Understanding Your Car Insurance Deductibles
Read on to know all about deductible rates in car insurance policies in the UAE.
The deductible is the amount you have to pay when making a claim. You will not have to pay the endurance value if you are not the cause of the accident. Generally you will pay the deductible rate to repair your car damage and when you are wrong. Ensure that you are able to pay the deductible, otherwise your claim will be rejected. The Insurance Authority has established the limits of the deductible, and insurance companies are not entitled to exceed them.
What is the deductible in insurance?
It is the amount that the insured person will pay when submitting a claim to the insurance company. Depending on some special factors, the insured and the cause of the accident may have to pay additional deductibles in addition to the basic deductible.
To make the point more clear, your own vehicle was damaged in a crash. The cost of the repairs was 5000 AED. You submit the insurance claim to the company with which you had the car insurance agreement. You will first pay the deductible mentioned in your policy, say for example 1000 AED. After that, the company will pay the rest of the amount due, which is 4000 AED to complete the repair of your car.
Types of deductible value in insurance
There are two types of deductible in insurance –
– Compulsory deductible
It is the fixed amount that your insurance company has set for you to pay when you file a claim. The insurance company is also entitled to impose additional deductibles in special cases, provided that the deductible shall not exceed the amounts approved by the Insurance Authority.
– Optional deductible
It is the amount you choose to pay when claiming with the mandatory deductible. If you happen to have a car accident you will have to pay both, so make sure you can pay them, otherwise the insurance company will reject your claim. Keep in mind that choosing a higher deductible rate lowers your annual premium.
What if the car damage cost is less than the deductible rate?
If the car damage cost is less than the deductible rate then you will pay the amount and repair the damages on your personal account, and the insurance company will not pay any expenses. For example: If the cost of car damage is 500 AED and the deductible is 1000 AED, you will pay the value of repairs 500 AED, and the insurance company will not do that.
A lot of people question this practice. Some of the repairs can be as small as a broken mirror or a scratch, and it won’t cost you a lot of money to get it fixed. Insurance companies will pay you when you really need the coverage. The amount of insurance coverage that the company will pay must be beyond your ability and personal possibility.
When the insurance company imposes a deductible or deductible, it forces the customer to assume responsibility, drive safely, and take the necessary measures to protect his vehicle from exposure to collision accidents.
Deductible in comprehensive insurance
It is necessary to know which documents include the deductible rate. But in the beginning, you should also know that the deductible is one of the obligations of the insured to the insurance company first and that it relates to the repairs of your vehicle only, not the third party vehicle. The UAE Insurance Authority has approved two types of car insurance policies in the UAE:
- Motor Vehicle Insurance Policy that insures the vehicle from civil liability towards third parties, which is known among insurance companies and policyholders as third party insurance.
- The unified vehicle insurance policy against loss and damage, which is specific to insuring vehicles that were damaged as a result of a collision accident caused by the vehicle driver himself.
It must be noted that both policies together make up the comprehensive insurance policy , which covers both third-party and vehicle damages.
According to the unified insurance policies approved by the Authority, the deductible is not covered by third party insurance policies, but rather by comprehensive insurance policies. Regardless of who was at fault for the crash, the insurance company will charge you a deductible to make the necessary repairs.
Deductible rate in third party insurance
It is reported that you will not have to pay the deductible in third party insurance. This is because the damage to your car in the event of an accident is not covered by insurance. You are personally the one who will repair the damage to your car and bear the entire burden, and your insurance company will repair the third party if you are the culprit.
In his interview with Sabq newspaper, insurance expert Iyad Al-Heibi also confirms that comprehensive insurance includes a certain amount called the deductible rate that is paid for each accident the customer is exposed to, explaining that there is an equation that says that the higher the amount of endurance paid, the lower the insurance price.
When do you pay the deductible?
The deductible is generally paid on each insurance claim and in the following cases –
- If the cause of the accident is you
- If the insurance company determines that you are partially at fault
- If there is a dispute about the fault, you may have to pay for the deductible until your car is repaired, and then compensate you later
- In the event that the driver at fault is not insured and cannot pay compensation
- The wrongdoer escaped from the scene of the accident without leaving his details
- The car was stolen
- The car was damaged by natural factors
- Deliberate vandalism
The process differs for each company, so when buying comprehensive insurance, it is best to ask the insurance representative about the cases in which you will have to pay the deductible, and the cases in which you will not have to pay.
When is the insured person exempted from paying the deductible?
Many insurance companies exempt the insured from paying the deductible if the liability of the third party (the other car) for the accident is 100% and the third party’s information and estimated damages are proven in the traffic report.
In order to avoid paying the deductible, you must meet the following conditions:
- The company’s agreement that you were not at fault in the accident.
- Provide the name and details of the person responsible for the accident.
- The company recovers money from the person who caused the accident.
It happens in certain cases that it is not immediately clear who is responsible for the accident, and it may take some time, then you will have to pay the deductible rate until the facts become clear. After that, the car insurance company will refund you the deductible.
What is the importance of having a deductible in car insurance policy?
