Auto Insurance in the UAE costs 15% More

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*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
Car owners in the UAE will have to pay 15% more for motor insurance plans in comparison to the last financial year. Most of the buyers in the UAE are not satisfied with the hike in prices as they think they are not receiving the complete value for what they are paying. Payable premiums for both comprehensive as well as third-party liability insurance for all the major categories will increase after the implementation of unified auto insurance guidelines by the insurance authority of UAE. 

The new guidelines include an increase in tariffs of insurance plans along with the introduction of upper and lower limits for payable premiums of motor insurance plans. The minimum premium for comprehensive insurance plans is restricted to AED 1300, and the maximum value restricted to 5-7% of the total insured value of the vehicle for sedan and SUVs respectively. Similarly, the minimum restricted value for third-party liability is AED 750 and the maximum value is AED 2100. 

The new unified regulations issued by the insurance authority have led to an increment in the damage protection offered by insurance companies in the UAE, making car replacement mandatory amid the repair period. Furthermore, the new policies issued under the unified guidelines will include ambulance and medical evacuation fee.  

The Dilemma of Customers

A large number of customers are unsatisfied by the hike in prices and complain that either the benefits promised by insurance companies in UAE are not mentioned clearly in the fine print or simply just don’t exist in real-time.  

Ahmed Shariff an Indian expatriate residing in the UAE from the past eight years says when he applied for a new car insurance policy, he was expecting a specialized clause for replacement of vehicles based on the unified policy issued by the insurance authority of UAE. On enquiring from the insurance provider, he got to know that the clause is not mandatory and hence is not offered in the plan he purchased. However, contrary to the information received by the insurance, Ahmed was under the impression that it is mandatory under the new laws. 

Another Pakistani expatriate, Siraj Khan says, the majority of insurers he contacted were not willing to insure his 2007 SUV and those who were issuing a comprehensive plan were charging way too high prices than the minimum limit set-up by the unified guidelines. According to Siraj, the guidelines are only being implemented with the motive of grasping more money from customers. He says the only insurance companies in UAE that agreed to issue a comprehensive car insurance plan was forcing him to lower down the total insured value of his vehicle.  

Benefits of the New Guidelines

Considering the concerns of customers insurance experts clarified the doubts and said that there are indeed some considerable benefits for car owners in the UAE after the implementation of new guidelines by the insurance authority.  

Apart from the additional cost that catches the eye of every customer, the new guidelines and regulations have some changes in the conventional policies issued by insurance companies in the UAE. The most important change is the introduction of new capping that allows customers to claim third-party liability damages, which were increased from AED 250000 to AED 2 million. The previous rules and guidelines in several cases left the scope for customers to be insured.  

A substantial number of customers were unaware of the fact that some of the insurance plans would not pay for third-party damages if the repair cost exceeds the damage of AED 250000. This way if the minimum limit of third-party damage is equivalent to AED 250000 and the accident caused damage of 500000 then in that case the remaining 250000 will have to borne by the policyholder.  

Apart from wider protection and coverage, the new payable premiums include add-ons that will cover the expense of emergency medical services i.e. ambulance, emergency evacuation. However, based on the new clause of replacement of cars for ten days or AED 300/day to cover the charges of car rental will only be payable if the policyholder is not at fault. For customers who are at fault replacement facility will only be valid if they have purchased an additional coverage that covers the cost of replacement.  

Another major benefit after the introduction of new unified guidelines will lead to standardized wordings of car insurance policies. The new regulations make sure that when a customer purchases a policy then can be satisfied so that it serves the purpose of the buyer. The replacement rule is applicable for both third-party liability coverage as well as comprehensive cover. 

Wider Array of Protection

With the implementation of new guidelines and regulations that benefits for customers have also increased as the extended liability is now available for husband, wives, parents, and children of policyholders. If a customer has a long history of claims then the system of calculating the new premium will take into consideration and therefore payable premium might turn out to be higher than expected.  

The rise in the prices might not appear pleasing but the increase will provide an additional array of protection to policyholders in the UAE.  

In a Nutshell

With the new guidelines, customers will get additional protection and seeking to mitigate the introduction of maximum premiums for car insurance plans in the UAE. 

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