Top six things you get wrong about car insurance in UAE
Did you know that Oman coverage on a UAE insurance policy does not necessarily mean that you’re legally entitled to drive in Oman? And did you know that a personal accident cover will not cover your medical bills in the event of an accident?
Jonathan Rawling, CFO of yallacompare, busts six myths about car insurance in the UAE.
1) Personal accident cover doesn’t cover your medical bills in the event of an accident
When you tick the box for additional personal accident cover when purchasing car insurance, you may assume that this will cover your medical bills in the event of an injury resulting from a car accident.
Unfortunately, personal accident cover only amounts to lump-sum payouts in the event of very specific injuries.
If you lose your life in a car accident, your personal accident cover will typically award your family up to AED200,000.
In the event of blindness, you’ll typically be eligible for up to AED100,000 per eye and if you lose a limb, it’s AED50,000 per limb.
These are one-off payouts that are given to you in a lump sum once a diagnosis has been confirmed.
As a result, you can’t simply show a copy of your policy document at the hospital if you’re injured during an accident – you’ll have to rely on your health insurance policy to cover your medical care.
2) Oman cover doesn’t legally entitle you to drive in Oman
GCC-wide cover is a common feature of most gold car insurance packages, but what most people fail to realise is that this type of cover doesn’t actually allow you to legally drive in another GCC country.
What this feature offers is protection against ‘own damage’ – i.e. damage to your car that you’re responsible for. For example, if you hit a tree in Oman, you can claim back the cost of the repairs that are needed from that.
However, with this sort of cover, you’re not insured for third-party damage, which is what makes driving in another GCC country with no other type of cover illegal.
In the insured/insurer relationship, you’re the first party, the insurer is the second party, and the third party is whoever you may hit in an accident.
So if you’re in Oman and you hit someone else in an accident, your UAE policy with GCC-wide cover won’t cover the damage to the third party’s car.
It’s not legal to drive without that basic cover in any country. This means that, if you’re going on a road trip to another Gulf country, you should buy basic cover from a local insurer at the border.
3) Mechanical repairs aren’t covered by your insurance policy
Another common misconception about motor insurance in the UAE is that your fully comprehensive policy will cover the costs of mechanical repairs in the event that your car breaks down. Unfortunately, that isn’t the case.
The job of the insurer is to, in the event of an accident, return your car to the state it was in when the policy was issued. This means that mechanical repairs may be covered if they’re needed after an accident.
What’s not covered, though, are general mechanical repairs that are needed if your car breaks down or has fallen into a state of disrepair. For that, you’ll need a warranty, which may be included when you buy a new car, or can be purchased from your dealer. Either way, it’s important to remember that your insurer isn’t responsible for your car’s general maintenance.
4) Your car dealer is very unlikely to give you the best insurance deal
It’s always tempting when buying a new car to have the dealer arrange everything for you. You simply pay your deposit, fill out some forms and the dealer will take care of the finance, insurance and registration for you.
“But insurance is one thing you should keep under your own control, as the margins that dealers charge on these insurance policies are out of this world,” Rawling warns.
“As an example, one of our colleagues recently bought a new car and the dealer offered to arrange insurance as part of the registration process. But the quote for that policy came in at around AED9,500 – a good AED4,000 more expensive than the quotes we could provide on our website for the same car of the same value. Naturally, our colleague said no thanks to dealer, and arranged insurance himself through us.”
5) Agency repair isn’t all it’s cracked up to be
One of the most sought-after features for fully comprehensive policies is agency repair, which means that, if any repairs are needed for your car after an accident, the insurer will pay for the official dealer of your car to carry out these repairs.
The problem with this, of course, is that policies featuring agency repair tend to be more expensive than non-agency repair policies.
“The thing is, if we assume that, in the event of an accident, it is the insurer’s responsibility to return your car to the state it was in when the policy is issued (and it is), do you really care about where the spare parts come from? There are plenty of good non-agency repair offerings – you can even opt for a premium garage add-on – meaning that, unless you’re driving a supercar for which spare parts are hard to come by, you shouldn’t see many issues with a policy that doesn’t offer agency repair. Indeed, you should really question whether or not the added cost of an agency repair policy is worth it,” says Rawlings.
6) A high valuation on your policy document isn’t always a good thing
It may be tempting to insist to your insurer that your car is worth more than the number it has been valued at, but in reality it’s not correct to value the car at the number you bought it for.
Firstly, if you’re insuring a car at a higher value, you’ll end up paying more for your policy, and secondly, the car value mentioned on the policy document only comes into play in the event of a total loss – which is a rare occurrence.
But the really big thing that people fail to realise about their car valuations is that, from your insurer’s point of view, the value of the vehicle decreases over the course of the year.
So what really matters is not the value of the car when you bought it, but rather the value of it today – in its current state. When your policy starts, you may have your car valued at AED100,000, but after three months, that value will have dropped slightly, and it’ll drop again in the following three months. This means that, if you write off your car during the last three months of your policy, you won’t get the quoted amount back as part of the insurance payout.