- When the insurance company imposes the percentage of excess, it forces the customer to assume responsibility and drive safely, and take necessary measures to protect his vehicle from exposure to collision accidents, such as reducing speed, for example, complying with traffic rules, providing means of protection against fire or theft, and others.
- Also, the deductible is based on reducing the monthly insurance premiums. It is a way to get affordable car insurance, by choosing a higher carry amount in your policy. When choosing a higher deductible amount, you can lower the premium. However, it offers you less coverage when you make a claim, and you end up paying more in an emergency than if the deductible or excess was lower.
Factors that determine the deductible rate
The insurance company may impose a high or low deductible, but in all cases it should not exceed the rates approved by the insurance authority, which we will mention later. Some of the common and approved factors in determining the deductible increase or decrease are:
- The number of claims made by the policyholder
- Claims within the country or outside the country
- Driver’s age, less than or greater than 25 years
- The deductible rate is determined according to the market value of the insured vehicle and not its type or model
- Vehicle use – private, commercial, or rented
How much is the deductible in comprehensive insurance?
Motor vehicle Deductible Private vehicle where the permissible number of passengers of which do not exceed 9 and its value does not exceed AED 50,000 Maximum AED 350 per each accident Private vehicle where the permissible number of passengers of which do not exceed 9 and its value exceeds AED 50,000 but not AED 100,000 Maximum AED 700 per each accident Private vehicle where the permissible number of passengers of which do not exceed 9 and its value exceeds AED 100,000 but not AED 250,000 Maximum AED 1000 per each accident Private vehicle where the permissible number of passengers of which do not exceed 9 and its value exceeds AED 250,000 Maximum AED 1200 per each accident Private vehicle where the permissible number of passengers of which do not exceed 9 and its value exceeds AED 500,000 Maximum AED 1400 per each accident Private vehicle where the permissible number of passengers exceeds 9 but not 12 Maximum AED 1500 per each accident Private vehicle where the permissible number of passengers exceeds 12, rental vehicles, and trucks where the tonnage exceeds 3 tons Maximum AED 1700 per each accident Trucks where the tonnage exceeds 3 tons and passenger buses and industrial vehicles for construction and agricultural purposes Maximum AED 4500 per each accident
In addition to the deductible imposed by the Insurance Authority in the vehicle insurance policy against loss and damage, it has permitted the insurance company, an additional amount can be charged in the following cases –
- If the driver of the vehicle is less than 25 years old, the deductible is a maximum of 10% of the compensation value.
- For taxi and public vehicles, the deductible is a maximum of 10% of the compensation value.
- For sports and equipped vehicles a maximum of 15% of the compensation value.
- For vehicles supplied outside the factory, a maximum of 20% of the compensation value.
- For rental vehicles, a maximum of 20% of the compensation value.
What should you do if the insurance company imposes a higher deductible than what the Insurance Authority has approved?
According to the rates of many local insurance companies, the average deductible for car insurance varies between 2.5-3.5% per year. It rises to about 5.5% on SUVs annually, while the deductible rate for sports cars exceeds 6% annually because they are considered high-risk vehicles.
Some clients have complained that insurance companies sometimes impose high deductible rates, which are not customary. Some insurance experts report that the deductible amounts or percentages are clear and explicit in the unified vehicle insurance policy against loss and damage approved by the Insurance Authority, and therefore companies are not entitled to exceed these amounts and percentages.
In such cases, you can submit a complaint to the Insurance Authority to take the necessary measures
Are deductibles imposed on other types of insurance other than motor insurance?
In addition to car insurance, you can find deductibles in health insurance, fire insurance, and other documents. It is based on percentages of the value of the insurance coverage and starts from 0% to 20%. Also, when submitting a medical or fire insurance claim, you and the insurance company will pay the rest of the amount.
Consult the experts at BuyAnyInsurance to know more
Is the term deductible or truncation still ambiguous? Or do you have any doubts or inquiries about our topic? Leave a comment. Or Consult Buyanyinsurance call us at the toll-free number – 800765429 or on WhatsApp 0557616131 .
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Frequently Asked Questions
- What exactly is the deductible or excess in the insurance policy?
In the car insurance policy, you will find the phrase deductible or excess. All of which indicates the amount you will pay when you file an insurance claim, as a result of a collision, before the insurance company begins to repair the rest of the damage to your car.
- When can I change the deductible rate?
You can change the deductible when renewing the car insurance
- How do I pay the deductible?
You can pay the deductible either to the car insurance company or directly to the repair shop
- What does deductible in medical insurance mean?
The amount the insured will pay when visiting a health care provider for a medical condition, including counseling, tests and prescribing medication.
- How do I calculate the deductible rate?
It suffices to review the deductible schedule approved by the Insurance Authority, in addition to the additional deductibles. For private vehicles with no more than 9 passengers and a market value of not more than 50,000 AED, the deductible amount does not exceed 350 AED for each claim.
Kritika Manchanda is a content writer with BuyAnyInsurance. She has more than a decade of experience of churning out SEO friendly content. When she is not writing, she is either reading, or making travel plans.
Originally published Nov 16, 2022 10:52:15 AM, updated Nov 16, 2022