What is the Loss of Use Allowance in Car Insurance?

Why is Loss of Use Allowance in Car Insurance Important in UAE?

• If someone else causes an accident and your car is in the workshop, this allowance ensures you're not left without transport.

• It removes the burden of paying for a rental yourself. Either the insurer compensates you daily or gives you a similar replacement car.
• This is especially helpful in the UAE, where daily travel is often by car and public transport may not be practical for some.

How Does Loss of Use Allowance in Car Insurance UAE Work?

These are the primary conditions and limitations, as outlined in the Central Bank of the UAE’s unified motor insurance rulebook.

• When It Starts - The allowance is calculated from the moment the damaged car is handed over for repair. However, this is only after you submit key documents like the accident report and the car’s title deed.
• Payment Type - You can choose between cash compensation and requesting a substitute vehicle (of the same make) for the same repair duration. If you choose cash instead of repair, you lose your right to the loss of use allowance in car insurance in UAE.
• Maximum Duration - The benefit applies for up to 10 days as per some insurers. 
• Right to Claim - If the injured third party also has their own motor insurance (for loss & damage plus third-party), they may claim the loss-of-use benefit directly from their own insurer. That insurer may then recover (‘recourse’) the amount from the at-fault driver’s insurer.

Where Does Loss of Allowance in Car Insurance Not Apply?

Here are some situations where the loss of allowance in car insurance does not apply —

• If your car is declared a total loss (i.e., not being repaired), you won’t get this allowance.
• If you delay submitting required documents (like the accident report or title deed), your claim might be delayed or declined.
• False or fraudulent claims (e.g., exaggerating repair days) are not allowed.
• Once the maximum allowed days (10 or 15) are reached, the insurer stops paying for loss of use.
• If you go for a cash payout instead of repair, you lose the right to this benefit.

Things to Keep in Mind When Claiming the Loss of Use Allowance in UAE

Here are some things to keep in mind when claiming loss of use allowance —

• Document Everything - File your accident report with the police. Give your insurer the repair shop details, the deed/title, and any job cards showing when repairs start and end.
• Negotiate if Needed - The AED 300/day is a cap, not always the rate. If the insurer offers less, you may check local car-rental rates to argue your case.
• Be Clear About Your Preference - When making your claim, clearly tell the insurer whether you want cash compensation or a replacement vehicle.
• Watch the Repair Duration - Try to keep track of the repair job card or garage timeline. This way, you can correctly claim the number of days.

Frequently Asked Questions