With the new laws and tariffs implemented from 1st January 2017, the cost of car insurance is going to rise in Dubai after 31st December 2016. The new tariff rates will be in placed from the 1st January that will force the insurance companies to increase the rates of car insurance premiums in order to compensate the cost of ambulance services and courtesy cars.
The new tariff rates are for both third party and comprehensive insurance plans with variation in increase based on the type of the car. The new vehicle insurance tariff system is introduced by the UAE Insurance Authority which will supersede the older tariff system that was implemented in 1996.
What Does New Tariff System Mean?
The new tariff parameters forwarded to the insurance companies mean the minimum premium cost is going to increase which is good news for companies. In last few years, many insurance companies dropped their minimum premium costs due to growing insurance. But now with the standard limit for the minimum insurance premium, insurance providers can earn more even from the cars of lesser value.
For example, the minimum insurance premium for a 4×4 Saloon is increased to 2,000 dirhams from 1,300 dirhams.
One of the reasons for the tariff increment is to adjust the cost of medical evacuations to hospitals and ambulance services.
Even though the minimum insurance premium is increased but the maximum limit for comprehensive plans is still retained which is 5% for a high-performance saloon car. This may be good news for owners of sports and other luxury cars.
For example, even if the driver has a poor record, the maximum he has to pay is 5%. If compared to the US and the United Kingdom, for expensive new cars, the insurance premium can jump to 8% to 9% if the driver has a poor record.
Simply put, car owners have to pay more as insurance premiums in 2017 while insurance companies are going to profit more. But to balance things, the new laws also add more mandatory coverage options for insurance providers like the 10-day replacement vehicles to a car owner in case of an accident.
The new law demands that insurance companies must provide 300 dirhams a day for up to 10 days in absence of replacement car. So it is a win-win situation in the end for both car owners and insurance companies.
