Why you may need car insurance

George Kuruvilla/Dubai
Filed on July 20, 2021

Motor insurance, like some paid safety features in a new car, seems expensive, unimportant, and even useless, until the unfortunate happens. Get your vehicle insured and get it insured right

A few years ago, a friend of mine driving his brand-new sports car met with a terrible accident. Luckily, he walked away without even a scratch, but his car was damaged beyond recognition. Good news is that he got it repaired almost for free. It got done in reasonable time. It got done by the agency that he used to frequent and, therefore, was comfortable with. And when he received the vehicle, the quality of work ensured that the car looked brand new inside-out. It was almost like the accident never happened. All thanks to the appropriate insurance policy that covered all his expenses. Of course, looking back to when he purchased the vehicle a few months earlier, he wasn’t one to care about that one piece of paper, like the most of us. But when the inevitable did happen, he was happy he was on the right side of documentation.

For a large majority, motor insurance seems expensive, unimportant, and even useless… until it is not. Come time for registering one’s vehicle, even the concept of insurance becomes a blur for some. These cynical voices often claim that insurance is a legal scam that corporations set up to add to the hurt of the already depreciating asset i.e. the car. They also add to the argument the excuse that local traffic-related incidents are significantly lower… thanks to Covid restrictions.

But here is the thing! This is a clear case of being penny wise, pound foolish. If you don’t have the suitable insurance to back you, just one fender bender may have you paying large sums of money out of your own pocket simply to get your car running and road-worthy again or even to settle hospital bills. And then you’d imagine, only if you had ticked every box on that insurance application.

To help you avoid the fuss, here is an overview of motor insurance in the UAE.

Types of covers

Essentially, there are two types of motor insurance covers. If you’ve got the cash, what you want to go for is the Comprehensive Car Insurance Policy. What its premium entails is damage compensation for your vehicle (often limited to 15 years of age) and personal injury coverage. It can also offer financial protection against fire, theft, or vandalism, etc. In addition to all this, it takes care of the other parties involved in the accident.

If you don’t have the moolah or think that your vehicle is far too old and doesn’t deserve that kind of budget, you must sign up for a Third-Party Car Insurance Policy — the mandated minimum in the UAE. As the name suggests, it covers liability against personal injury and property damage for the other parties involved, leaving you to pay for your own expenses.

Policy considerations and discounts

While evaluating your case, insurance companies consider the type of your vehicle. For example, if it’s a 2-door coupe you’re driving or your vehicle has a high displacement engine, the monthly premium will be higher. Next on their checklist is the age of your vehicle, estimated mileage and the amount the vehicle is being insured against. If your car is more than a year old and if you have remained accident-free, request for a No Claims Discount (NCD). This is where the legacy of your driving experience will help slice off a chuck from the premium. Some companies even provide cash back annually based on the distance you drive. This pay-per-kilometre option can earn you a certain percentage as cashback at the end of the year. Age of the driver is another crucial point. Plainly put, it doesn’t help being young.

The optional extras

There is an exhaustive list of additional benefits, which you may want to review. The first of which I’d like to highlight is agency repair. This may be the most reliable bet, as opposed to the certified list of workshops you can also get the repair work done at. Other options include cover of RTA inspection and the associated courtesy vehicle pick-up and drop; 24/7 roadside assistance; replacement of locks, etc. And if you own a 4x4 and your weekend outings are a tad adventurous, you may want to sign up for off road cover as well.

If you are someone who commutes daily, we suggest you tick the rental car option. Although it is a temporary fix, your routine won’t be hassled for a while at least. Also recommended is the windscreen cover, especially if you drive on the highways often. The new car replacement option also works splendidly for one who likes to keep his or her vehicle in pristine condition. The pain of a “totalled” vehicle can almost certainly be invalidated with joy of a brand-new replacement. If you are not one to venture beyond the borders of the UAE, you can avoid the GCC/Oman coverage options. Furthermore, although UAE is relatively free of natural calamities, if you reside in a flood-prone area, make sure you tick the relevant box. Some policies even cover the ambulance cost of up to Dh6,770, a joyriding valet incident and even taxi fares. Do check with your insurance broker.

Do keep in mind that the type of cover and associated costs vary from one insurer to another, and it’s important to ensure that you sign on a sheet only after your needs and budget are met. And while all these points are important, keep an eye on the deductible.

When is it a good time to buy insurance?

Let’s put it this way, there is never a bad time to have your vehicle insured. That being said, during car-buying seasons like the shopping festivals, car dealers often include the price of a Comprehensive Car Insurance policy within the price of the vehicle itself or if you are good at the business of bargaining, you may be able to strike a deal with the distributor in this respect.

wknd@khaleejtimes.com