Dubai: When shopping around for car insurance, it’s a common dilemma when choosing between whether or not you should shell out extra money for an insurance that would insure you and your vehicle, or instead save money by settling for one that otherwise doesn’t offer as much protection.
While that may be the key difference between getting a ‘comprehensive’ car insurance and a ‘third-party’ policy, what else makes such all-in-one coverage plans more cost-effective than other low-cost insurances? Here’s why comprehensive car insurances are worth the added cost.
“While a bare-minimum car insurance plan like a third-party vehicle cover is mandatory, a comprehensive insurance policy for your vehicle is optional,” explained Ibrahim Riba, a senior car insurance salesman based in Abu Dhabi. “But the choice doesn’t always boil down to cost.
“You might have to shell out more money while buying a comprehensive insurance policy, but it is completely worth it as the scope of coverage is much higher. While the added benefit to comprehensive insurance policy is full protection of your vehicle, there are other long-term perks.”
Why do many prefer third party car insurances?
Third party car insurances are often more popular as it is the lowest form of cover available in the market, and a wide range of insurers offer it here. Not to mention, it’s far more affordable and its cost is regulated and is therefore considered fair on the consumer based on the cover provided.
“Third party car insurance is a good option if you’re on a budget, your car is of relatively low value or cheaper to repair. This also helps as you can easily cover the costs of repairs yourself,” said Pam Baglia, a Dubai-based insurance analyst.
“Also, you stand to benefit from third party car insurances if you’re looking to build up a ‘no claims discount’ or ‘bonus’ by driving carefully, or if you’re a new or relatively inexperienced driver, or if it’s your first time to buy car insurance in the UAE.”
Why are comprehensive car insurance plans costly?
Comprehensive insurance coverage pays for anything that could happen to your car outside of an accident. The plan is bought along with a collision policy that pays for the damage to your vehicle if you cause an accident. Given the additional cost, is comprehensive insurance worth it?
“Comprehensive insurance can save you money if you can't afford to pay for repairs to your or someone else's car,” said Riba. “However, not everyone has a choice about whether to get comprehensive car insurance.
“If you’re leasing or financing your vehicle, it’s likely required. But if you can drop the coverage, consider the value of your car. While it costs more than minimum required coverage, it could save you a lot of money on repair or replacement costs if your car is newer and has a high value. However, it isn't worth the price if your car is older and has little value.”
What type of auto insurance do you have to buy?
Experts recommend purchasing ‘collision insurance’ to cover damage to your own vehicle that does not fall under your comprehensive policy. Your lender or leasing company will also require this coverage for leased and financed cars.
“You must consider a range of factors to decide if comprehensive insurance is worth it. When making this decision, primarily review the risk of damage,” added Baglia. “Getting quotes from different providers increases your chances of finding an affordable policy.
“The cost quotes you receive for comprehensive insurance is dependent on the value, age, and mileage of the vehicle you drive; and the amount of savings you have available to pay for a replacement vehicle after a crash.”
Verdict: Is comprehensive car insurance worth the added cost?
To determine if a comprehensive policy is a good idea for you, start by calculating what your car is worth and subtract the amount of your deductible — this is the most value you can expect to get from your policy should the worst occur. Compare this with the cost of your insurance payments.
In order to know how much it costs, determine your deductible, which is how much you pay out of pocket after a claim is approved to repair or replace your vehicle. Thus, up to the cash value of your vehicle, the remaining expenses are covered by the insurance company after the deductible is paid.
“Taking a comprehensive car insurance cover is always advisable as it provides complete protection of not only someone else's car like a third-party car insurance, but also the own damages to your car, as well as any injury to the owner driver,” added Riba.
“Keep in mind that anytime you file an insurance claim, your renewal rates may go up. We recommend that you shop around for car insurance and compare car insurance quotes regularly to ensure you’re getting the lowest rates and best coverage possible.”