UAE Motorists Urged to Check Insurance for Flood Coverage Amid Rising Costs

UAE motorists are being urged to ensure their car insurance policies cover flood damage, following significant rainfall in April that left many vehicles stranded and damaged. The record rainfall, the heaviest since records began in 1949, brought much of the country to a standstill, causing widespread disruption and financial loss.

The heavy showers resulted in abandoned vehicles on flooded roads across various emirates. Many car owners found themselves without adequate coverage for flood damage, resulting in unexpected expenses. Insurance experts are now advising vehicle owners to review their policies and consider comprehensive coverage that includes natural disasters.

Neeraj Gupta, CEO of the insurance comparison website Policybazaar.ae, noted an increase in the number of people seeking comprehensive insurance policies after the floods. He emphasized the importance of ensuring that these policies cover natural disasters.

During the flooding in April, homes and roads were submerged, vehicles were marooned on highways, and flights were disrupted. The UAE Central Bank confirmed that damage to vehicles and homes caused by the rain would be covered under comprehensive insurance policies.

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Mohammed Hamadeh, CEO of Al Ain Ahlia Insurance Company, reported a noticeable shift as more people moved from third-party insurance to comprehensive coverage. He observed that insurance premiums have risen by 20% to 30% due to the increased claims from the flooding.

“The floods caused significant losses for insurance companies, prompting them to raise premiums. It’s a normal market response to increased risk and losses,” said Mr. Hamadeh. “Insurance companies need to protect their shareholder funds and ensure profitability.”

The increase in premiums has particularly impacted electric vehicles, which are costly to repair after flood damage. In some cases, the cost of insuring electric vehicles has doubled.

Julien Audrerie, executive vice president and head of consumer lines and marketing at Sukoon Insurance, explained that the rise in premiums is driven by inflation and the higher cost of reinsurance following the floods. “Reinsurers lost around Dh500 million on motor insurance during the last flood and are now passing these costs to insurers, who in turn pass them to clients,” he said. “Despite the increase, clients are still paying less than pre-Covid prices.”

Ali Adil, a Dubai resident, was shocked when his comprehensive insurance quote for his 2015 Mustang GT jumped to Dh6,000 from the previous Dh1,700. Despite having a clean driving record with no claims, he was told the increase was due to the floods.

Similarly, Mohammed Fathi, who owns a 2018 Lincoln SUV, saw his insurance premium rise from Dh1,200 to Dh1,700. He believes that drivers with no claims and unaffected by the floods should receive discounts.

Insurance companies are now reviewing their policies and premiums to account for the increased risks and costs associated with natural disasters. Motorists are advised to stay informed and ensure their policies provide the necessary coverage to avoid unexpected financial burdens in the event of future flooding.