If you’re in the market for car insurance in the UAE you need to read this first. The initial instinct of buyers is always to look for the cheapest option available. This makes sense on many levels. Going for cheaper insurance means you pay out less every month in premiums, you adhere by the law without having to pay an arm and a leg, you’re covered for basic damage, and you can sleep easy at night.
However, cheap car insurance doesn’t pay if you don’t do it right.
There are only two types of car insurance policies available in the UAE. Of those two third-party liability insurance is the cheapest option. However, it doesn’t provide much as far as insurance goes. Only damages and personal injury of the other party involved in an accident with you is covered under third-party liability insurance. Comprehensive coverage expands to cover your damages as well, but it’s no longer the cheapest option available. It’s true that comprehensive coverage comes in many shapes, sizes, and prices. You can opt for the cheapest rate in comprehensive coverage, but it still is only one of two options in the market.
If you insist on buying cheap car insurance make sure you understand exactly what is being covered. Cheaper options of car insurance hardly cover much. As mentioned before third-party liability doesn’t cover your vehicle, or any personal damage you may sustain. This is no coverage at all. Even in comprehensive coverage the cheapest quote will get you very little coverage. Sometimes only the basics are covered, and even then you have to pay out of pocket if your coverage is exceeded in the claims process.
You can purchase cheap car insurance by going for a higher deductible. This means you will have to pay a lower premium. However, what you might not be aware of is that you take the brunt of the risk in your car insurance policy. In case of an accident or collision you will be paying for most of the damage repair and any personal injury incurred by the other party and yourself. Unfortunately when we try to save on car insurance we end up paying more out of pocket when we really need the company to cover us.
Car insurance isn’t a temporary cost in your monthly budget. It is something that will be a part of your financial considerations for as long as you own a car. This is why it is short-sighted to invest in cheaper car insurance in the long run. Filing a claim every year is unlikely, and paying premiums every month for an uneventful year might seem futile but it is worth it. Car insurance isn’t just for one-time accidents, fire, and damages, it also provides for regular vehicular maintenance, theft, and malicious vandalism.
Don’t expect your cheap car insurance to remain cheap overtime. As the global economy takes a dip expect rates for everything, including car insurance to rise steadily. So if you purchased a cheap policy last year, it will increase this year due to inflation. Many companies even run a sales gambit where they offer cut-prices on their policies at the end of the financial year to get buyers to switch to them. However, within six months buyers see a sharp increase in their premium which makes the affordable insurance policy not so cheap anymore.
There are ways to work around this, of course.
You can start the process by jotting down exactly what you want. You won’t know what to look for if you don’t know what you need. Once the list is curated you should conducting a thorough research. There are reliable websites that are based in the UAE which help you search and compare car insurance policies tailor-made for this market. Car insurance quotes can range from the mundane to the high-end but if you have your list handy you can stick to what you need and keep the premium down.
It makes more financial sense to pay the minimum you can afford, not the minimum the market has to offer. At least this way you are covered for the essentials, and the rates won’t creep up suddenly in the middle of your financial year.
Umar Saeed is a Contributing Editor at BuyAnyInsurance Blog. He writes a blog about car insurance & other insurance products. He loves writing on the connecting dots between Fintech and real-world consumer behavior.