How The 2017 Car Insurance Rules Impact You
The Insurance Authority has recently implemented a new set of car insurance rules in the UAE, which went into effect on the 1st January 2017. ServiceMarket.com, the UAE’s leading online marketplace for home services and car insurance, teamed up with Qatar Insurance, a global multi-line insurer, to explain the details of how these new rules will impact UAE drivers. The changes have, in most cases, led to increased prices. However, the mandatory benefits have been increased and according to Frederik Bisbjerg, Head of Group Retail & Executive Vice President MENA in Qatar Insurance Company, the changes are poorly understood in the market. He commented that "Many residents are viewing the changes to the insurance regulations in a bad light simply because of the increased prices. While it is true that the cost has increased in most cases, the reality is that the new rules also result in better mandatory coverage and have increased benefits protecting drivers in the UAE.”
So what are the key changes that UAE drivers should be aware of?
Increased mandatory benefits:
➔ Free replacement car if you are not at fault:
Previously if you got into an accident you would only get a replacement car if it was included in your car insurance policy, irrespective of whether or not you caused the accident. Under the new rules, if you are not at fault, then you will be provided with a replacement car or compensation equivalent to the cost of a replacement car by the other party's insurance provider automatically. This compensation will be provided for a maximum of 10 days and up to AED 300 per day.
➔ Extension of liability coverage to family members:
In the past, relatives were not necessarily covered in case of an accident. They would only be covered under the passenger accident benefit which was usually an add-on to insurance policies which occurred an additional cost. Under the new rules, the coverage will be extended so that it covers car accidents involving close family members such as your husband, wife, children or parents.
➔ Increase in cover for property damage:
The maximum insured amount for damage to third party property due to a car accident has increased significantly from AED 250,000 to a maximum of AED 2,000,000.
Greater clarity of insurance conditions:
➔ Clearer rules on when a car should be declared as a total loss:
If the chassis of your vehicle is damaged and the damaged part cannot be replaced then the insurer must declare the car as a total loss and will not be allowed to try to repair the car. Frederik explains that, “When a car is declared a total loss, the car owner will either get a new car or will be paid the market value of the car - which is usually specified in your insurance policy.”
➔ Clarity on policy breakdown:
Typically customers were able to get quotes for either a third party liability (TPL) insurance or comprehensive insurance. Many customers did not fully understand the difference between the two and the cover provided in each. A comprehensive insurance policy is actually a bundle of covers which combines third party liability insurance with “own damage” cover which covers damages to your own car. Under the new rules, customers would be able to get separate quotes for TPL and “own damage” cover, and they would even be able to purchase these from different insurance companies.
➔ Maximum specified premiums:
Under the new rules, premiums must not exceed 5% of the value of a saloon car or 7% of the value of a SUV.
These new regulations only apply to insurance policies bought from the 1st January 2017, so if you bought your insurance last year, the terms and conditions of your policy still hold.
What is the implication on the cost of insurance?
All these additional mandatory benefits come with an increased cost of purchasing insurance. However, Emre Guclu, Head of Insurance at ServiceMarket.com, explains that, “The new car insurance rules also have other direct impact on costs that many people are overlooking. For instance, there are now stricter rules on policy excess. The policy excess is the amount that the customer must pay towards the cost of repairing their car in case of an accident. The new car insurance rules specify a maximum excess, meaning many customers will see a lower excess on their insurance policies this year. It is however still possible for customers to select a higher voluntary excess to get a lower premium. Additionally, UAE car insurers can no longer charge additional policy fees such as the ambulance or medical evacuation fees currently charged in Dubai or the Emirates Vehicle Gateway fees charged in Abu Dhabi and Sharjah”.
The new minimum rates:
Previously it was possible to get a comprehensive car insurance policy for a sedan or SUV car starting from AED 1,050. With the new regulation, minimum comprehensive rates have been set to AED 1,300 for sedan cars and AED 2,000 for SUVs.
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