Souqal­mal founder Am­ba­reen Musa on the im­por­tance of small print

Am­ba­reen Musa, founder and CEO of com­par­i­son site souqal­mal. com, delves into the finer de­tails of car in­sur­ance poli­cies

Gulf Business - - FRONT PAGE -

WHILE CAR IN­SUR­ANCE

ad­ver­tise­ments may be plas­tered in big bold let­ters all over news­pa­pers, bill­boards or on­line, the quin­tes­sen­tial de­tails – terms, conditions, ex­clu­sions – are of­ten in the small print. In fact, un­der­stand­ing the fine print of your car in­sur­ance pol­icy can make all the dif­fer­ence be­tween your claim get­ting ac­cepted or re­jected.

Cru­cial de­tails that af­fect your in­sur­ance pay­out may some­times be dif­fi­cult to spot if you don’t run a fine-tooth comb through your pol­icy doc­u­ment. We shed light on some lesser-known facts about your car in­sur­ance pol­icy and how ig­nor­ing them could cost you dearly.

Landed a cheap car in­sur­ance plan – what about the de­ductible?

Your de­ductible or ex­cess is the fixed amount or per­cent­age of the ex­pense you have to pay out of your pocket at the time of mak­ing a claim. The higher the de­ductible, the lower will be your in­sur­ance pre­mium and vice versa. Watch out for ad­ver­tise­ments pro­mot­ing low car in­sur­ance pre­mi­ums – there could be a high de­ductible ap­pli­ca­ble.

Be­sides the standard pol­icy ex­cess, there may also be ad­di­tional ex­cess ap­pli­ca­ble un­der cer­tain cir­cum­stances. For ex­am­ple, you may have to pay a 10 per cent ad­di­tional ex­cess if the driver is less than 25 years old at the time of the ac­ci­dent.

Head­ing off-road? Check your coverage

Your off-road cover may not be as ex­ten­sive as you think. A pop­u­lar pol­icy add-on fea­ture among UAE driv­ers, off-road cover has its lim­i­ta­tions. Some in­sur­ance poli­cies may limit this coverage in terms of how far you are from a paved road at the time of an ac­ci­dent. The up­per limit could range any­where from 10 me­ters to 1 kilo­me­tre. Coverage may also be lim­ited in terms of the off-road ac­tiv­i­ties (dune-bash­ing and racing are standard ex­clu­sions) and fre­quency of re­cov­ery ser­vices.

If you’ve had an ac­ci­dent, are you still el­i­gi­ble for a No Claims Dis­count?

Con­trary to pop­u­lar be­lief, you don’t lose all of your no claims dis­count/bonus if you make a claim against your car in­sur­ance pol­icy. The dis­count may be re­duced in ac­cor­dance to a step back scale, upon the next pol­icy re­newal.

Be­fore you buy an in­sur­ance pol­icy, it may also be worth­while to check if the in­surer of­fers ‘no claims dis­count pro­tec­tion’ – A fea­ture that safe­guards your no claims bonus even if you make a non-re­cov­er­able claim dur­ing the pol­icy term. How­ever, this is sub­ject to the num­ber of claims you make dur­ing the year as well as the to­tal sum these claims amount to.

Who de­cides the value of your car – you or the in­surer?

At the time of gen­er­at­ing an in­sur­ance quote, the in­sur­ance com­pany will cal­cu­late the es­ti­mated value of your car based on whether it is brand new or used, the year of man­u­fac­ture, make and model. But you have the op­tion to choose a higher or lower value than this es­ti­mate, within a pre-spec­i­fied range, although this may be sub­ject to ap­proval by the in­surer. This can be use­ful when in­sur­ing a used lux­ury or sports car, as these may be val­ued below their mar­ket value by the in­sur­ance com­pany.

Re­mem­ber, there’s no point over­valu­ing your car at the time of buy­ing car in­sur­ance – the in­surer will only pay out the mar­ket value if the car is deemed a to­tal loss at the time of an ac­ci­dent.

Mod­i­fy­ing your car – will your coverage still be valid?

If you’re plan­ning to mod­ify your car, it is im­por­tant to check with the in­surer if the mod­i­fi­ca­tions will be cov­ered or not. If you fail to in­form the in­surer about any mod­i­fi­ca­tions made dur­ing the course of the pol­icy ten­ure, you could end up get­ting your claim re­jected and have your pol­icy can­celled too.

In­sur­ance com­pa­nies may ex­tend coverage to cer­tain mod­i­fi­ca­tions upon their dis­cre­tion, but you will be charged an ad­di­tional pre­mium since mod­i­fied parts cost more to re­pair or re­place. Other mod­i­fi­ca­tions that jeop­ar­dise the safety of the ve­hi­cle may not be cov­ered at all.

Most of us know that the small print ex­ists, but the ma­jor­ity fail to go over it thor­oughly – a big mis­take that you may re­gret at the time of mak­ing a claim. So be­fore you zero in on a car in­sur­ance pol­icy and make your pur­chase, make sure you fully un­der­stand the finer de­tails of the pol­icy and what the in­sur­ance coverage en­tails.

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