Do you know how car insurance rates are calculated in Dubai?

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  • Insurance rates in Dubai are generally quite affordable, but do you know what you’re paying for?
  • Learn about the different factors that impact your premium such as your age and car type.
  • Discover the different options when it comes to choosing your policy, from excess amounts to the type of car you choose to drive.

 You’ve done it – you’ve finally decided on the car you want. But with all the emotions, comes the parallel question of insurance. Sure enough, you know you need to be covered, but do you know what you’re paying for?

The UAE Insurance Authority recently introduced revised insurance rates, which had shown a hike in car insurance costs. Yes, of course, everyone knows what a “ballpark” figure should be, the various minimum and maximum caps on car insurance etc. But did you know that your overall rate is also affected by a number of other factors, many of which you can and can’t control?

Here’s a quick look at a few of these variables. Not only will you know how your premium is calculated, but this can also help you choose the best rates for your brand new baby.

car insurance premium calculation concept

Below are some factors that go into the making of your final car insurance premium.

“I’m an excellent driver”
Age and driving experience

It shouldn’t come as a surprise that your age is one of the major factors that determine your car insurance premiums.
Simply, if you are under the age of 25 or a new driver with a license less than a year old, the chances are that you will be paying 15 – 20% higher on your car insurance premium than someone who is older or more experienced. This is not to say that you’re a bad driver. In fact, this is based on statistics that have shown a correlation between the frequency of accidents and people within the age group – so, in actual fact, it’s rather precautionary.

“I’ve never gotten a fine”
Accident and traffic fine history

Let’s face it – we’ve all had a moment where we see a flash and wonder if it’s our fault. Often, if you’re a careful driver, you should be ok.
Today, your final car insurance quote is defined by your accident history, including past claims that you have made. Traffic fines you incur do not have an impact on your insurance premium.
However, if you have had a rough time on the road, received any tickets or violated any rules, you are soon to find yourself paying for it because fines are expected to be taken into consideration in the calculation of the premium in the future.
Also, the more you claim, the more your insurance company will assume that you are likely to claim in future, which drives your premium up. On the flip side, having a spotless driving record will make you eligible for a no-claims discount. Bonus!

“My car is a classic”
Vehicle age and coverage

Brand new or second-hand, your vehicle’s age is another vital factor that insurers use to determine your quote.
To put it simply, a new car would be more expensive to repair or replace, and therefore you would need better protection in the form of comprehensive coverage – whilst it may seem like a lot, this is only to make sure you don’t have to pay out of your pocket. But, this doesn’t essentially mean you would be paying a higher premium for a new car because people tend to drive more carefully when owning a new vehicle. However, an older or second-hand car can be protected with the minimal third-party liability cover which makes the premium lighter.

“Listen to the sound of that engine”
Car type and features

Whether you’ve got the latest roadster, or the ‘mom van’ of the decade, the type of car you drive also has a significant impact on how much you pay to have it protected.
Luxury, sports or other more expensive cars would inevitably cost more to replace or repair if needed, especially if they are rare and have expensive spare parts. Not to forget that high-performance cars could be involved in more accidents since they can accelerate faster and therefore are more expensive to insure.
On the other hand, insurers take into account the safety features and ratings of the car models too, which could lower your premium.

“I’ve got a guy who can repair this”
Agency or non-agency repairs

Agency repairs refer to repairs done by the car dealership, whilst non-agency refers to repairs performed by an external garage appointed and accredited by the insurance company. Agency repairs can be added to your policy at an additional cost, if not included in your existing policy.

“But why should I pay?”
Excess or deductible

The ‘excess’ or ‘deductible’ is the amount of money that you agree to pay out of your pocket, in case of an accident caused by you. If you choose to pay an excess amount, then your premiums will be lower due to you contributing more. Sometimes, the excess is a fixed amount, no matter what the damage is.

“Oh, and I need this too.”
Optional features

For all other add-ons or optional benefits that you would like to add to your existing policy, you will be charged a fixed amount for each. These may include an off-road cover, international cover, roadside assistance, car hire, etc. Consider these carefully when choosing your insurance policy, as these will differ according to your lifestyle.

It’s hard to beat the feeling of having your own car. But it’s even better knowing that you’re safe and protected too.


About Author

Aqeed is on a mission to help you become better at everything related to insurance. The articles are meant to enrich your knowledge about insurance so that you make the right choices. From the decisions you make to the options you take, you are In Sure Hands.

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