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March 12, 2022

How Do Insurance Companies in UAE Calculate Car Insurance Premium

 How Do Insurance Companies in UAE Calculate Car Insurance Premium

Ever wondered how car insurance premium is calculated in UAE? Here we explain the factors that influence the premium that you pay for your car

  • Introduction

While purchasing car insurance in the UAE, you do not necessarily need a big budget. In fact, we work with multiple insurance providers who offer a variety of plans to meet different budget requirements. If you are purchasing car insurance for the first time, then you may be pondering about how car insurance or motor insurance premiums are calculated

Car insurance premium means paying your insurer/insurance company in exchange for your car insurance during each coverage period. It simply means the fee you need to pay to keep your car or motor insurance valid. For example, if your vehicle is involved in an accident that was your fault and caused damage or loss of property to a third party, then this will be covered by your insurance company. Moreover, in the unfortunate situation of an injury to the car insurance steps in again and protects you against the same. On the other hand, comprehensive car insurance like the name suggests provides extensive coverage. In case of an accident, it covers damages caused to both the 3rd party as well as you. If you aren’t sure about the kind of car insurance policy that is right for you, working with an insurance broker is highly advisable. An insurance broker or intermediary not only aids you in choosing the right policy but also acts as a backing force and helps you settle claims. As insurance intermediaries, we understand your needs and hence we can ease the entire process due to our tie-ups with multiple international and local insurers. We also assist you during claims as we have a dedicated claims team that eases the process and supports you during claims registration. To ensure the process of purchasing car insurance is seamless for our valued clients, we offer multiple payment methods like cash, bank transfer, and online payment

  • How Do Companies in UAE Calculate Car Insurance Premium:

Since having car insurance is a legal mandate in the UAE, you must know the factors that affect your car insurance premiums. And now that you know what car insurance is, let us discuss how a car insurance calculator in the UAE works. While calculating car insurance in the UAE, costs can be highly personalised; every insurer calculates rates uniquely. But still, there are several common factors that insurance companies in UAE take into account while setting the rates. They are:

  • Cost of Your Car:

The worth of your car is an important factor that decides the rate of your car insurance premium. As per rules and guidelines in the UAE, if the value of your car or vehicle is more than AED300,000 the applicable rate is up to 2.75%, and for cars valued less than AED 100,000, the rate applied may amount to at least 3.25%, regardless of which company you may choose.

  • Type of Vehicle, Features, Model, Etc:

If the car is rare, highly expensive, and very uncommon in the UAE then the car insurance premium for it will be substantially higher than usual.

  • Age, Experience & Driving History:

If you are below the age of 25 or if your driving experience is less than a year old, your car insurance premium is likely to be higher than usual. This is because a younger and less experienced driver might be more prone to accidents compared to an experienced one.

  • Optional Benefits:

To optimise the benefits of your car insurance further, you can choose add-on covers like car rental, roadside assistance, passenger cover, etc. These additional covers will increase the cost of your car insurance premium.

How To Reduce Your Car Insurance Premium:

Even though car insurance in the UAE is generally affordable, some extra savings never hurt! Below are a few tips on how you can save further on your car insurance plan:

  • Drive Safe To Avail No Claims Bonus (NCB):

Car owners in UAE get rewarded for their safe driving with a No Claims Bonus or Discount.  If a car insurance policyholder makes no claims during the policy period, he/she is entitled to a no-claim discount during the renewal of their policy. The amount of discount will depend on the insurance provider and the number of years a policyholder has made zero claims.

It is applicable even if you buy a new car whilst retaining your name on the insurance policy.

  • Increase The Deductible Amount :

Deductible or excess is the amount of money a customer must pay in the event his vehicle meets with an accident due to his ‘own fault’ or an ‘unknown fault’ where recovery is not possible. Deductibles only apply for comprehensive car insurance policies. An increase in the deductible amount will lead to a decrease in the comprehensive car insurance premium, and vice versa.

  • Conclusion:

While each car insurance company in UAE will have their mechanisms to calculate car insurance premiums, understanding various factors that affect it will help you negotiate better rates. The process of evaluating multiple car insurance quotes from various insurers can be daunting, hence we have a team of car insurance experts who leverage our extensive insurer network and expertise to offer you choices for the most suitable car insurance plans!

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