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23 February 2024

Does your UAE car insurance have blackholes?

UAE has 12.7 road deaths per 100,000 population: WHO data. [Image via Shutterstock]

By Staff

UAE and GCC motorists who do not ‘read the small print’ on their motor insurance contracts to ensure they have sufficient coverage levels for their needs risk serious financial consequences, according to Nexus Group, an insurance broker.

While motor insurance is usually compulsory, the policies and benefits provided are extremely varied, and many motorists do not fully understand what level of coverage they actually have, says Alison Fenech, Head of General Insurance, Nexus Group.

By law, motorists have to take out a minimum of third-party liability coverage, which will cover damage of property, death or injury to a third party caused by a driver’s vehicle.

Comprehensive policies provide additional protection – but with insurers competing to offer attractive premiums to entice drivers, that level of protection can be very different, depending on which company the driver is insured with.

With the GCC having some of the highest rates of road accidents in the world, strong insurance protection can be absolutely vital. According to World Health Organisation data, the UAE has 12.7 road deaths per 100,000 population, compared with just 3.7 in the UK.

“Road safety is a serious concern here in the region. We find that although more and more of our clients are opting for comprehensive coverage, they often don’t understand that not all comprehensive policies are the same – the levels of protection that are actually included may be very different from one provider to the next,” Fenech said.

“While people often select their insurance provider based on the cost of the premiums, the cost of not having the right policy can be far higher in the long run.”

Most clients opt for comprehensive coverage, but they often fail to check that this covers all their needs. For instance, motorists need to be careful that they have sufficient coverage for medical and legal costs in the event of an accident.

While many policies do include personal accident protection, not all do and there are likely to be limitations imposed – so in the event of a serious accident drivers may be facing high medical bills that are not covered by their existing health coverage either. Drivers may also face heavy legal bills if other people are seriously injured, or worse still, killed in an accident.

“You need to make sure that you don’t have any ‘black holes’ in your coverage – a massive medical charge may fall outside the limits of your health insurance, and will add distress on to the injury you have received,” said Fenech. “Large legal bills may be ruinous if you aren’t protected.”

If someone is hurt as the result of an accident for which a driver may be held liable, that person’s damages may include medical and hospital bills, rehabilitation, and loss of wages and future earnings capacity.

Even without health and legal bills, damage to the car can be extremely costly. For most people a car may be their most valuable possession – as well as a vital means of transport to and from work, or to drive family members.

 Drivers should factor in how much it would cost to repair or replace their vehicle when choosing their policy level. Policies will usually include deductible limits and the higher the deductible is, the lower the premium is likely to be.

 The nature of driving here in the GCC can influence a car insurance policy. For instance, many cars in the region will have off-road capabilities, which can make it tempting to go for a quick spin on the sand dunes – but if a driver’s policy does not include off-road coverage, they may find themselves in trouble. Likewise, while policies may include roadside assistance, that may not apply in remote areas.