Car insurance terminology may seem a bit complicated, and many may feel overwhelmed when dealing with the details. But do not worry! In this article, we will explain everything related to car insurance terms that you must be aware of as a driver in the UAE. We will introduce you to the terms and basics in a simple way so that you can drive your car with confidence and protect it in the best possible way. Let’s get started:
Car insurance
A contract between two parties, one of which is the Insurer (the Insurance Company) and the other is the Insured (you). Within the contract it outlines the terms in which the Insurance Company shall pay the Insured, financial compensation in the event of accident or if a risk is realized as indicated in the contract. This is in return for premiums paid by the Insured to the Insurer.
Third-party insurance
This type of insurance covers the damages caused by your vehicle to others (persons and property included). Third-party liability is typically more affordable than Comprehensive Insurance as it does not cover damages caused by you, to you or your vehicle in the event of an accident. Comprehensive insurance
This type of policy provides protection against damage caused to the insured vehicle, whether the Insured caused the accident or not, as long as it is covered within the policy. The Insured must observe the terms and conditions of the policy when driving the insured vehicle. The Insurance Company remains liable to compensate for many damages caused to the vehicle as outlined in the policy.
Add-Ons
Add-ons are additional coverages offered by the insurance companies for an additional premium. You can choose to have as many add-ons as you like in your car insurance policy, subject to the insurer offering them.
Roadside assistance
Insurance companies, depending on the type of insurance policy or add on, provide you with some services if your car breaks down while driving, such as towing the broken car, changing damaged tires, charging the battery, opening car doors, and other things.
Emergency Medical Expenses cover
The insurance company will, under certain conditions and according to the insurance policy, cover and pay medical bills and emergency expenses, within reason, for you and your passengers in the insured vehicle.
Natural disaster cover
According to the insurance policy, the insurance company will compensate you for the loss or damage of your car in the event of a flood, storm, hurricane, volcanic eruption, earthquake, or other natural disaster.
Agency repair cover
The Insurance Company shall repair the damaged vehicle at any of the agency’s (dealerships) repair shops, usually for up to 3 years from first registration if the Insured has a comprehensive insurance policy. This cover is typically more expensive in comparison to a Workshop plan as original parts will be replaced with genuine manufacturer made parts and may come with a manufacturer warranty.
Windshield damage
According to the policy, the insurance company covers the cost of paying for fixing or replacing the Windshield a sometimes-other glass within the vehicle, up to a certain limit in case it is damaged. Windscreen cover is often built-in with comprehensive insurance policies however, sometimes it’s not, so you need to carefully check your policy to avail the benefits.
Off-road cover
According to the policy, the insurance company may compensate you if your vehicle breaks down while off-roading. There are certain limits to off-road cover, like sedans are usually not covered and damages caused due to desert racing are also unlikely to be covered.
Ambulance cover
This cover is to make sure that the charges for an ambulance ride to the hospital are covered by the insurance company following an accident.
Personal possessions cover
Personal possessions/belongings cover I usually come with comprehensive car insurance. As part of this the insurance company will usually provide coverage for any damage or loss to any personal possessions kept inside the car (up to the policy limit) while it was parked.
Car key replacement
According to the policy, a car key replacement cover usually protects your financial interests if you lose your car keys. This feature tends to cover any damages to your car's lock as well and the insurance company may reimburse the cost of this when you install a new lock or get new keys.
Valet Parking Cover
The insurance company, according to the policy, compensates you if your car is damaged or stolen when it is parked with a valet parking service, and this is applicable in certain cases such as: filing a claim against the hotel or shopping center, or when handling over the car to an employee authorized by the valet parking company.
Car theft cover
The insurance company provides coverage according to the policy, where they will usually reimburse you for repairs or for the value of the car itself if it’s stolen.
No Claims Bonus
No-claims bonus (NCB) is a discount in premium offered by insurance companies if a vehicle owner has not made any claim during the term of the motor insurance policy.
The Insurance Company may grant the customer a discount of up to 30% on the minimum car insurance rate if he/she has not had an accident occur in a specific time period. The discounts for each time period are as follows: 10% for the first year 15% for the second year 20% for the third year, whilst the insurer can also offer an additional 10% loyalty discount.
Claim
A claim is an official request a policyholder raises with the insurance provider to have them cover the expenses raised due to damage or loss of the vehicle.
Deductible
The deductible, otherwise known as an excess, is the contribution paid by the insurance holder in the event of a claim.
Conclusion
Through understanding the various aspects of a car insurance policy and the key terms involved, you can read through the details with ease and ensure everything is in order. Having a clear understanding of the terminology of a car insurance policy makes comprehending the technicalities of the insurance agreement much easier.
