Motorists in the UAE are paying around 15% more on their vehicle insurance premium compared to last year since January of this year.
After the UAE Insurance Authority revised the unified auto insurance regulations with effect from January premiums for both third party and comprehensive insurance for all vehicle categories were increased.
The amendment to the auto insurance regulations also introduced upper and lower limits to premiums. The minimum comprehensive insurance premiums restricted to Dhs 1,300 for saloon cars and Dhs 2,000 for SUVs, while the maximum cap is at 5% and 7% of the insured value of the vehicles for saloon cars and SUVs, respectively.
The minimum third party premium for a saloon car is Dhs 750, while the maximum is Dhs 2,100. For four-wheel drive vehicles, the minimum third party insurance is Dhs 1,000 and the maximum Dhs 2,150.
The insured value of the vehicle is decided on the 15% annual depreciation of the vehicle’s market rate, however, according to the new rules, 20% of the insured value will be deducted if the vehicle is written off.
The unified auto insurance regulations also increased damage protection coverage as well as making a replacement car mandatory for the repair period post-accident.
The new policies will also include no additional levy of ambulance or medical evacuation fees, which were introduced last year.
Experts in the insurance industry have said there are some substantial benefits for the motorists in the new regulations. “Aside from the added cost, the new regulations do have some pretty substantial changes behind them. For me, one of the most important is the new minimum cap that an insurer can put on third-party property damage, which has been increased from Dhs 250,000 to Dhs 2 million,” said Jonathan Rawling, CFO, compareit4me.com.
He added that the previous regime had left the scope for consumers to be substantially under-insured. “Many consumers were perhaps unaware that some insurance policies were such that, if you caused an accident that resulted in more than Dhs 250,000 of damage to the other party, you would be personally liable for the difference. So, if you had a policy with a Dhs 250,000 limit, and you caused Dhs 750,000 of damage to a Ferrari, you would be personally liable for the missing Dhs 500,000,” explained Rawling.
Apart from wider damage coverage, he said, the new tariff includes add-ons that will cover the costs of emergency services in the event of an accident. However, he clarified that the replacement cars for 10 days or Dhs 300 per day to cover the cost of car rental will be available only to those who are not at fault.
“It means that those who aren’t at fault do not lose out financially if someone damages their vehicle. Now, if someone hits you and damages your car, their insurance policy will either arrange you a replacement car, or else pay you to rent a car for up to 10 days. This means that you are not in danger of being stranded without transport as a result of someone else’s mistake,” he added. For those who are at fault, they will get a replacement car only if they have purchased additional coverage.
Another benefit of the regulations is standardisation of the wordings of policies, that brings in minimum levels of cover. “The regulator has stepped in to ensure that when you buy a policy, you can be more comfortable that it is fit for the purpose. It should no longer be the case that consumers buy policies that are “comprehensive” in name but could in fact leave consumers underinsured,” he said. The replacement car rule is available in both comprehensive and third party insurance.
Frederik Bisbjerg, executive vice-president of QIC Insured, said apart from increasing the maximum cover for property damage, the regulations have also extended liability coverage to husbands, wives, children and parents of policyholders. Refuting the claims of the consumers that insurers are not complying with the new regulations, he said “This is new to me, I don’t see how we as insurers cannot comply with the laws laid out and I do not know of any specific cases where a customer has been refused eligible benefits. I fear some insurers might not have been precise enough when explaining the new benefits to the customers and hence created the wrong expectations.”
Responding to the confusion over non-renewal of insurance policies due to previous claims he said: “If a customer has a long or severe claims history, the system calculating the new premium will take this into consideration and the outcome can be a larger premium. I don’t know of cases where insurers directly refuse to renew a car insurance, but I understand that some customers might be surprised by an increase in the premium from the previous year. The new rules are seeking to mitigate this by introducing a maximum premium for the car insurance and hence avoid unrealistically high premiums in case the customer has one or more claims.”
The new regulations apply to policies sold on or after 1st January 2017.
Source: Gulf News