The first step after buying a car is to register and insure it, so when doing the latter it is vital to know what type of coverage is best suitable to you.
There are 5 types of car insurance policies in the UAE:
Third Party Liability Policy: This is a basic coverage that is mandatory by UAE law. It covers death or bodily injury to any third party including property damage caused by the insured party’s vehicle. This policy however does not cover any loss or damage to your own vehicle unless the blame lies on the other party in which case you will have to claim from their insurance provider. There is also no claim for fire and theft.
Third party, Fire & Theft Policy: Same as the one above except this covers Theft and Fire damage/loss as well.
Comprehensive/Fully Comprehensive (Basic) Policy: This covers you against third party loss/damage as well as your own. Damage/Loss can occur due to fire, burglary, external explosion, accidental collision, lightening, self igniting, theft and even if a third party commits a malicious act. A legal obligation exists for insurance companies to provide this policy at a maximum price of 3%-5% of the car value. This type of policy must be thoroughly read so as to be aware of the restrictions and/or loopholes in it.
Comprehensive Policy with Options: This covers all of the above and provides you options to get extra care. For an extra cost, you can avail options such as dealer repair, free hire car, recognition of no-claim bonuses and free insurance in GCC countries. Estimated payment is 3%-10% of the car value which depends on the company and if no-claim bonus is availed.
Comprehensive (Premium Level) Policy: This is the most expensive option and not even offered to everyone; only selected clients can avail this package by paying 1% or 2% extra. It covers claims of other people if their car is damaged by you plus your own accidental damage to your own car.
Now that you know about the types of policies that exist, let us take a look at the assessment criteria for premiums.
Age: Under 25 years old male drivers are subject to a higher insurance rate, since they are regarded as risky drivers. Female drivers of the same age and male drivers above 25 are not subject to this.
Car: The insurance rate will depend on the car’s brand, model and make. Some cars cost more to insure if they have a reputation to be involved in a number of accidents. Cars older than 5 years, plus Sports and luxury cars are very expensive and/or difficult to get insured.
Interest rate: There are two types; fixed interest rates which remain the same for the entire insurance period and balanced interest rates that decrease with time.
Keeping all of these factors in mind, an informed decision should be taken regarding the policy to be availed. You may know that it is a statutory requirement in the UAE to have your car insured, so choose wisely and drive safely.