(Newswire.net — January 31, 2019) — Have you got your driver’s license? Obviously, your next plan will be your car hunt. There are plenty of dealers offering pretty good deals so for new buyers, it is a daunting situation to choose the best deal.
Buying a car apparently doesn’t end with car purchases; however, you would need a car insurance (Dubai insurance) to cover your financial losses if an accident occurs.
Increase in VAT is a recent buzzing topic in the car industry. The government has increased VAT for new cars at a standard rate of 5% which has come into effect since January 2018.
Since the revision of VAT prices, the car prices have gone up by a thick margin. For example, if the price of the car was 100,000 AED, now after inflation, the current rate would be 5000 AED in addition to the existing prices.
Perhaps it is not very good news for both sellers and buyers. In fact, buyers consider buying a car as a hefty expense because of the price hike, car insurance Dubai, fuel charges and parking rates. So, consumers are likely waiting to hear some positive news from sellers about deductions to make a worthy purchase.
One of the crucial reason for the increase in Value Added Tax (VAT) is because the country is facing budget deficits due to the decline in oil prices.
The government feels that tax reforms are essential for the country’s well-being and they have made the increase, thinking of low-income families. Although VAT for food items was increased only by 3%, luxury products like cars and smartphones were increased to 5%, impacting both buyers and sellers.
Although car sale has dropped considerably, yet needs and necessities make consumers go for new purchases.
For expats living in the country, car insurance is rather important because of the increasing number of road accidents. Perhaps Dubai is on top of the list when it comes to the percentage of car accidents.
Owning a car is no longer a luxury in these countries because every home has a minimum of two cars. Consequently, commuting takes up a pretty significant amount of time for most people which is truly frustrating for commuters. To cope with the time lost in traffic, drivers are less bothered about their own safety and consequently, drive their vehicles in an impulsive manner resulting in road accidents.
Therefore, it becomes necessary to protect your own well-being. One of the few things you need to do is to buy a car insurance. A very good Dubai insurance policy will not only benefit your own safety but also the safety of the third party to protect you from claims and lawsuits when you are at fault.
Getting the right Dubai insurance is not as easy as you think. You need to know about the different policies, make a comprehensive analysis of each of these policies and go with the right one.
Let us look at the different insurance policies you will need for your car.
Different types of insurance policies which you should know about
With more than 200 nationalities living in the country, the quality of driving differs and accidents are common. Driving without insurance is illegal; therefore it is important to have valid car insurance to protect you and your family from unforeseen accidents.
Here are the major Dubai insurance policies worth considering.
Comprehensive Insurance – This is considered to be the best coverage for keeping you and your car safe. It provides maximum coverage to your car. Perhaps a complete package for your car. Fire, accident, and theft are few of the typical damages that occur to a vehicle. To protect your vehicles against these hazards, comprehensive insurance is a rather good option. Some of the instances covered by this type of policy are:
- Vandalism- like a car being keyed, slashed tires, broken windows which all result as a truly maddening situation to the car owner.
- Cracked windshield – This generally happens when the car is driven on a bumpy road in an aggressive manner. This might result in a small chip across the windshield. However, sometimes you cannot accuse the driver of this instance, because you need to follow the flow of the traffic.
- Animal collision – Although there is less possibility of hitting animals and ending up with injuries, Dubai insurance policy provides coverage for animal collision.
- Natural calamities like fire and flood
- Damage to third party vehicle
- Damage to your own vehicle
Although comprehensive insurance involves major coverage, yet it will not cover instances like damages caused to the vehicle under the influence of drugs and alcohol, wear and tear of the vehicle, damaged tires and a few others.
Third Party Liability insurance – To get your car registered, the minimal requirement, you need to have third party insurance. There are instances, you can cause damage to another vehicle, and you may be at fault.
If you hit a vehicle or individual and caused damages and bodily injuries to the person or vehicle, then you can cover your financial expenses through third-party coverage. Perhaps this insurance is even mandatory by law.
When you understand the difference between the two, your choice can be made simple and fairly right. People who cannot afford to pay a chunk of money on insurance usually go only with the third party insurance coverage.
However, when you feel that you need to consider your own safety and to be prepared to meet the future financial losses in the case of accidents, comprehensive coverage in addition to third-party liability insurance is a good decision.
There are a few companies that offer best deals for insurance
- Dubai National Insurance – It is a promising national public shareholder providing health, medical and car insurance. Procedural terminologies, voluntary add-ons, and surprising exclusions are some of the few things the user often gets confused while choosing a policy. Apparently, Aman insurance company provides comprehensive details about car insurance Dubai and guide the consumer to go for good insurance.
- New India Assurance Car insurance – They are one of the top insurance companies in Dubai because rock the market due to its wonderful policy plans. Apart from on-road coverage, new India assurance also covers for off-road for private vehicles. The most striking feature of this insurance company is that they provide benefits even for rent-a-car options.
- Oriental Car insurance – With more than 15 years of experience in the industry, the company is rated as the top rated insurer. They know how stressful it is when your car is damaged. To manage this costly expense, they recommend good insurance policies to car owners. Their coverage is applicable all across UAE.
Having a widespread knowledge about the Dubai insurance policy, you can go ahead with the purchase of your new vehicle.
On the other hand, the UAE auto sector is facing multiple challenges due to the increased VAT. Because of the increased prices, the traders pretend to be consumers and sell the vehicle through classified ads to avoid paying higher taxes.
Effect of VAT on cars
The application of VAT also depends on the purchase whether you are buying from the dealer or agency. People in UAE are fond of purchasing royal cars, and if you are going to purchase a brand new car from a dealer, then the consumer is subjected to pay 5% of VAT in addition to the actual price of the vehicle. However, when you buy a used car sold through the dealer, you have to pay VAT based on the dealer’s margin.
It is expected that the increase in car prices may have a significant impact on car loans. The banks are charging 5% VAT on loan processing fees. However, banks apparently don’t charge extra on loan installments and interests.
With the increase in VAT prices, the annual cost of car maintenance is on the rise. The car license registration and renewal fees have gone up.
Earlier drivers have to pay 420Dh for registration or for a complete changeover of the vehicle. However, after the price inflation, the user has to pay 200Dh higher for license conversion 220Dh to open a traffic file and 50Dh for handbook manual with an overall increase of 450Dh higher than the earlier price.
In addition, the resident of Dubai has to pay more for fuel consumption because 5% VAT is applicable to petrol, diesel, oil and other products in the petrol bank. Apart from these charges, car maintenance and repair prices have also increased by 5%. Subsequently, purchasing and replacing spare parts has turned to be a costly affair.
Wrapping it up
Buying, selling and owning a car has become little pricier for the people in the Gulf countries. Fear of the Value Added Tax is persisting among most industry players since its debut on Jan 1, 2018. Stakeholders are still not clear with these current challenges and are looking for more clarity. According to experts, VAT will add an additional burden to consumers!