UAE Car Insurance - The Reality behind 'No Claims Discounts'

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If you own a four-wheeler and you also have a UAE car insurance policy, you must have a vague idea about the concept called the ‘no claims discount’ or sometimes referred to as ‘no claims bonus.’ This is a discount that is offered to a policyholder on the car insurance premium at the time of renewal.

A no claims discount is sort of a reward that you are eligible to earn for not making any claims against your UAE car insurance policy during the tenure of the policy and is quite a good way to back yourself up with in order to save on the premium of your next car insurance.

Below is a guide that explains the reality behind the no claims discount –how they work, how much you can save with them, what could put it at risk, and how you can protect them.

No Claims Discount = Large Savings

 A no-claims bonus accumulates over the course of time and the more are the years that you go through without making any claim on your policy, the higher is the potential discount that you can achieve on your UAE car insurance policy premium. Depending on the decision of the authorities in UAE and the car insurance providers, the discount on premiums can range between 10% and 50% upon the renewal of the policy. Where your discount falls in this range depends on your risk profile that consists of a variety of factors like your age, profession, and lifestyle among many others.

Does Making a Claim Cut Off Your No Claims Discount?

In contrast to the popular belief, your no claims discount does not fall down directly to 0 if you make a claim in the previous year. The insurance providers make use of a step-back scale in order to reduce the discount available at the point of renewal, in case there is any claim filed. This helps in making sure that one single accident does not end up eliminating your rights on a no claims bonus.

However, there is no one standard formula for all, this scale can vary from one insurance provider to another. It is advised for you to check with your UAE car insurance provider regarding the same.

How Can You Protect Your No Claims Bonus?

The protection against your no claims discount is an add-on benefit offered by some of the insurance providers in the UAE. This is a feature that comes at additional premium charges, and it helps the policyholder in protecting their no claims discount in the event of a claim being filed by him/her in the previous year, subject to various limitations.

The rules regarding the protection of the no claims bonus can vary from one insurance provider to another. While some of the insurance providers might allow one to retain the discount even in the event of multiple claims being filed (up to a fixed number of claims), others might put a cap on the at-fault claims that can be filed.

However, this does not in any way mean that the premiums in the following year would not increase, since the claims filed will be reflected in your history.

Transferring the No Claims Discount

No claims bonus is associated with the driver instead of the vehicle. This means that the no claims discount that you are holding can be transferred if you decide to switch your insurance provider or your four-wheeler. For the same, the insurance providers offer a ‘no claims discount’ certificate, that comes free of any costs in accordance with the regulations set by the UAE Insurance Authority in the year 2018.

In a Nutshell

There are a few important points to keep in mind, they are:

  1. The no-claims bonus is only applicable at the point of policy renewal.
  2. This discount is associated with the driver and not the car.
  3. If you have an existing no claims discount, it can be applied to your 2nd car too, if the primary driver is the same across both the vehicles.
  4. In the event of an at-fault claim being filed, some of the no claims bonus is likely to be forfeited if your insurance provider is the one who has to payout. In case of a no-fault claim being filed, your insurance provider might end up retrieving the funds from the insurance company of the other party and your no claims bonus may then remain unaffected.

You must keep in mind that every insurance provider is different when it comes to the set of rules regarding the no claims bonus and each offers different discount rates along with the insurance benefits. It is best for you to find out about your shortlisted UAE car insurance providers’ policy in order to conduct a proper comparison before going ahead and committing to one.

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