Decoding Car Replacement Add-on Coverage

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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.
2018 has witnessed an exponential rise in the number of insurance providers in the UAE. This rise of insurance providers has resulted in a tough competition amongst multiple car insurance providers in the UAE leading to an overall decrease in the price of car insurance plans in the UAE. Luxury cars and premium range SUV vehicles have some of the highest monthly premiums amongst all cars in the UAE. The above-mentioned fact makes it easy to understand why a lot of car owners trim down their monthly premiums by cutting down on all those unnecessary add-ons and opting for the important ones over the basic car insurance plan.

Having said that we’ll take you through one of the most important car insurance add-ons Replacement Cover and why you should consider this in UAE.

What is the Car Replacement Cover?

Road accidents often can leave your car completely incapacitated. The only option in such a scenario is the replacement of the vehicle that can be carried out easily using replacement vehicle add on. The major purpose of buying a car replacement cover as an add-on over your basic car insurance plan is that you can replace your car in case of the occurrence of any accident, irrespective of your fault. It eases the financial liability of replacing a brand new car in case of incapacitation. The insurance provider pays the same amount for a new car of the same range and not the depreciated value of the vehicle. An important point worth mentioning here is that the insurance provider does not pay for the deductibles as only the depreciated value of the car is paid.

Statistics Say!

Replacement car add-on was found to be the most popular add on in the category of car insurance in the UAE. The add-on is offered by almost every car insurance provider in the UAE. About 43% of the car insurance buyers bought car replacement add-on out of the total 23% of the people that purchased add-ons with the basic car insurance plan in the UAE. The average price for the add-on was almost AED 174.

Car replacements add-on not only reduces the risk of financial loss in case of an accident but also offers peace of mind to the owner of the car. For a lot of vehicle owners, loss of means of their transportation i.e. car can affect their professional duties. As per the statistics from the year, 2018 replacement car cover was the most extensively purchased add on for the given year. Therefore it is always a wise decision to buy a car replacement add-on over the basic car insurance in the uae.

New Car Replacement add-on: How Does it Differ from Collision Coverage?

The collision insurance plan is the standard insurance coverage but has several differences when compared to the new car replacement add-on. Collision coverage is an insurance plan whereas new car replacement is an add-on to the plan. The primary objective of car replacement add-on is to enhance the overall coverage of car insurance in the UAE. Under the collision coverage, damage to your vehicle is covered. A major difference between both types is how much the actual compensation will be in case of an accident. Due to depreciation, it is very much likely that you will receive less than the actual purchase price of the vehicle with collision coverage, whereas, with the new car replacement add-on, the insurance provider will offer the money for the brand new car and not the depreciated value of the vehicle.


Buying an additional cover over your basic car insurance plan in the UAE allows you to safeguard your car against any unfortunate event where your car is damaged severely. Moreover, it provides complete compensation in the form of the amount of the brand new car and not the depreciated value of your car.

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