Important motor insurance terms for Dubai
If you're new to motor insurance, you may be confused about some of the terms that are normally used in policy documentation and the industry at large. With this in mind, Johnedwardkelly Dubai has prepared the following list of terms and definitions to help you familiarize yourself with motor insurance terminology.
- Betterment: This is a feature that is found more commonly among car insurance policies versus other types of insurance. The term refers to a clause which states that if the value of a damaged piece of property (your car) increases after it is repaired, an insurance policy will not reimburse the value of the increase beyond the value of the part before the accident.
- Broker: An insurance broker is an individual or company that sells insurance as an intermediary between clients and multiple insurance companies. Plans are sold for the same price as customers would get from purchasing through the insurance company directly, as the broker is paid by the insurer and not the insured.
- Claim: A claim is made when an insured person actually makes use of their insurance. By submitting a claim form, the insured makes a formal request for reimbursement as dictated by their insurance policy documentation.
- Comprehensive: Also commonly referred to as Comprehensive car insurance. This type of insurance includes coverage not only for other people that you may get into an accident with but also the people in your vehicle and your vehicle itself. It is considered to be the most insurance coverage that you can obtain.
- Deductible: This is an amount of money that must be paid by the insured before a claim can be made against their insurance policy. For instance, if repairs for damage to your vehicle cost $5000 and your policy has a $500 deductible, you must pay the first $500; the insurance company will cover or reimburse the remaining $4500 (or the amount up to the limit of your plan).
- Depreciation: This refers to a general loss of value that occurs over time. When it comes to motor insurance, your vehicle's value will depreciate over time with use.
- Excess: Excess is a term is used interchangeably with 'deductible'. Please see the definition above.
- Exclusion: Insurance policies frequently mention specific items that they will exclude from covering (not cover). For example, any damage to your vehicle sustained while a person was driving under the influence of alcohol, or damage caused in another country. Note: These will vary by insurer and plan, so be sure to read your car insurance policy documentation before purchasing it.
- No Claims Discount (NCD): This is a discount that is given for driving for an extended amount of time without making a claim on a motor insurance policy. It can vary depending on the insurer, but an NCD generally starts after a year or more of safe driving. The longer that the insured goes without a claim, the greater the discount, with most discounts being applied at renewal.
- Policy period: This refers to the length, and thereby end date, of an insurance policy.
- Premium: An insurance premium is just another term for the cost of an insurance policy. It is generally paid either monthly or annually.
- Renewal: At the end of a policy term comes the policy renewal. This is the process of starting a new policy term, and may result in changes to policy benefits and associated premiums. It is important to ensure that you renew your plan before the end date of your plan in order to ensure continual legal cover.
- Third party liability: Also referred to as 'Third Party Only' in Dubai. This is the minimum level of cover that a motor insurance policy provides. It is often required by law, as is the case in Dubai. Third party liability insurance provides coverage for damage or injury to third party individuals and their property through your fault. It does not provide coverage for damage or injury to your or your property through a fault of your own.
- Underwriting: This is the process that insurers go through to determine what your insurance premiums will be. An insurance professional known as an underwriter will analyze your information and set the premium based on your perceived risk to the insurance company.
- Waiting period: A waiting period is an amount of time that must pass before an insurance policy is able to be claimed against. While these are rare in motor insurance, they are frequently seen in other types of insurance, such as health insurance.