By: Souqalmal.com– Souqalmal.com is a prominent insurance and banking comparison website in the UAE and Saudi Arabia
Souqalmal.com’s latest analysis uncovers increasing price sensitivity among car owners in the country, who are trying to lower their car insurance costs by cutting back on insurance coverage.
Based on an in-depth analysis of consumer behavior on its online car insurance comparison platform, the team at Souqalmal has discovered a steady change in user preferences. As more and more UAE residents face the brutal impact of the current economic slowdown, there seems to be a trend in the thought process of customers when picking out their insurance.
We surveyed 250 car owners across the country and nearly 50 percent of them have suggested that they will be looking at downgrading their insurance cover when it’s up for renewal. This is in stark contrast to the trend observed six months back in October 2019, when only 32 percent of all users on the Souqalmal platform bought Third Party Liability car insurance, with the remaining 68 percent opting for well-rounded coverage in the form of comprehensive car insurance plans.
But these findings aren’t exactly unexpected. The COVID-19 pandemic has translated into financial hardship for many UAE residents. With an undisclosed number of employees facing salary cuts, unpaid leaves and redundancy, and various small business owners grappling to keep their businesses afloat, these are undoubtedly challenging times for many.
According to Souqalmal.com Founder & CEO Ambareen Musa, “People everywhere are coming to terms with their new financial circumstances. The Covid-19 pandemic has definitely left people struggling with their finances, and so it’s understandable that car owners are trying to save wherever they possibly can.”
For the uninitiated, a third-party liability policy is the basic motor insurance requirement mandatory as per UAE law. It provides basic car insurance coverage that covers the car owner’s legal financial liability towards a third party resulting from a car accident. It covers death or bodily injury sustained by a third-party individual and extends coverage to damage caused by the insured vehicle to third-party property.
On the other hand, a comprehensive insurance policy offers far more enhanced protection, covering loss of or damage to the insured vehicle in addition to providing third-party liability coverage.
Typically, the annual premium of a TPL policy could be anywhere between 30 percent to 50 percent of the cost of a comprehensive car insurance policy. This makes the saving potential obvious when you swap your comprehensive policy for a TPL one, but there’s another pressing question that pops up – Will car owners be able to afford the steep expenses of repairing or replacing their car if it gets damaged?
Musa adds, “The danger of trying to save every dirham now on insurance can backfire at a later stage in case of a claim. Most of us do not think anything will happen to us but if it does – we can be at the wrong place at the wrong time and the savings of a few hundred dirhams today leave you uncovered for what can eventually be a total loss on your car.”
Souqalmal recently launched our ‘Insure Now, Pay Monthly’ service which allows customers to pay for their insurance monthly in the hope that this would help residents retain their coverage safely, without having to pay the whole premium upfront. Instead, they can spread those payments over a 12-month period.