How to Estimate Cost of Car Insurance in UAE

Need help in researching the cost of car insurance while living here? This guide should help

Posted on

23 December 2019

| Last updated on 23 December 2019

How to estimate car insurance cost in UAE

You might be able to afford the vehicle - but have you considered your insurance?

When buying your car in the UAE, it is, of course, important to budget both for your car and for your car insurance, since the latter would cost you a few percentage points of the value of your car itself.

While each driver profile and their corresponding vehicle would cost differently at any point in time, especially since the world of motor insurance underwriting is always developing (this is why you shouldn't purchase policies online, and you should ensure your personal shopper structures the best solution for you), to give you a basic idea of how much car insurance may cost you, here's a general formula you can follow...

Estimating your car insurance in UAE

Firstly, if the value of your car is less than AED 100,000, take the base starting rate of 2.5%. If it is more than AED 100,000 and less than AED 300,000, take the base starting rate of 2.35%, and if it's more than AED 300,000 and less than AED 1m, take the base starting rate of 2.2%.

Bear in mind, however, that base rates are tentative and further discounts may be offered subject to factors such as driving history.

Now, apply the following discounts and/or surcharges:

If you are between the ages of 23 and 25 - add 25%
If you're between the ages of 25 and 30 - add 15%
If your UAE driver's licence is less than 1 year old (and you don't have a licence from your home country for a minimum of 1 year) - add 25%
If you're more than 30 and less than 60 - deduct 10%
If your car is a coupe or sports car - add 20%
If your car is more than 3 years old (between 3 and 5 years) and you wish to have agency repair cover - add 50%
Add AED 120 if you wish to cover personal accident benefit for the driver, and add AED 30 per passenger (some insurers bundle this cover under the standard coverage)
Add AED 180 for rent-a-car benefit (some insurers benefit this cover under the standard coverage) i.e. to receive a courtesy car while your car is being repaired in the event of an accident

:: The above is subject to satisfying the minimum premium requirements set by the Insurance Authority.

Since the announcement of the revision in Motor Tariff by the Insurance Authority effective January 2017 for a saloon and 4x4 vehicles, the minimum premiums set for saloons are at AED 1,300 whilst for SUV's it's set at AED 2,000 (which excludes optional covers like driver and passenger accident benefit).

In addition to this, the announcement also specified that insurers can grant a reduction to the applicants with claims-free records.

If you are claims-free and can prove it, deduct:

10% for a 1 year no claims declaration/certificate
15% for a 2 year no claims declaration/certificate
20% for a 3 year no claims declaration/certificate
25% - 30% for a 4 - 5+ year no claims declaration/certificate

Furthermore, if the owner of the vehicle decides to retain his policy with the same provider at the time of policy renewal, the insurer may grant a 10% discount as a ‘loyalty discount’ on the renewal premium. The above indicated are excluding VAT. As per the Federal Law in UAE, all insurance premiums have VAT applicable effective January 2018.

Now, obviously, the above is just a rough indicator of your car insurance rating at the time of writing this article – however, different insurance companies have different areas of strength and similarly, your rating can be affected significantly by the coverage you are given as well as the quality of the insurer.