UAE car insurance: The truth about 'no claims discounts'

Your no claims discount doesn't drop to zero if you make a claim in the preceding year, writes Souqalmal founder and CEO Ambareen Musa
By Ambareen Musa
Thu 19 Apr 2018 10:49 AM

If you own a car and have a car insurance policy, you must be familiar with the concept of no claims discount or no claims bonus – a discount you can get on your car insurance premium at the time of policy renewal.

A no claims discount is like an award that you get for not making any claims during the policy term and is a reliable way to save on your next car insurance premium.

The Souqalmal.com team explains how the discount works, how much you can save with it, what could jeopardize it and how you can safeguard it…

No claims discount equals big savings

A no claims discount adds up overtime and the more years you go without making a claim, higher the discount you can get on your car insurance premium.

In accordance with the UAE Insurance Authority Board of Directors’ decision No. 41 of 2017, drivers with a no-claim record of one to three years are entitled to an assured reduction in premium ranging between 10 and 20 per cent upon renewal of their policy.

Some insurers may even extend this discount up to 50 percent depending on the driver’s risk profile which takes into consideration their age, lifestyle and profession among other factors.

Will you lose your no claims discount if you make a claim?

Contrary to popular belief, your no claims discount doesn’t drop to zero if you make a claim in the preceding year. Insurance companies use a step-back scale to reduce the discount at the time of renewal, in case a claim arises. This ensures that a single accident doesn’t eliminate your right towards a no claims discount.

But there is no standard formula, and this scale varies from one insurer to another. It would be worthwhile to check with your Car insurance company about this.

Protecting your no claims discount

No claims discount protection is an optional add-on that is offered by some insurance companies in the UAE. This feature, which is available at an additional premium, helps safeguard your no claims discount in case you make a claim in the preceding year, subject to several limitations.

The rules regarding no claims discount Protection vary from one insurance company to another.

While some insurance companies might allow you to retain your discount even if you make multiple claims (up to a pre-specified amount), others might limit the number of at-fault claims. This, however, does not mean that your insurance premium would not increase in the following year, since the claim will be reflected in your history.

Transferring your no claims discount

No claims discount is associated with the driver and not the vehicle. It means that the discount can be transferred if you choose to switch your insurance provider or your car.

For this purpose, insurance companies provide the 'No Claims Certificate' free of charge, in accordance with the UAE Insurance Authority regulations that came into force earlier in 2018.

Key points to note

• No claims discount is only obtainable at the time of renewal of policy.

• It is linked to the driver and not the car.

• An existing no claims discount can be applied to your second car as well, if the main driver remains the same.

• In case of an at-fault claim, some or all of your no claims discount may be forfeited if your insurance company is required to pay out. In case of a no-fault claim, your insurer may retrieve the payment from the other party’s insurance company and your no claims discount may therefore remain unaffected.

It’s worth noting that each insurance company differs in terms of rules related to no claims discount and offers different rates of discount as well as benefits. It’s best to inquire about the insurer’s policy on the matter for a thorough comparison before you commit.


Souqalmal founder and CEO Ambareen Musa.

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