Why Car Insurance is Expensive | Main Reasons for Costly Insurance
We all know that car insurance is mandatory in countries like the UAE and Japan. We have already discussed why it is compulsory. If you cannot recall, just know that car insurance offers numerous advantages to the policyholder. Now, we get numerous queries from our customers and readers. We try to respond to each and every one of them. Lately, one question is getting our attention – why is car insurance in the UAE more expensive than in other countries?
Some of our Japanese friends are sending specific queries like ‘why car insurance in UAE is more expensive than in Japan?’. These are questions which are difficult to answer in a few lines. It is why we have decided to answer them through a blog post. There are numerous factors which impact the insurance premium. We discussed them in detail before.
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Today, we will focus on which specific factors make car insurance more expensive in the UAE as compared to Japan and other countries. Remember, the information we are about to list is not from any official source. Instead, much of it is from our experience working in the car insurance sector and our research. Let’s start the discussion.
1. Type of Policy
What many people fail to realize is that there are numerous car insurance policies available in the UAE. Unfortunately, they do not undertake extensive research and end up buying insurance which is not in line with their requirements. For instance, a person who drives rarely does not need comprehensive car insurance. Therefore, if you feel that you are paying too much, evaluate your policy.
The language can also be a barrier for many people. Let’s consider the Japanese. While it is certainly easy for them to communicate with insurance companies in Japan, it can be difficult to do the same in the UAE. Hence, they might shy away from discussing more openly with insurance companies. The result? Foreigners end up buying an insurance plan which is not suitable for their needs due to communication gap.
2. Driving Record
What many people fail to comprehend is that the UAE laws regarding traffic are stricter than most countries. Much of it has to do with the Government's vision to bring mortalities from car accidents to zero. As a result, one can see that the relevant departments are regularly running awareness campaigns regarding road safety. Perhaps, UAE is the only place where you will so many campaigns being done in a single year. Due to a wide variety of laws and their strict application, many car owners find them on the wrong side of the law, which leads to fines and black points on the license. The result? An increase in your car insurance premium.
3. Making Frequent Claims
During our research, we noticed that Japanese people are unlikely to make claims for minor accidents. The same cannot be said for the UAE. Unfortunately, due to the high number of claims, UAE insurance companies set a higher starting premium than their Japanese counterparts. However, there is no cause for alarm as your premium would drop once they realize that you are a safe driver.
4. Age
A person's age is a significant factor in determining the insurance premium. Older people might realize that they have to pay a lot more for car insurance in UAE than Japan. Why? The answer lies in the average age. Japan has a much higher life expectancy as compared to the UAE. Due to it, Japanese insurance companies do not charge unusually higher premiums from older citizens. Older people driving cars is quite ordinary due to the higher average life expectancy. In the UAE, due to the lower life expectancy, car insurers charge higher from older people.
5. Type of Vehicle
Our research reveals that Japanese insurance companies do not use the car make and model to determine the insurance premium. The same is not true for the UAE. In the UAE, insurance companies consider certain vehicles as more prone to accidents than others. Hence, if you own any such vehicle, you will end up paying more.
Wrap Up
There might be numerous other factors that make car insurance in the UAE more expensive than in Japan. However, it is challenging to list them, especially when insurance companies do not reveal the formula for calculating the premium. So, all of the above is based on our experience and research. If you have anything to share regarding what we just discussed, please let us know. Thank You.