Dubai: For first-timers, shopping for car insurance and getting the right amount of coverage at the right price can initially seem intimidating. If you’re a first-time buyer, there are ways to simplify the process of getting a car insurance for the first time.
“First-time drivers are much more likely to face a higher insurance premium compared to experienced drivers because they’re new to the road and pose a higher risk to insurers,” said Ibrahim Riba, a senior car insurance salesman based in Abu Dhabi.
“However, if you’re a first-time car buyer worried about being charged higher premiums on your first insurance, you can still look for discounts to lower your costs by asking about low-mileage discounts, or bundling your insurance policies.”
This includes personal details, such as age, information about the car you’ll be driving, level of cover you’re looking for, the distance you think you’ll be driving each year.
This allows the insurer to gauge how ‘risky’ you are, and they’ll calculate your premium based on this. The higher risk the company considers you to be, the higher the premium will be.
How is insurance calculated for different ages?
While car insurance in the UAE costs around 2 per cent to 3 per cent of the car's value, each driver profile and their corresponding vehicle would cost differently at any point in time. However, to get an idea of how much car insurance may cost you, here's a general formula:
“If the value of your car is less than Dh100,000, consider the basic starting rate to be 2.5 per cent of the car’s value – which roughly equates to Dh2,500 annually. If the value of the car is more than Dh100,000 and less than Dh300,000, consider the base starting rate of 2.35 per cent,” added Riba.
“Similarly, if it's more than Dh300,000 and less than Dh1 million, use a starting rate of 2.2 per cent. Keep in mind, however, that these rates change constantly, and further discounts may be offered subject to factors such as driving history and the value of the car.”
How are charges applied to new car insurances?
The next step for a first-time car insurance buyer would be to apply discounts or surcharges. This amounts to an additional 25 per cent of your insurance premium if you are between the ages of 23 and 25, detailed Riba, and another 15 per cent if you're between the ages of 25 and 30.
“Additionally, as a new driver, if your driver's license is less than a year old, and you don't have a license from your home country for a minimum of 1 year, add another 25 per cent. However, if you're more than 30 and less than 60 years old, you get to deduct 10 per cent,” he explained.
“In order to cover accident benefit for the driver, you are to add Dh120, and Dh30 per passenger and while some insurers bundle this under the standard plans, keep in mind that the above is subject to first satisfying minimum premium requirements set by the UAE Insurance Authority.”
First-time drivers are much more likely to face a higher insurance premium compared to experienced drivers
Discounts, charges vary with drivers, car value
As young drivers’ car insurance is likely to be very expensive, Pam Baglia, a Dubai-based insurance analyst, also detailed how it’s cost-beneficial for new drivers to have an idea of what affects how much is paid, in order to get the best deal and your premiums reduced.
“Rates vary depending on your driving record, credit history, age, but you can expect to pay a minimum of Dh250 for vehicles that are priced below Dh50,000 and Dh350 for vehicles priced between Dh50,000 to Dh100,000,” said Baglia.
“Vehicles priced above Dh100,000 are charged an additional Dh500 while 2-door cars are required to pay a minimum excess of Dh1,500. However, with a good driving record and a longer insurance history, it is possible the rate could go down in the future.”
How can you get discounts as a first-time driver?
As a new driver buying your first car insurance policy, while you can expect to pay more than an experienced driver who has had insurance for several years, as car insurers take a look at driving history and insurance history when setting auto insurance rates, there are still ways to save on it.
“The less driving experience you have, the more likely you are to file a car insurance claim. But the best way to save money is to compare car insurance quotes from multiple companies, while getting the right amount of coverage,” said Baglia.
“By knowing how much car insurance you need, you can decide on coverage limits and you don’t end up paying more coverage than is necessary. There are also common car insurance discounts, such as multi-policy discounts, new car discounts and defensive driver discounts.”
The key for new car buyers purchasing insurance is to qualify for as many discounts as possible. Baglia also noted that insurers can incentivise defensive driving skills and offer discounts for safe driving, typically ranging from 10 per cent to 15 per cent off your premiums.
“Review conditions for discounts with insurers you’re considering. Some require at least a year of a clean driving record to qualify. Even if you don’t qualify when you sign up for the policy, you may be able to apply the discount when you renew if you meet the requirements at that time,” she added.
“Also, your credit history can affect the prices you pay for car insurance, so first-time drivers need to maintain clean credit profiles for better offers or discounts. You don’t want any surprises about the contents of your policy after you purchase a car insurance plan. So be sure to read your policy well.”