Car Insurance Types in the UAE Explained

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*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
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Congratulations! After months of thoughts and consideration, you have finally made to buy a brand new car. Now, you are eager to drive parallel to UAE's coastline along the Persian Gulf through the longest road - Sheikh Zayed Road. But, before you get down on the iconic road, make sure that your car is insured and registered with the Road and Transport Authority (RTA).

With the ownership of a brand new car, here comes the most complex part that is, buying a car insurance that provides coverage against maximum odds.  With different banks and insurance providers in the UAE, there are plenty of car insurance options available under different names. This could leave you confused or perplexed. To help you choose the best car insurance we have broken down the list of numerous car insurance covers available in the UAE into two major types. Also, we have shared some of the common add-ons and exclusions in the policies that need to be taken care of while buying a new car insurance policy. Check them out:

Types of Car Insurance Covers

While the insurance providers in the UAE offer plenty of car insurance covers, they all fall into two major categories. The categories are:

Third-Party Liability Insurance

Third-party liability insurance offers the minimum level of coverage required under the law in the UAE.  This kind of insurance covers only those damages that are caused by your vehicle to other people’s vehicle. It also provides coverage against death or bodily injury to any third party in the UAE. It should be noted that any damage done to your own vehicle is not covered under this policy.

However, if you met an accident that was not of your fault and you have a Third Party Liability car insurance policy, then you need to check whether the other party’s insurance company will pay for your damages or not.

Comprehensive Car Insurance Coverage

Comprehensive car insurance provides covers with the damage done to the third party vehicles plus the damage done to your own car. It may also include other potential damages caused due to theft, fire and collision.

Any car can be insured under comprehensive car insurance coverage provided it is not older than 7 years. This kind of car insurance coverage is usually more expensive than third-party liability insurance offers.

Comprehensive Car Insurance Coverage Common Add-ons

Most of the comprehensive car insurance covers allow you to choose certain add-ons for your premium at an additional cost. Some of the common add-ons are as follows:

  • Theft
  • Fire
  • Death/Bodily injury to person or property involved in third party accidents
  • Personal injury protection (PIP) to cover medical costs of treatment of the injuries to the driver and passengers of the insured car
  • Oman coverage to cover the car damage to your car when you enter Oman
  • Off-road cover to insure your car on unmarked roads depending on the limitations
  • Roadside assistance offers mechanical repairs, battery boost, vehicle towing, flat tires, lockout and emergency fuel delivery
  • Zero depreciation coverage to cover the entire cost of a claim without accounting for the car’s depreciation if the insured car is brand new (it is valid only for new cars up until 6 months from the purchase date).
  • Cover for Agency/dealership repairs which are different from “garage” repairs. This add-on includes mechanical repairs from an authorized dealer’s workshop.
  • Add-on cover for the loss of personal items that belongs to you and is carried in the insured vehicle. It also covers the damage caused to the item due to an accident, fire, theft or attempted theft provided the damage has been evidenced in a police report.

Common Exclusions of Car Insurance Covers

Even though comprehensive car insurance covers allow you to select several add-ons, there are certain exclusions associated. These are:

Off-road coverage

Only vehicles with off-road features and capability are eligible under this type of coverage. The insurance company may also ask for the driver’s off-road license to provide this type of coverage.

Damages caused by driving under the influence:

Any damage that has been caused by the driver under the influence of alcohol, drugs or any other additive will not be covered. Also, if the damage occurs while the car was being driven by a person without a valid driver’s license, it won’t be covered.

Deliberate accident loss

Loss or damage caused by the accidents that were planned intentionally will not be covered.

False claims at the time of purchase:

In case the insurance company finds that the facts claimed during the time of purchase are false, your claim may be rejected.

One More Type of Car Insurance - GAP Car Insurance

Apart from comprehensive car insurance covers and third-party liability insurance, there’s one more category of car insurance. It is GAP, or Guaranteed Asset Protection insurance. It is essentially an add-on cover that helps you pay the difference between the actual cash value of your car and the amount you still owe to the finance company in the event of an accident.

It should be noted that the settlement is based on the car’s actual cash value and not the original price you paid for it. The actual cash value of a car is its monetary value at the time of the accident. The settlement may or may not cover what you still owe on your lease. This is because cars depreciate in value very quickly.

The Bottom Line

As an owner of the car, you should be wise enough to choose the best car insurance.  Ideal car insurance is the one that minimizes the risk and maximizes the benefits. Even though the third-party liability insurance is the cheapest option, whenever it comes to the policyholder’s interests, a comprehensive car insurance coverage is a better option. It allows you to select several add-ons.

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