A replacement car was the most popular car insurance add-on sold in the UAE during the second quarter of this year, according to a study from financial comparison site yallacompare.
Forty-three per of UAE car insurance buyers who bought add-ons between the start of April and the end of June chose replacement car coverage at an average cost of Dh174, yallacompare said in a statement on Thursday. Twenty-seven per cent chose personal accident protection at an average cost of Dh120 and a fifth opted for breakdown cover at an average cost of Dh47.
“The minimum levels of cover that mandate a replacement car for anyone not at fault in an accident were introduced by the UAE's Insurance Authority in January 2017,” said Jonathan Rawling, the chief financial officer of yallacompare. “However, the replacement car add-on selected by these buyers provides a replacement car to the owner of the premium regardless of who is at fault.”
Yallacompare analysed sales data from its online car insurance comparison portal, which it says represents over 76 per cent of all online insurance sales in the GCC. The research found that 20 per cent of UAE car insurance buyers selected at least one add-on during the second quarter.
The car insurance market had an overhaul at the start of 2017 when the IA made a number of changes including demanding UAE insurers adopt minimum comprehensive insurance premiums of Dh1,300 for saloon cars and Dh2,000 for SUVs.
“While the headline news was that new minimum premiums would be introduced (with comprehensive car insurance prices going up by 14.9 per cent as a result), that increase paid for better levels of cover,” said Mr Rawling. “Along with a replacement car for the party not at fault, the minimum cap on third-party damage was raised from Dh250,000 to Dh2 million, and personal accident cover for passengers had to be included in every comprehensive policy.”
A study released in June by financial comparison competitor Souqalmal.com found that car insurance buyers in the UAE are skipping add-on covers to reduce their premiums.
Just under one in five UAE consumers who bought policies through Souqalmal opted for the agency repair add-on in 2017 – a feature that allows drivers to have accident repairs carried out by the dealership they bought the car from. The website said that was a significant drop on 2016 when over 42 per cent chose this feature.
Mr Rawling said evidence from separate research Yallacompare had carried out also suggested that UAE residents are becoming more cost-conscious - particularly since the introduction of five per cent VAT in January.
“However, being cost-conscious and choosing to buy a car insurance add-on aren't mutually exclusive,” he said. “In some cases, it makes financial sense to purchase a cheaper car insurance policy and a single add-on. The point is that, if you compare insurance options online, you're always going to find the best deal for whatever level of coverage you need.”
According to a July study released by insurance comparison site InsuranceMarket.ae and the classifieds platform Dubizzle, premiums in the UAE declined by an average of Dh169 in the first half of 2018 for the most insured car brands compared to the same period last year.
Ford, Honda, Mitsubishi, Nissan, and Toyota are the top five insured car brands in the UAE, according to InsuranceMarket.ae, which assessed about 56,000 enquiries to the site between January 1 and June 14 2018.