Car insurance is a crucial aspect of owning a vehicle, but it can also be a complex and confusing topic for many people. One aspect of car insurance in Dubai or the UAE that often raises questions is deductibles. To effectively reduce the cost of insurance and car repairs over the long term, it's crucial to have a thorough understanding of car insurance deductibles. Let’s learn about car insurance deductibles in the UAE in simple terms. 

What is the Deductible in Insurance?

A deductible is an important component of insurance policies that outlines the amount of money the insured person must pay when submitting a claim to the insurance company. This amount acts as a form of cost-sharing. This is where the insured shares responsibility for covering a portion of the expenses incurred in the event of a covered claim. In the case of a car insurance policy, for example, if the cost of repairs was 5000 AED and the deductible was 1000 AED, the insured would need to pay the first 1000 AED before the insurance company would start covering the remaining 4000 AED.

It is important to note that in some cases, additional deductibles may apply depending on the cause of the accident and other special factors. The deductible is a key component of insurance policies that helps to determine the cost of insurance coverage. It outlines the amount the insured person is responsible for paying in the event of a covered claim.

Types of Deductibles in Car Insurance

In the realm of car insurance policies, it is essential to note that there exist two distinct types of deductibles: Compulsory deductible and Optional deductible.

Compulsory Deductible

A compulsory deductible in a car insurance policy is a fixed amount that the policyholder must pay out of pocket towards the cost of repairs or replacement of their vehicle before the insurance company covers the rest. This deductible is a predetermined amount set by the insurer, and the policyholder must pay this amount regardless of the total cost of repairs. In exceptional circumstances, the insurance company has the right to impose supplementary deductibles, but these deductibles must not exceed the amounts authorized by the Insurance Authority.

Optional Deductible

An optional deductible, also known as the voluntary deductible, is an additional amount that you can choose to pay when claiming your car insurance policy. This is on top of the mandatory deductible. In the unfortunate event of a car accident, you will be required to pay both the mandatory and optional deductible amounts. Therefore, it is important to ensure that you are financially capable of paying both if needed. Failure to do so could result in the insurance company rejecting your claim. However, selecting a higher optional deductible can lead to a lower annual premium, meaning you can save money on your insurance costs.

What Happens if the Cost of Car Damage is Lower than the Deductible Rate?

In case the cost of car damages is lower than the deductible rate, you will have to cover the repair expenses out of your own pocket, and the insurance company will not contribute any amount. To illustrate, if the car damages cost 500 AED and the deductible rate is 1000 AED, you will have to pay the entire repair cost of 500 AED, and the insurance company will not cover this amount.

Deductibles in Third-Party Insurance and Comprehensive Insurance

In the UAE, car owners can choose between two types of insurance policies approved by the Insurance Authority: third-party insurance and comprehensive insurance. While both policies cover third-party damages, comprehensive insurance also covers damages to the insured's own vehicle. However, comprehensive insurance policies require the insured to pay a deductible for repairs to their own vehicle, regardless of who caused the accident. The deductible amount is not covered by third-party insurance policies, and the insured must bear the cost of repairing their vehicle in case of an accident. So, the higher the deductible paid, the lower the insurance premium for comprehensive policies.

When Do You Have to Pay the Deductible?

If you caused the accident or are partially at fault

When a fault dispute arises

Leaving the scene of an accident or being uninsured by the at-fault party

If the car is stolen or damaged by natural factors

Deliberate vandalism.

Exemption for the Insured Person from Paying the Deductible.


Insurance companies in UAE may waive the deductible if the third party is fully liable for the accident and their information and damages are proven in the traffic report.

The importance of a deductible and factors that determine the rate

Having a deductible in your car insurance policy encourages you to drive safely and protects your vehicle. It also helps to reduce monthly insurance premiums by choosing a higher deductible amount. However, this means less coverage when making a claim, and paying more in an emergency.

Factors that determine the deductible rate include the number of claims made by the policyholder, claims within or outside the country, the driver's age, the market value of the vehicle, and the vehicle's use (private, commercial, or rented). The deductible rate cannot exceed the rates approved by the insurance authority.

What if the Insurer Sets a Higher Deductible than What the Insurance Authority Allows?

Local insurance companies in UAE charge an average deductible of 2.5-3.5% per year for car insurance. However, some customers have reported that some insurance companies in UAE impose high deductible rates. The approved deductible rates are stated in the unified vehicle insurance policy against loss and damage issued by the Insurance Authority. If the insurance company charges a higher rate, you can file a complaint with the Insurance Authority. 

If you need assistance learning more about deductibles in car insurance, you can always connect with, the best insurance broker in Dubai. The expert team of car insurance professionals at will help you find the best car insurance in Dubai for your vehicle and understand deductibles to get the most out of your policy. You can also take car insurance online. Contact today to learn more.

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