UAE: Renting a car? Know what insurance works for you and reaps you better benefits Image Credit: Shutterstock

Dubai: If you drive a car in the UAE then, just like almost every other country in the world, having car insurance is mandatory.

While you should ensure that insurance covers your needs completely when you rent a car, you also need to avoid duplication of coverage – when opting for them through multiple avenues.

You will either be required to have third party or fully comprehensive insurance, and out of the two, fully comprehensive - is preferable, matter experts evaluate.

Two types of basic car insurance in the UAE
Third-party liability insurance: If involved in an accident with another vehicle, this type of insurance covers the other car and its passengers, but not your own automotive. This is the cheapest insurance and made mandatory by authorities.

However, the downside of this plan is that you will spend more on repairing your damaged car, than what the higher insurance would have cost you.

Comprehensive cover: This covers both cars and their passengers in a car accident. It also takes care of other car-related accidents like theft, fire, and other accidental damages. The comprehensive insurance is more expensive and has many more benefits.

Do you have the right level of coverage?

While renting a car in the UAE usually includes insurance as part of your standard agreement, it’s important to make sure you’ve got the right level of cover.

When you book your rental car, it’s also important to find out exactly what kind of insurance is included, and how extensive your cover is.

You can also opt for any missing covers directly from the rental desk if you choose to hire the car straight from the location.

Rental companies that are charging you for repairs, can also charge you for loss-of-use to their vehicle, like diminishing value, towing, and administrative fee tor claims.

A comprehensive policy can guard you against excessive charges so make sure you get full coverage.

What should be included and excluded in your rental insurance coverage?

Hiring a car can sometimes be a confusing experience, especially when there is a lack of clarity on the inclusion and exclusions of services and coverage.

Collision Damage Waiver (CDW): This is a mandatory insurance. CDW limits a renter's financial liability to the ‘excess amount’ stated on the rental agreement. The renter will be responsible for an excess between Dh1,500 and Dh5,000.

Super Collision Damage Waiver (SCDW): This is an optional coverage, offered in addition to the Collision Damage Waiver (CDW) insurance. By accepting this, the renter is reducing the liability for damages to the vehicle to zero, meaning you won’t have to pay anything from your pocket.

Personal Accident Insurance (PAI): This is an optional coverage for the driver and the passengers. PAI insures drivers of a rental car and their passengers for accidental medical costs, emergency care and accidental death during your rental trip, up to a certain limit. Claims are subject to UAE court verdict.

Miscellaneous coverage options: This is a coverage option that covers damages caused to the windscreen glass of the rental company’s vehicle, any non-mechanical breakdown during the rental period.

‘Roadside safety net’ is a coverage that is meant to assist the customer for services while they are on the road or during the time of the rental.

There is also a coverage option that covers flat or damaged tire. This cover waives off customers’ additional charges relating to tire repair or replacement.

How much does rental car insurance cost in Dubai?

Car insurance is low cost and affordable since it is compulsory. There are comprehensive plans that are more expensive than others.

There are extra benefits that they offer depending on the type of car. All the plans are for a 12-month period, after which you may renew your plan. Insuring a car in Dubai costs between Dh300 and Dh600 per month depending on car or plan type.

rent a car
How much does rental car insurance cost in Dubai?

What is price of premium for rental car insurance?

Premium is simply the amount of money that you pay to fund your car insurance account with your company. Not every subscriber pays same rates, as premium is either high or low depending on certain factors.

Premium is high when there is 'off-road coverage’, the car owner or driver is inexperienced, or younger than 25 years old, or if it is an expensive vehicle. Premium is low when the vehicle is new and has good safety features.

Some car rentals in Dubai include cost in their insurance for people who want to go off-road. As mentioned above, those who are younger than 21 years old, and have not actively driven in a while, get a higher premium.

Does your credit card offer auto rental collision damage waiver insurance?

Many credit cards offer some insurance for car rentals. This coverage is secondary if you have an existing personal auto insurance policy.

Note: Call your card issuer, or review your card benefits guide, to find out about the specific terms, conditions and exclusions. For example, certain kinds of vehicles may not be covered.

Credit cards with this benefit typically cover physical damage to, or theft of, the rented vehicle, with no deductibles. If you get into an accident, any damage to the rental car is covered, as long as the rental agency verifies the losses and coordinates with the benefit provider.

However, most cards do not cover damage to other cars or property, or any liability that arises, including injuries to people. To be eligible for your credit card’s coverage, you must generally make and pay for the rental car reservation with the card.

You must also decline the rental agency’s collision damage waiver – as well as any offers for coverage, which you might get from third parties when you book the car.

Some rental agencies request a letter of eligibility when you use your credit card for coverage. Check with your card issuer to determine how you can get one if it’s needed.

Also confirm how the coverage works if someone else is driving the car. Most coverage through a credit card extends to all drivers authorised by the car rental company, but you should check to be sure.

When does it make sense to purchase insurance from the rental company?

If you do have coverage through your credit card or personal auto insurance, consider whether you want any additional insurance offered by the rental car company.

You might opt for supplemental liability insurance if you aren’t protected by a personal policy. Or you might purchase personal effects insurance if you are worried about having items stolen from the rental car (although homeowner’s and renter’s insurance often covers this kind of theft).

Key takeaway: If your credit card or personal insurance policies provide adequate coverage, the additional expenses are probably not worthwhile.

However, if you do decide to purchase insurance from the rental company, be sure to ask about its terms and conditions. What is covered? Which drivers? What’s excluded?

Whatever your decision, it’s crucial to understand what you pay for and what you’re ultimately responsible for when renting a car.