Takaful Car Insurance and Traditional Car Insurance

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*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
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The recent reports by Roads & Transport Authority (RTA) suggest that the vehicle density in Dubai is amongst the highest across the world. If you are a resident of Dubai or any other Emirates of the UAE for that matter, there are chances that you are a driver. All of this suggests that being a regular car owner/renter, one of your major budgeting concern might be in regard to your auto insurance. In fact, they invest a lot of time to buy or renew car insurance in UAE. With the wide range of cars and their owners in Dubai, the growth in Takaful car insurance in recent times is no surprise. But the burning question is how is it different from traditional or normal car insurance.

Why do you Require Car Insurance in the First Place?

We often find people lamenting about the ever-rising costs of car insurance, flaunting their driving skills and claiming that insurance is a need for “the other idiots” driving on the roads of UAE. But just as everything else, even this situation can be related to the saying “it’s better to be safe than to be sorry”. It is not always possible to protect ourselves & our family from unfortunate events. Hence, we have the option of insurance, such that the prices we have to bear in such situations are not financial but emotional. With the rising number of cars and drivers in the UAE, it is not just compulsory but also sane to get auto insurance.

What does Takaful Car Insurance mean?

Takaful is derived from the Islamic jurisprudence concept. It is routed in Muamalat, from the Islamic law that includes commercial dealings. Basically, it is concerned with a co-operative system of repayment or reimbursement in a situation of loss. This insurance evolved with the belief amongst a few people that the concepts of traditional insurance encourage forbidden gharar (too much uncertainty) and riba (usury). Hence, Takaful auto insurance could offer an alternative which is Sharia-compliant and would avoid religious compromise for achieving security.

The outcome for the policyholder remains the same as the traditional insurance. However, under Takaful insurance, shared contributions are made by the members. The returns are controlled with mutual cooperation keeping in mind the benefit of all members.


  1. In compliance with the Sharia or Islamic laws
  2. Takaful policyholders have the right to share in surplus which is accrued from the appropriate management of Takaful funds
  3. Well-being of the community, operations optimizations for affordable protection from risk
  4. Investment of funds is done only in the businesses which are Sharia-compliant
  5. Compulsory for the ones who receive loans via Islamic Banks
  6. Options for innovative customization available


  1. Not as established as the legacy insurance providers
  2. Scope is smaller

What does Traditional Car Insurance mean?

As per the real situation, now it is almost redundant to call non-Takaful auto insurers as just “traditional”. A lot of well-established names have been a part of this industry for several years. The power and growth of market have caused even these brands to embrace the changes important for continued success.

The providers who have been the most long-standing throughout the years have realized that modern customers today prioritize price and convenience. Hence, the competition in the industry has led to greater flexibility for the customers in the kind of policy they require. This includes customizations and faster access to getting a suitable policy (just minutes in a few cases). The customers also look for comparatively more appealing costs which would not grow as weeds every year.


  1. A long legacy of stability and performance
  2. A huge variety of options to select from
  3. Opportunities for innovative customization and flexibility


Only the option for Third Party Liability (TPL) is in compliance with Sharia

The Ending Note

Both the options, Takaful and Traditional Car Insurance are available for everyone, irrespective of the religion you belong to. The traditional or Non-Takaful auto insurers usually offer Sharia Compliant Third Party Liability insurance options. So, ultimately it depends upon your personal preference and research to select the most suitable solution for yourself and your family. There is a wide range of options available, including Sharia Compliant Third Party Liability as well as comprehensive insurance offered by a lot of providers. It is recommended that you go through all the available options carefully while you purchase, switch or renew car insurance online in the UAE.

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