Motor Insurance in Dubai – The Rule of Law

Motor insurance in Dubai is confusing. That seems to be the general consensus, especially amongst new residents. However, the best way to understand something is to look at the laws surrounding it. Insurance rules and regulations in the UAE are governed by the Dubai Insurance Authority.

Reading laws and regulations can be tedious, especially if you don’t have a law degree. The terms can be confusing. Luckily, we’ve done the hard work for you. Reading through the rules and regulations on motor insurance in Dubai, we’ve come up with a list of the most relevant clauses to you as a buyer.

Understanding these rules can be beneficial. You can use this information to your advantage in many ways.

Motor Insurance in Dubai – The Rule of Law

Benefits of Knowing the Law

1. If you know the ins and outs of motor insurance laws in Dubai, it will be hard for sales representatives to fool you. We don’t mean that misleading customers is common practice at insurance agencies in the UAE. It is a sales rep’s job to oversell the product. Customers unaware of the law can buy more than they need. Being aware of the laws can help you stick to your budget.
2. Similarly, you’ll know exactly what your insurance is missing. No-Claims Bonus is a perfect example. It is a reward to policyholders for making no claims during their policy. It is provided by law. Many buyers, however, are unaware of it. Keeping a close eye on motor insurance laws in Dubai can help you keep track of the concessions owed to you.
3. Another great thing about knowing motor insurance laws in Dubai is you can avoid claim rejection. Knowing which laws to follow will keep you on the right side of a claim.

Car Replacement

One such advantage you should be aware of is a replacement car in case of an accident. It can be highly inconvenient to be in a collision. When your car is extensively damaged, it can leave you without conveyance for a significant period. It is costly to find an alternative last minute. Luckily, motor insurance in Dubai has a good solution.

If you’re involved in a collision, and it was not your fault, you are entitled to a replacement car by the other party’s insurance policy. If you do not require a replacement vehicle, compensation is made to you for the inconvenience. The compensation is limited to AED 300 per day, up to 10 days.

Liability
Coverage for Family Members

It’s only natural to want coverage for your family if something goes wrong. However, before 2017 family coverage could only be availed through an add-on to your insurance policy. This was expensive because add-ons increase premiums exponentially. Now, however, family liability is covered automatically without additional cost. This does not include just anyone in the vehicle at the time of a collision or accident. Only immediate family members are covered.

Clear
Rules of Total Loss

Another factor streamlined by motor insurance laws in Dubai is when to declare a vehicle a total loss. Total loss is when the car has been through such an extent of damage that repairing it would cost more than buying a new car. Now the outlines and rules for declaring total loss have been explicitly clarified. This is so it is not vague, and providers don’t have their own obscure rules to follow.

Clear Policy Breakdown for Motor Insurance in Dubai

Insurance policies can be a little confusing. There are so many to choose from and little clarity about their structure. However, two basic motor insurance policies are available in the UAE – Third-Party Liability and Comprehensive Coverage. Most folks aren’t aware of the basic tariffs or their properties. In the past, insurance providers weren’t obligated to clarify these differences. The law now instructs to clarify both insurance types’ differences and policy breakdowns. For your information, we’ve taken the liberty of clarifying the differences.

Third-Party Liability

The minimum required by law does not protect you or prevent any damage to your vehicle. As the name suggests, it will only look out for the interest of the third party, i.e., those involved in the collision with you, if the collision was your fault.

Comprehensive Coverage

Building on the principles of third-party liability insurance, comprehensive coverage provides for the policyholder and any vehicular damage. It is more expensive but not mandatory by law. However, it is the less risky of the two as it covers all the bases. Comprehensive coverage is highly recommended, especially for less experienced drivers.

Rules
of Excess

Excess is simple to understand. A higher excess on part of the company means:

1. The company takes on more risk
2. They are expected to pay more in case of an accident
3. The premium will be high

A lower excess means:

1. That the customer will be taking more risk
2. The policyholder must pay more in case of damage
3. The premium is comparatively lower

According to Dubai’s motor insurance laws companies are supposed to take on a higher excess ensuring that the customer takes on less of a risk. Though this means that policyholders will be required to pay a higher premium it is beneficial for them in the long run. However, this law does not apply to the policyholder. They can request a lower excess on the company, taking on a higher excess themselves. If policyholders insist on higher excess then the company is allowed to comply.

Insurance laws in Dubai have been structured in a way that they benefit everyone. With the Dubai Insurance Authority keeping a check on providers and policy trends it is inevitable that the laws they create will be relevant and expedient. The motor insurance market in the UAE is relatively new compared to other countries, but it has started things on the right foot and hit the ground running.

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.

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