How Is Your Car Insurance Premium Calculated In The UAE?

 

In the United Arab Emirates (UAE), car insurance is compulsory. Even private cars need to be insured in the country to protect drivers from financial loss in case of an accident. However, insuring a car in the UAE can be expensive, and also difficult to understand as there are a lot of variables that affect the premium amount you pay for car insurance. With that being said, we’ll explain all you need to know about how your car insurance premium is calculated in the country. So read on for more details about the ins and outs of auto insurance in the UAE, as well as the factors that affect your premium costs.

Importance of car Insurance in Abu Dhabi

In the UAE, car insurance is compulsory and is required by law. Just like in many other countries around the world, it is a legal requirement to have car insurance in Abu Dhabi. Safe driving before, during, and after your commute is extremely important and could be the difference between being injured and not. Whether it’s a minor fender bender or a major accident, you don’t want to be the one who has to pay the bills. If you get into a minor accident that doesn’t involve damage to another person, vehicle, or property, you won’t have to pay for the damage, but you could have to pay for the repairs. In this scenario, you would also have to pay for any fines or penalties you incur. Better safe than sorry, so make sure you take out car insurance to protect yourself and your assets.

Types of car insurance plans available in Abu Dhabi

Abu Dhabi is known for having a multitude of car insurance plans to choose from when you’re looking to get coverage for your vehicle. While most of the plans are the same across the country, the coverage amounts and terms differ slightly from one Emirate to the next. And the type of coverage you choose will play a major role in how much car insurance premiums you pay. Depending on your needs, you can choose between comprehensive and third-party liability car insurance plans. And before you do, it’s important to note that all drivers in the UAE have to have car insurance and not just those who own cars. All modes of transport, including motorcycles, bicycles, and boats, need to at least have valid third-party car insurance in the country.

What is a car insurance premium?

Car insurance premium is the sum you pay every month to your insurance company as an upfront fee. The amount of the premium you pay will depend on many factors, including your age, driving record, the car you own, and others. At the end of the day, the amount of premium you end up paying will also depend on the type of insurance you select. For example, a comprehensive insurance plan will likely have higher premium amounts than a third-party liability plan.

Factors affecting car insurance premiums

The amount of your car insurance premium will largely depend on several factors, including your age, driving record, and the car you own. Here are a few other factors that could also sway your car insurance premium:

Where you live in the UAE:

The cost of car insurance is much higher in Dubai than in other parts of the country. This is because of the high level of traffic and the requirement of third party insurance in the emirate.

The type of vehicle you own:

Depending on the make and model of your vehicle, you could end up paying different premiums for car insurance. For example, a car with high value will cost you more than a car with a lower value.

Age and driving history of the driver:

Age is an important factor that affects the cost of car insurance premiums in the UAE. Your premium will be at least 15–25% higher if you are under 25 and have a license that hasn't been valid for more than a year. This calculation is based on a statistical association that indicates that people who lack driving expertise and belong to this age group have a higher probability of accidents and mishaps. In addition to this, your driving history also plays an important role in determining the cost of premiums. This means any traffic violations, fines or other infractions could hike up the price of premiums in car insurance in Abu Dhabi.

Claims history:

Car owners in the UAE are rewarded with a No Claims Bonus or Discount for their careful driving. A no-claims discount is available to vehicle insurance policyholders who maintain a claim-free record during the term of their policy. The insurance company and the number of years a policyholder has had no claims will affect the discount amount.

How to buy your car insurance plan

All private car insurance plans in the UAE are issued by specific insurance companies. The companies are usually the same across the country, and they operate as a local branch of a multinational insurance company. If you buy your car insurance plan through a local insurance broker, you will be able to save a considerable amount of time and money. Car insurance brokers are licensed insurance brokers who are authorized to sell car insurance in the UAE. You can usually find car insurance brokers online by searching for local insurance providers.