Coronavirus and Car Insurance - How to Save Money?

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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.
With the maximum residents in the UAE staying at home because of the coronavirus pandemic, the lack of commutes to school and work has led to a big-time reduction in driving.

Lesser vehicles on the streets lead to a decline in the accidents and hence, costs for the insurance providers fall. In this case, are the insurance companies passing on their savings to their customers?

From offers on the premium charged on car insurance and “free month” offers on yearly premiums to offers on services of the partner companies, insurance providers and aggregators are introducing attractive deals for easing some of the financial burdens on the residents of the UAE. They can compare car insurance Dubai and buy the one that suits their needs the best at a discounted premium.

The insurance authority in the UAE has amended motor insurance rules and regulations on April 22 2020 for giving the providers the power of reducing the minimum premium amount charged on insurance by a maximum of 50% for those working on the frontline and other specific categories.

The people eligible for this offer include individuals working in the health sector, members of the civil defence and police, armed forces, the elderly, people of determination, and those individual insurance seekers who hold no-accident records.

Insurance providers can either refund a part of their premium or decrease it while renewal of the policy, taking into consideration that the reduced or refunded amount must be in proportion to the sterilization period issued by the concerned authorities.

The Insurance Authority or IA has also suggested the companies to change the premium calculation of the renewed or new plans by deciding the premium on the basis of the kilometers driven. Some of the motor insurance companies such as Union Insurance, Oman Insurance, and Watania Insurance have introduced offers on their new as well as existing plans keeping in mind the suggestions by IA or as per their own discretion.

The latest guidelines by Insurance Authority suggest the relaxing of the minimum eligibility concerning rates for insurance companies. It is still to be seen whether the insurers will adopt it or not. After circulars like these, the changes in product and prices take time for implementation in the market.

There are many auto insurance companies in the UAE that are offering discounts to frontline workers; however, it is based on each case. Some of the insurance providers are decreasing the premium amounts by 20-30% for the customers with no claims in the past or providing 1 or 2 months premium free. Since this market is generally competitive, the prices are expected to fall even further.

The car insurance companies throughout the globe are struggling to determine whether or not to refund their customers because they come under the rising pressure of providing financial aid to the drivers according to the decreased duration on the road.

One of the largest motor insurance companies in the United States, Allstate has claimed to return above $600 million, that is  AED 2.2 billion in premiums to their customers because a lot of Americans have been driving around 40-55% less since the stay-at-home orders as a result of the coronavirus pandemic.

Other main insurance companies in the US including State Farm, the United Services Automobile Association, and Geico are also offering rebates to their customers.

In the United Kingdom, the first insurance provider to offer refunds to the motorists is Admiral, giving back 25 Euros, that is, AED 112 each to the drivers in a complete package costing 110 million Euros.

Recently, a new regulation came into force in the UK, which asked the insurance as well as premium financing firms to reassess their customers’ risk profiles, emphasize on providing products that include lower premium amounts, and waive off fees and charges like cancellation that are related to adjusting the policies of the customers.

The guidelines of the Financial Conduct Authority in the UK are similar to the guidelines issued by the Insurance Authority in the Emirates in the way that they are optional. However, in the UAE, there is no expectation of refunding the premium.

The US has a completely different system, where there are various options for making the payments monthly. But in the UAE market, the premiums are mostly paid annually.

Here is a rundown on the deals and discounts offered by the car insurance companies in the UAE.

Beema Insurance

Created by the accelerator program Enoc Next in partnership with AXA, Beema is an online insurance provider. It is offering up to 25% cashback to those customers who drive around 20,000 km or less in one year.

Although this pay per mile product was introduced in October last year, this pandemic could be the perfect time for benefiting from racking up lower mileage. It offers a comprehensive car insurance plan starting from nearly AED 1,300. In case you decide to get your policy renewed for the next year, the Beema mileage is reset to zero. 

AXA Gulf

As of now, AXA Gulf is not offering any special discounts on car insurance-related coronavirus. However, for all the existing customers who are renewing their policies as well as for the new customers of AXA, their initial rates will take the reduced driving of the individuals and lower the possibility of accidents these days in account. This is to support their customers in a time of their financial hardships. AXA is also following the guidelines of IA that state that there should be a discount of up to 50% on car insurance for the frontline workers. 

Watania Insurance

Watania began with an offer of free one month on the Comprehensive Motor Takaful it provides, which is nearly a discount of 8%. Since then, it has increased it to free for 2 months. Moreover, it is also offering a no claims discount of 20% on its third-party liability motor insurance plans.

Additionally, this insurance provider, which has around 30,000 to 40,000 motor insurance customers in the Emirates, is providing a 50% discount to the individuals working in the frontline in partnership with Fazaa. Fazaa is a social initiative that works with finance companies for providing leases to the buyers of cars.

Watania has factored in the situation of lockdown and stay at home campaign, which has led to a reduction in the number and frequency of people going out. 

Oman Insurance

It offered the retail car insurance customers a 30% discount on their premiums per month in April and May on renewing their plans.

During these difficult times, they have been determined on supporting the community by the way of sharing their unusual and temporary profits on car insurance back with their clients.

The provider has created a relief fund of AED 5 million for supporting the corporate as well as individual customers who renew their plans with Oman Insurance Company till the end of March next year that is, 2021. Moreover, the customers can convert their premium amounts to easy monthly installments at 0% rate of interest with their banking partners that include Mashreq, Emirates NBD, ADCB (Abu Dhabi Commercial Bank). 

Union Insurance

It offered a free one month offer, which is equal to a discount of around 8% on the premium of the comprehensive policy. The new customers had to submit a yearly no-claims self-declaration while the existing customers were eligible until no non-recoverable claim was reported. The offer was to expire on June 30. The company is still offering various offers in line with the current situation. 

While the pandemic has made life tough for people, car insurance companies are trying to make it easier. You can simply compare car insurance dubai and choose the one that suits your needs the best with discounts and other offers.

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