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
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.