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What Makes Motor Insurance in Dubai Different?

Written by Sahar

What Makes Motor Insurance in Dubai Different?

Motor insurance in Dubai is different. There is no doubt about that. It doesn’t vary drastically from what is universally accepted but there are certain elements to keep in mind. It takes some getting used to.

However, many internationally renowned insurance providers operate in Dubai. There are local vendors to choose from as well. The market is abundant and thriving. But before you purchase motor insurance there are a few things you need to be aware of.

FAQ’s

What is the cost of automobile insurance in the UAE?

For cars that cost more than three hundred thousand AED, the average insurance rate in Dubai is around 3%.

Is car insurance in Dubai expensive?

Car insurance in Dubai will cost around 1.25% to 3% of the car’s value. Other factors that can influence the cost of car insurance in Dubai are the number of previous insurance claims, age of driver, and how old the driving licence is.

Can I drive my friend’s car in Dubai?

Anyone on a  tourist visa cannot drive a private car in the UAE unless they are the owner’s close relative. If any traffic fines are incurred, the legal responsibility for paying them lies with the car owner.

Mandatory Motor Insurance in Dubai

Car insurance is required by law according to the Dubai Insurance Authority. Those found in violation will face the consequences. Drivers found without insurance are fined AED 500. It doesn’t end there. 4 black points are added, and the vehicle is impounded for a week. These measures may seem harsh but they are there for a reason. And it isn’t to provide a steady stream of clients for insurance providers.

Accidents were a commonplace occurrence on the wide streets of Dubai. Without any insurance, those involved in collisions had to pay out of pocket for exorbitant damage repair and medical bills. Making motor insurance in Dubai mandatory has allowed for ease of financial restitution in cases of damage and reduced the number of collisions per year. Making motor insurance mandatory has encouraged the populace to be more careful on the road.

Furthermore, the UAE government is not unreasonable. It does not demand that people buy the most expensive insurance. No. Buying the basic motor insurance package fulfills the minimum requirements of the law. If residents buy Third-Party Liability insurance, the government will consider them in compliance with the law.

Two Basic Policies

The UAE has two basic motor insurance policies. Clients can add features to these, but these are the only two on offer.

Third-Party Liability Insurance

It is the most basic form of insurance you can get in the UAE. Third-Party Liability ensures that others on the road are protected against your negligence. If an accident was caused by your mistake, third-party Liability covers their medical expenses and vehicle damage.

It does not, however, cover any damages or injuries incurred by you. This fact makes third-party liability insurance a risky investment. It is equivalent to having no security or protection at all. But for some, it works. For those who have a regular route or use their cars frequently, it makes more sense to have the minimum insurance because they don’t run too much risk. For others, there is another option.

Comprehensive Coverage

Comprehensive coverage encompasses all that is good about third-party Liability and adds to it. It includes security for others on the road but also safeguards your interests. Damage to your vehicle and personal injuries are covered. Extra features can be added to any policy to make it more secure. Comprehensive coverage is expensive, but costs can be mitigated if extra add-ons are kept to a minimum.

Takaful

Another thing you’ll find when looking for motor insurance in Dubai is the word takaful. Takaful is a pool system in which participants pool funds to care for each other in times of need. Takaful is based on Shariah law. It expands on the Islamic beliefs that a community is responsible for the individuals that reside within.

Takaful is an alternative to traditional insurance. Since the UAE is predominantly a Muslim country, it is common to find takaful insurance and Islamic banking in the region.

Here are a few differences between takaful and conventional insurance:

  1. Takaful does not require monthly premiums. Those participating in a takaful fund invest as much as they can afford or according to the coverage they require.
  2. Takaful insurance also has a specified period of time like a conventional policy. However, if no claims were made during the time the takaful policyholder gets certain cash-back.
  3. Takaful insurance must be Shariah and government complaint. So while conventional insurance only has to follow government laws, takaful has to follow two.
  4. Takaful funds can only be invested in ventures that are Shariah-compliant.
  5. Takaful insurance has to be free from riba (interest), maysir (gambling), and gharar (uncertainty).
  6. Risk is shared and distributed amongst the takaful participants.

Takaful insurance is not limited to Muslims. Members of other faiths are welcome to be part of takaful insurance and participate in a fund.

13 Month Renewal Period for Motor Insurance in Dubai

Another strange thing you’ll encounter about motor insurance in Dubai is that policies usually run for 13 months instead of the traditional 12. This is because Dubai laws require motor insurance providers to give customers a grace period of one month after the policy has expired to renew. So, the grace period is included in the policy term to make it 13 months.

The grace period allows customers to take advantage of any sales that are going on. They also do a lot of online comparison of policies and switch to new providers. This makes the insurance market competitive and fair.

So, there you have it. Motor insurance in Dubai has its differences, but it is essentially the same anywhere. You can expect the same high standard of care and regulation as you would in Europe or the USA. It just takes a little research and reading up on the things that local providers have to offer. If you still don’t understand some things, you can always contact our team of industry experts. With 15 years under their belt, they’d be more than happy to walk you through the world of motor insurance in Dubai.

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    Originally published Nov 19, 2019 16:59:12 PM, updated Jun 28, 2022

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