Don't leave yourself exposed

Even the best drivers can end up in an accident because of someone else's negligence, so it's vital you have the right and appropriate insurance for your car.

With the purchase of car insurance a mandatory step before registration, customers are often so focused on the price of premiums they forget to look at what they're getting for their money. Jonathan Jane, regional retail manager, AXA Insurance (Gulf) Dubai, says, "Customers need to look at the type of coverage they are paying for, and not so much the price of the premium. They will get what they pay for, and should decide which coverage best meets their needs," Jane explains.

Sometimes car buyers get so caught up with the excitement or the urgency of getting their cars that they often leave the important matter of car insurance to car dealers, whose focus tends to be making buying a car an easy one-stop process.

But car buyers need to realise that they are in control and that they can choose both their insurance coverage as well as which bank to use for their auto loans.

Types of insurance

There are essentially four types of insurance policies that car owners can choose from, and the difference boils down to the type of coverage each one offers.

Third Party Fire and Theft (TPFT) insurance is the minimum cover car owners need to have to get their vehicles registered, and it is also the cheapest. With this type of coverage, the insurance company will not pay for damage to the car. In an accident, the other party's insurer might pay for damage to your car if their client has the right coverage and is responsible for the damage.

Comprehensive or fully comprehensive insurance covers the damage to your car, but there are a lot of restrictions and clauses that car owners need to be aware of to make sure there are no surprises come claim time.

Chloe Martinez, a PR practitioner at a leading communications agency, had an accident a couple of years ago that left her car a total wreck. "I didn't realise that the insurance I had would not replace my car, but would only cover the payment of the mortgage. It was a big surprise and a huge disappointment because I was left with nothing, and found it challenging to sort out my transportation needs after the accident. In hindsight, I would recommend reading the fine print."

There is a legal obligation for insurance companies to provide the comprehensive or fully comprehensive insurance at a certain maximum price level of about 3-5 per cent of the value of the car.

Another type of insurance is the comprehensive coverage with options, which offers valued added features such as dealer repair, free hire car, free insurance in Oman and other GCC countries, recognition of no claims bonuses (either UAE and/or from overseas) for an added fee. The rate for this type of coverage is usually 3-10 per cent of the value of the car.

A premium coverage type of insurance may also be obtained, which includes other perks and bonuses. Just make sure to read the fine print to know exactly what coverage benefits you are getting, and paying for.

Equally important is knowing your coverage benefits, besides ensuring you get good value for your premium, is to make sure you remember to use these perks when the situation arises.

Other considerations

While coverage is an important factor to consider when choosing the right auto insurance, It is also critical to choose the right insurance company that will provide the coverage. It would be worth your while to get to know the company's financial standing, and the kind of customer service they have, especially when it comes to claims time.

This may take some effort but would make your eventual claims experience as hassle-free as possible. Having an accident, whether it is your responsibility or not, is already a stressful situation; making an insurance claim shouldn't be an additional aggravation.

When you have selected a suitable policy then get all the other necessary details such as restrictions and other important information such as the eligibility criteria for the coverage. Likewise, check if the policy premiums will increase as this will help you assess how you can pay for the policy in the long-term when the costs add up.

Some insurance companies give bonuses or discounts to drivers with accident-free records; so make sure you use this as a bargaining chip when negotiating your insurance coverage. It does help to drive safely, but then again, accidents do happen. So, better safe than sorry.

Here are a few things your auto insurer will perhaps not tell you outright...