Trump tariffs: UAE car insurance premiums can rise further — even if prices at dealerships don’t

Dubai: UAE car buyers may have breathed a sigh of relief after recent US tariffs on imported cars and parts — including a steep 25% duty on fully assembled vehicles — were not expected to drive up prices here.

Dealers across the UAE said they had enough supply, alternative sources, and stable pricing strategies to keep showroom costs in check. But while car prices in the UAE may remain steady, insurance premiums could still creep up — and here’s why.

Even if the sticker price doesn’t budge, repairing cars could get costlier. That’s because many parts — even for Japanese, Korean, or European cars — flow through global logistics networks affected by the US-China tariff standoff and rising freight costs. If getting replacement parts takes longer or becomes more expensive, insurers are likely to factor that into their premiums.

“Insurers are always watching the cost of claims. If parts take longer to arrive or cost more, that reflects in what customers pay over time,” said an insurance underwriter based in the UAE.

Another subtle but significant risk: longer repair timelines. If supply chains are disrupted, cars may spend more time in workshops — which increases claims under rental reimbursement coverage. This is the part of your policy that covers the cost of a temporary car while yours is being fixed.

“Even if you don’t see it on the surface, this kind of inflation in back-end costs often leads to rate adjustments a few months down the line,” said a Dubai-based insurance broker.

As global car prices remain inflated, some vehicles that might have been repairable in the past could now be written off as total losses — because repair costs would exceed current market value. This pushes insurers to payout for full vehicle replacement, which is typically more expensive than repairs, again nudging premiums higher.

Not immediately. Unlike in the US or other markets where the tariffs hit directly, the UAE has more flexibility in sourcing and strong dealer inventory, which helps limit the local impact on car prices.

But industry insiders warn that if global auto inflation persists — or if new rounds of tariffs or supply shocks hit — the ripple effects could show up in your next insurance renewal.

Expect any increases to be gradual, though. Insurers typically wait for a few quarters of data before adjusting rates, and some regulatory checks in the UAE also prevent steep or sudden hikes.

Even if that shiny new car doesn’t cost more at the dealership, protecting it might soon carry a higher price tag — driven less by what you pay upfront and more by what it costs to keep it on the road.

For now, your best defence? Shop around at renewal time, ask about bundled discounts, and if you’re buying a new car, consider models with readily available and affordable parts.