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How the changes in the rules for Car Insurance in Dubai Impact you?

By PolicyBazaar

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The revised rules for car insurance in Dubai can be a bit confusing to understand, especially analyzing the impact these new rules are bound to have on every single resident of Dubai. These changes in the rules governing car insurance in Dubai are a lot to fathom for people who find insurance and everything it entails, a difficult subject to grasp. Issues like the benefits of the new rules, the level of coverage that is most appropriate as well as all the DOs and DON’T’s one needs to know, can be somewhat overwhelming.

The new rules of car insurance in Dubai have given a significant rise to the prices. Experts also state that these new rules that have made car insurance in Dubai mandatory, have also led to a sea of better and greater benefits. The rise in prices is balanced by the wider coverage together with better benefits offered. 

In this article, we aim to cover all the necessary information you need to understand the changes in car insurance rules in Dubai. This will undoubtedly help you decide which is the best car insurance for you under the updated car insurance rules in Dubai. 

Let us try to understand how these changes impact the drivers in Dubai in the longer run: 

Free replacement car in case it’s not your fault- According to the earlier guidelines, a new replacement car was only possible to get in case it was already incorporated in your car insurance in Dubai. If it was covered by the insurance policy, regardless of whether it was caused by you or not, you will be getting a replacement car in case of an unforeseen accident. The new rules however state that if it is not the fault of the policyholder, they’ll automatically be given a new replacement car immediately or they will be entitled to get the compensation that is equal to the cost of the replacement car by the insurance provider of the other party. This compensation is offered for a maximum period of 10 days and amounts to AED 300 (or USD 82) each day. 

Keeping this new change in mind, car insurance buyers should differentiate between the several different car insurance policies available in the market to pick the one that suits them best. 

Increase in property damage cover- Under the revised rules, third-parties that are affected in the event of an accident can breathe a sigh of relief. On the occurrence of an unforeseen event, the maximum amount that is insured has been significantly increased in case there is damage to their property. This cover also includes any injuries caused to them during the accident. The maximum insured amount to cover damages caused to the third - party property in case of an accident was earlier fixed at AED 250,000 (or USD 68,000). This range has now been increased to AED 2 million (or USD 545,000) under the revised rules. 

Policyholders trying to buy the best car insurance in Dubai should make their choice after keeping these rule changes in mind. 

Liability cover for family members extended- Previous guidelines specified that family members will not be covered by car insurance in Dubai in the event of an unforeseen accident. They were outside the coverage of the policy’s protection plan. Only a passenger accident benefit will be able to guarantee them some type of cover. This benefit is an additional cover one had to buy along with their insurance policy at an extra cost. The newly released rules, however, this coverage has been extended to offer coverage to family members including one’s parents, spouse, as well as children. 

Much more clarity on when a car can be announced as a total loss- In case the damage to your car is severe, to the extent that even the chassis is beyond repairs, or can not even be replaced, the car’s insurer will have to declare his/her car as a total loss. The car will no longer be permissible to be repaired if there is no feasibility in doing so. The car’s owner can either get a new replacement car or get the amount equalling the market price of the car, usually paid under one’s insurance policy. These details are specified in the policy documents so, always go through them carefully when choosing car insurance in Dubai. 

Premium rates have been specified- The new rules state that the car insurance premiums can not be more than 5 percent of the total value of the saloon car and they can not exceed 7 percent of the total value of an SUV. Under these new rules will however only be applicable to policies that were bought from January 1, 2017, onwards. Before this date, the terms and conditions applicable will be according to the past rules. 

New policy excess rules- The impact of these new rules can be seen directly on policy excess among others. The policy excess is that amount which the customer has to pay towards the charges incurred on repairing the car in the event of an accident. Under the new rules, there is a maximum excess that can be charged. This means that there will be a lower excess fee on the policyholders. The policyholders can also choose a higher excess voluntarily in order to get lower premiums. 

Apart from this, people buying car insurance in Dubai, no longer have to pay an additional fee for policies like medical evacuation fees etc. 

Cost of insurance- With an increase in the reach of mandatory insurance and its many benefits, the prices of car insurance in Dubai is bound to increase exponentially in the coming years. Like in the past doing a thorough comparison was a wise option, it still is as the insurance providers have the freedom to set the exact prices based on the policy holder’s profile. But according to the new guidelines, the car insurance companies can not levy hefty additional charges like the ambulance fee that is charged in Dubai or the EVG (Emirates Vehicle Gate) fees that is applicable in Sharjah and Abu Dhabi. 

Policy breakdown made less obscure- Customers generally find it difficult to differentiate between Comprehensive insurance and Third-party liability insurance (TPL). There is an absence of transparency in getting quotes for each of these. At the same time, it is sometimes confusing to understand what all is included in the coverage offered by them. 

Where a Comprehensive insurance policy offers a group of covers under one umbrella. It combines the third- party liability insurance along with the “own damage” cover, that is, it provides a shield against the damages incurred to your own car. According to the new guidelines, customers will now be able to obtain quotes separately for both the TPL as well as the “own damage” (OD) cover. Apart from this, they can also buy the two covers from two different companies that offer car insurance in Dubai, as per the new rules. 

New minimum rates- Previously, it was plausible to acquire comprehensive car insurance in Dubai for an SUV or a Sedan, beginning at approximately AED 1,050 (or USD 285). Under the updated rules, the minimum comprehensive price of a car insurance policy is fixed at around AED 1,300 (or USD 285) for all Sedan cars and at AED 2,000 (or USD 255) for all SUVs. 

Discount if no claim has been made- The new rules imply that a policyholder can avail of a discount on the policy premium of next term if they have not claimed insurance in the past year. This is known as the No Claim Discount or NCD. The NCD aids in getting lower premium rates from the providers of car insurance in Dubai during the renewal of the policy. This NCD also tends to increase with every passing year and can also be transferred if the policy holder wishes to change his insurance provider. 

However, an important thing to remember is that, if the policyholder themselves are at fault, they can be deprived of the benefits of NCD either partially or completely. But if it’s not their fault, they are entitled to full discounts. 

Here are the possible reasons for nullifying the policy mid- tenure by the insurance provider-

  • Lack of transparency: If the policyholder is to make any changes or modifications to the car, valuation or safety, without informing the insurance provider, the insurance policy might be terminated. It is thus vital to communicate freely with the policy provider about all modifications to the car.
  • Unearthing a lie: A car insurance policy of the driver can be terminated if it is later discovered that he/she made false claims or showed their disregard for the policy’s terms and conditions. It is extremely important to pay special attention to the terms of the policy before signing up for car insurance in Dubai.
  • Disregarding traffic laws: Showing negligence towards traffic rules and regulations can not only land the drivers in trouble with the law enforcement authorities but also end up nullifying their car insurance. Drinking and driving while putting the lives of innocent bystanders as well as your own at risk, carrying illegal substances in your car or driving without renewing your driving licence among many others are sufficient grounds for an insurance company to terminate your insurance policy. 

In a Nutshell

Be careful about indulging in any activity that is against the law as it might hamper the validity of their insurance policy along with landing you in rough waters with the police. These new rules have been introduced to make the lives of car insurance holders slightly easier, especially in case of an unfortunate event. Take advantage of these rules to make more informed decisions about buying or renewing your car insurance in Dubai.