Posted on Feb 05, 2020

What You Need to Know About Car Insurance in the UAE

When people first start shopping for their dream car, they often research the latest models, technological enhancements, safety features, and the various colors it comes in. But searching for the perfect ride is only part of being a responsible car owner.

In the UAE, all drivers are legally mandated to have car insurance coverage. It doesn’t matter if you’re buying a used or brand new car, you must have car insurance before you take ownership of the vehicle. 

But here’s the tricky part, how can you find the best car insurance deals for your requirements?

Numerous car insurance agencies offer different coverages and policies. Banks and brokers also provide various insurance plans. For a new driver, all of this can be very daunting. The decision-making process can be clouded by all the technical jargon and misconceptions surrounding insurance.

As the UAE’s most trusted insurance comparison website, we understand your struggles. That’s why we’ve put together this helpful guide.

Whether you’re looking to learn all the terms and conditions or simply want to know what insurance policy you need to get on the road, we break down every step of the process so you can make the right informed decision.

The importance of car insurance

If you’re new to car ownership, you may not understand the importance of car insurance. After all, you’ve likely never had to file an insurance claim after a car accident. This can make the whole process frustrating as insurance premiums often come with a high cost.

But, insurance does have a purpose. 

Think of car insurance as financial protection. Not only is it illegal to drive in the UAE without car insurance, but if you cause a car accident without insurance coverage, you’ll be forced to pay out of pocket for any damage that you’ve caused.

Without insurance, you’ll be held financially and legally responsible for not only damages to the vehicle but also to the injured party. This liability can potentially cause financial ruin.

Car insurance offers protection from any costly and unexpected expenses. Depending on the coverage you select, car insurance can provide liability coverage, personal injury protection, sudden accidental occurrences like collisions, and other damages like vandalism or theft.

Understanding insurance coverage 

There are two types of insurance coverage policies available to drivers in the UAE; third party liability insurance and comprehensive insurance.

Third-Party Liability Insurance

This type of insurance is the minimum amount any driver must have in the UAE. Because it offers a minimum level of coverage, it is often the cheapest option available. Its affordability also means many new drivers make the mistake of opting for this insurance without reading the fine print.

While third party liability insurance is the most affordable, it doesn’t provide coverage for any damage to your vehicle. Meaning, if you cause a collision, your policy is only liable for any damages to the third party. This includes any damage to the vehicle and any medical bills the third party may incur.

Third-party liability insurance will not cover any repair work your vehicle might require as a result of the accident. Any repair work your vehicle may require will be paid out of your pocket. 

Additional add-ons to this policy include theft and fire coverage.

Comprehensive Insurance 

As the name implies, this type of insurance will provide coverage for just about everything. 

Meaning, unlike third-party liability insurance, your comprehensive policy will also reimburse you in the event of an accident. This coverage extends to other damages caused in cases of vandalism, burglary, fire, and other malicious acts.

Comprehensive insurance also comes with additional cover options like:

  • Agency repair
  • Personal accident cover
  • Emergency medical expenses cover
  • Emergency accommodation expenses
  • Off-road cover
  • Roadside assistance
  • Personal belongings cover
  • Windshield damage cover
  • Car hire
  • Natural calamity cover
  • GCC cover

Each of these policy add-ons will incur a cost, so only opt-in for the coverage you need.

How your insurance premium is calculated

It’s important to know that when comparing car insurance in Dubai and the rest of the UAE, certain factors will affect the price of your quote.

The factors that influence the rate of your insurance premiums include:

Age and experience

Statistics typically show that young and inexperienced drivers are more at risk of getting into car accidents and mishaps. This puts them in a higher risk category, which increases their insurance premium. Young drivers can expect to pay up to 20 percent higher on insurance premiums.

Driving history

Any accidents you’ve incurred or fines you’ve received will also affect your premiums. On the other hand, making no claims means you’re eligible for a no-claim bonus, which deducts your premiums.

Vehicle age

A brand new car requires comprehensive insurance because it is more expensive to repair or replace. This will impact the cost of your final quote. A used car, though, can be bought and insured with only third-party liability, potentially reducing your premiums.

Vehicle model 

Expect to pay more for insurance if you’re looking to buy a luxury or high-performance vehicle due to the expensive nature of repairs. Vehicles with high safety ratings can significantly lower your premiums.

Agency or non-agency repairs

This factor refers to the where your car gets repaired should it get into an accident or mishap. An agency is your car’s official dealer. A non-agency is an external garage approved by your insurance provider.

Excess or deductible

This is the amount of money you pay out of pocket if you cause an accident is known as excess or deductible. Agreeing to pay a higher excess amount will lower your premium rates.

Which insurance policy is right for you? 

Now that we know what insurance options are available and how premiums are decided, let’s look at which is right for you. Figuring out which insurance policy is best for you can be determined by your budget and lifestyle, as well as your risk category.

A young driver (age 25 and under), for example, is often regarded as high risk. A driver like this would probably benefit from comprehensive insurance. Similarly, a driver who prefers luxury or high-performance vehicles should also opt for comprehensive coverage as repair can be costly.

On the other hand, someone who prefers an older car with low-cost repairs will find that third party liability insurance will provide the right type of coverage.

Take some time to go through your requirements and your coverage preferences. 

You can use our car insurance comparison tool to look at different quotes from the UAE’s most trusted insurance providers. Researching before signing a contract will help you avoid paying more than you have to.

Getting coverage

After you’ve selected the insurance policy you want to purchase, you’ll need to submit proof of identity. Before you get coverage, you’ll need to provide the following documents:

  • A copy of your valid Emirates ID
  • A copy of your driving license
  • A copy of your vehicle’s registration card (if it’s a new vehicle, submit a copy of the proforma invoice)
  • A no claims certificate (if applicable)

Once you’ve been approved, your insurance policy is valid for 13 months. Typically, insurance policies run annually, but the RTA provides a month-long, penalty-free grace period to allow UAE drivers to re-register their car and renew their insurance policies.

Protect yourself on the road

No matter what type of vehicle you drive, you’ll want the right insurance coverage to avoid paying out of pocket. Doing your homework will ensure that you have the right protection based on your needs and budget.

At CompareDubai.ae, we understand you want choice. Our online comparison portal does all the work to identify the best insurance policy options that suit your needs. We take the guesswork out of comparing plans and prices so you can make a more informed decision.

Want to see how much coverage you need? Get a quick, no-obligation quote now.

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