Vehicle insurance contracts

12 February 2019

Recent Insurance Authority Decision has implications for vehicle insurance contracts in the UAE. With increasing numbers of traffic accidents occurring globally, more people are finding themselves scrutinising the vehicle insurance policies which they periodically conclude with their insurance companies in terms of the extent, volume and scope of the damage covered, and the events and damage which are not covered under the policy, and under which the insurance company has the right of recourse on the insured to reimburse what has been paid by them to third parties.
Insurance Authority
Decision No. 25/2016 As a result the UAE Insurance Authority has issued Insurance Authority Decision No. 25/2016 to consolidate the vehicle insurance documents and introduce a unified
template for vehicle insurance. This Decision forbids any amendments to policies unless they are in the best interest of the insured. It also states insurance companies should act in good faith when issuing a policy and dealing with clients. They are also required to abide by the main principle of the insurance industry to adapt the principles of disclosure and transparency and provide
clear and precise information to insurance applicants, the insured and beneficiaries.
Insurance Not Provided
The Decision also states cases where insurance will not be provided. These are for accidents which occur outside the State borders, which have occurred, been caused, resulted or are related directly or indirectly to natural disasters like floods, hurricanes, volcanoes or earthquakes, and invasion, foreign enemy hostilities or warlike operations (whether war has been declared or not), civil war, strikes, riots, civil commotion, mutiny, rebellion, revolution or insurrection. Insurance will also not be provided in cases of ionising radiation, contamination by radioactivity from any nuclear fuel, power usurpation,  confiscation or nationalisation, radioactive substances and radioisotopes, atomic or nuclear explosions, or any element related directly or indirectly with these
In such cases accidents which occur to the insured, the motor vehicle driver or a person employed by the insured if they are injured during and because of work, will not be covered unless they have obtained additional coverage under a rider or another policy.
Insurance companies also have a right of recourse against the insured in ten specific cases after the payment of compensation.
These are where it is proven the insurance was concluded based on the insured’s misrepresentation or non-disclosure of material facts which affect acceptance by the company to cover the risks or
determination of the premium, if the motor vehicle is proven to have been used for purposes other than those set out in the insurance application attached to the policy or if the maximum number of passengers has been exceeded.
This also applies if the vehicle was overloaded or its load was not correctly secured or exceeded the permissible limits of width, length or height, or if it is proven the vehicle was used in a speed race or test (in impermissible cases), provided this is proven to be the proximate cause of the accident.
Recourse is also provided if the violation involves a wilful felony or misdemeanor, under the Penal Code (Federal Law No. 3/1987), if it is proven the vehicle was driven without a driving license for its required type under the Traffic Laws and Regulations and the provisions of this Policy, or if the license granted to the insured or driver was suspended by a court’s order, by the concerned authorities or by virtue of traffic regulations.
If the driver’s driving license had expired at the time of the accident, unless they manage to renew it within 30 days of the accident date, recourse is possible.
This is also the case if it is proven the driver, or another person  allowed by them to drive the vehicle, caused the accident while being in an abnormal condition due to being under the influence of narcotics  or alcohol which undermined their ability to control the vehicle or if they had taken medical drugs for which driving is medically prohibited. In case of rental vehicles, recourse is made
against the motor vehicle driver (or renter), if it is proven the accident occurred intentionally by the insured or the motor vehicle driver, if a trailer, half-trailer or semi-trailer caused an accident and the Insured has not agreed with the company to include it in the policy. Recourse can also take place if the motor vehicle is used outside the road, as defined in this policy, without any additional coverage. However, if damages occur to an injured third party as a result of theft or robbery of the insured motor  vehicle, recourse will be against the thief only.

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