value.

Consumables Cover :

This covers the expenses of consumable items such as lubricants, grease, engine oil, nuts & bolts, etc. required during vehicle repair

Key Replacement Cover :

Basic car insurance does not pay for replacing lost or damaged car keys. This add-on pays for the replacement and also covers the expenses of repairing the lockset (if required)

Natural Calamity Cover :

Basic car insurance excludes the loss or damage due to natural disasters such as earthquakes, floods, storms, cyclones, etc. This add-on policy covers such losses.

Personal Accident Cover :

A car accident may result in bodily injuries, disability, or death of the driver. The personal accident cover pays for the medical treatment and offers compensation in the event of the driver’s disability or death.

Passenger Cover :

The personal accident cover does not pay for the medical treatment of the passengers injured in an accident. The passenger cover pays for their medical treatment and also offers compensation for disability or death (if any)

What is Covered Under Car Insurance?

The coverage under the two types of car insurance in the UAE is as follows.

1) Third-Party Liability Insurance

1) Comprehensive Car Insurance

What is Not Covered Under Car Insurance?

The general exclusions of car insurance in the UAE are as follows:

How to Choose the Best Car Insurance Plan in the UAE?

Here are some useful tips to help you choose the best car insurance plan in the UAE.

Know Your Requirements: Consider aspects such as the car’s age, value, driving habits, and the budget you can set aside for premium payment every year. You can opt for comprehensive coverage only if the vehicle is fairly new.

Request for Multiple Quotes: Try to get car insurance quotes from the top three to five insurance providers. You can compare their features, benefits, coverage, and prices to zero in on an optimal plan.

Check the Scope of the Policy: Ensure that the policy coverage meets all your needs without any uncommon exclusions.

Assess the Deductible: Choosing a higher deductible can lower your premiums. However, you may incur higher out-of-pocket expenses in the event of a claim. So, opt for an optimal deductible to keep these expenses affordable.

Ask for Discounts: Insurers offer attractive discounts for ‘safe’ drivers with a clean record. Further, you can install anti-theft devices and renew the policy on time every year to bargain for a higher discount on your premium.

Read the Policy Document: Policyholders must be aware of all the minor (but finer) points in the policy document to understand the terms & conditions, exclusions, and restrictions of the plan.

Check the Insurer’s Track Record: Here, you can consider factors such as the insurer’s financial position, claims settlement, customer reviews, and industry ratings.

Customer Service Quality: High-quality customer service ensures that policy purchases, renewals, claims settlements, etc. are smooth and seamless for policyholders

Frequently Asked Questions on the Car Insurance Price

The premium rates may vary among insurers. The price of third-party car insurance in Dubai usually ranges between AED 450 to AED 1,000 (per annum).

Basic third-party car insurance is mandatory under the UAE motor laws. This ensures that every car owner can compensate a third party for bodily injuries or property damage due to an accident.

Passenger injuries are typically not covered under the regular comprehensive car insurance plan. Policyholders can purchase a separate ‘Passenger Cover’ add-on to compensate for the medical treatment of injured passengers.

Third-party car insurance is mandatory but does not cover accidental damage to your vehicle and loss due to theft. Although the premiums are higher, purchasing comprehensive car insurance for complete protection is advisable.

The IDV (insured declared value) represents the maximum sum insured on your car. It is the maximum amount the insurer offers if your car is stolen or damaged beyond repair. Zero depreciation is an additional benefit provided to policyholders who buy a separate add-on cover. Here, the insurer does not charge any depreciation on the vehicle (or its parts) and pays the full claim amount after due assessment.