Insurance only covers repairs of accident vehicles: Dubai Court

Compensation paid by insurance companies in car accident cases should be only to cover damages to vehicles, the Dubai Court of Cassation ruled.

Policy holders are not entitled to seek compensation from insurance companies for cost of renting cars to replace damaged ones or for any other financial losses incurred in the accident, the court has ruled.

Based on these principles, the court rejected an appeal by the owner of a fully-insured car that met with an accident.

The plaintiff sought from the insurance company  a total of Dh48,000, including the cost of repairing the car (Dh18,000), cost of renting a car for eight months (Dh 10,000), depreciation in the car’s market value (Dh10,000) and compensation for emotional hurt (Dh10,000).

The Court of First Instance had assigned an expert to assess the damage to the car and its market value before and after the accident.

After receiving the expert’s report, the Court of First Instance ordered the insurance company to pay Dh33,000, including Dh18,000 for repairing the car, Dh10,000 for renting another car  and Dh5,000 as compensation for emotional hurt .

Both the insurance company and the car owner appealed the judgment before the Court of Appeal.

The Court of Appeal ruled that the insurance company need pay only Dh18,000 for repairing the car.

The car owner appealed the judgement before the Court of Cassation which issued the final verdict on the basis of Articles 1026 and 1034 of the Civil Transactions Act which stipulate that compensation is determined by the risk insured against as mentioned in the insurance policy and not for any other risks not mentioned in the policy.

Follow Emirates 24|7 on Google News.