Auto Insurance

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Types of car insurance in Saudi Arabia

Third party insurance: This is the mandatory insurance type for the vehicle and the user. The third-party insurance covers all liabilities of the driver for up to three people. Remember that the 300,000 Saudi riyal applies for one person. With the third-party insurance, the driver protects his liabilities for three people that may suffer consequences of an accident. The application of the insurance takes place when in a car accident the responsibility is the first driver that has the insurance. In the case the responsibility is the third driver, the first driver does not use its insurance, but the insurance of the third person. In the case the third person does not have car insurance, the blood money rule applies for the third driver, and the Kingdom takes responsibility for the first driver. One of the extra services included in the third-party insurance is the travel assistance service to help the driver if the car fails in road.

Comprehensive insurance: This insurance includes the third-party insurance and all the related expenses for both drivers and vehicles. The comprehensive insurance includes all the reparations maintenance of the vehicle inside the insurance time coverage. Many insurance companies do not insure vehicles with more than ten years because the depreciation value of the car is near zero and the maintenance and repair costs of old cars are higher than the new cars. The comprehensive insurance is not mandatory for the drivers, but it is mandatory for new car acquisitions, especially in credit transactions where a bank supports the user to buy the new car. The bank requires collateral to support the financial operation, and the collateral is the value of the comprehensive insurance which is proportional to the car price.

Points needs to be considered when filling a claim:

- Whether you file a claim depends on many factors, including the extent of the property damage, the amount of your deductible and whether there were injuries.

- Who you file the claim with (the other driver’s insurer or your own) depends on, among other things, who is at fault, the insurance coverage in place and whether you live in a no fault state.

- Your premiums typically will go up if you caused an accident and you or someone else files a claim with your insurer.

- filing an inflated claim, filing a false claim, or making a claim for a loss that occurred before the coverage was in place Is serious crime.

- Policyholders have options for disputing what they believe is an unfair settlement amount or an unjustified denial of a claim.

(Delbridge, 2016)

Filling a claim procedure

The claim is filled one an event occurs; that is for a car accident that affects a third person or material goods (private or public). The process starts with a phone call to the insurance broker or insurance company call center to report the incident to the exact location, date and the people in the event. The first call opens the event file, and it will be a user in favor or against the policyholder. Once the report is ready, the insurance company coordinates with the Kingdom authorities to send the required personnel to assist the event: firefighters, police, paramedics, car Crane and others. After the event, the insurance company has 30 labor days to give a response to the people and goods affected in the event.

Analysis and discussion

Accidents in Saudi Arabia and legislation:

Saudi Arabia has one of the highest accident-to-trip ratios in the Arab region. Currently, almost twenty people per day die in Saudi Arabia due to car accidents (JIFFRY, 2013). In other numbers 23 deaths per 100,000 people, the highest ratio in the Arab region. The previous condition makes necessary to acquire car insurance to protect the responsibility of the driver and the car itself. The value of car accidents is 20 times higher than domestic and industrial accidents.

The Islamic rules referred to the responsibility of one person in someone else death are known as blood money. In the case of a car accident when a third person dies, the first person has an obligation to pay 300,000 Saudi riyals or the equivalent of 100 camels. Without car insurance, the person must pay that penalty or hanged to death. The death penalty is legal in the Kingdom of Saudi Arabia and allowed in the constitution.

The high possibility of the participation in a car accident by any driver in the kingdom of Saudi Arabia is an incentive to acquire an auto insurance policy

Conclusion

Insurance is a large investment and you will most likely purchase multiple policies throughout your lifetime. It is important that you know what each type of Auto insurance covers and how it works so you can make the best decision about what to buy and not basing your decision on what is cheapest, but on what benefits it provides.

Policies that do not meet your needs is just a waste of money, but the right insurance policy can protect you and your family from unforeseen accidents

Take the time to look around and find the right vehicle insurance for your situation. People often say they cannot afford insurance, but the reality is that they cannot afford not to have it. It can save them liabilities and from thousands or more dollars in unplanned expenses when unexpected situations arise.

References

Anon., 2015. What is the purpose of auto insurance?. [Online]

Available at: http://www.onlineautoinsurance.com/learn/purpose-of-auto-insurance.htm

[Accessed 29 11 2016].

Anon., 2016. What is auto insurance?. [Online]

Available at: http://www.iii.org/article/what-auto-insurance

[Accessed 20 12 2016].

Anon., 2016. What is the purpose of auto insurance?. [Online]

Available at: http://www.onlineautoinsurance.com/learn/purpose-of-auto-insurance.htm

Delbridge, E., 2016. Is car insurance a scam?. [Online]

Available at: https://www.thebalance.com/what-is-car-insurance-for-527458

[Accessed 27 11 2016].