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Recent reports indicate that UAE car owners will continue to face higher car insurance premiums into 2025. Despite initial expectations for a slowdown, motor insurance renewals in January and February 2025 were observed to be 15%-20% higher than those from the previous year, a trend that appears to persist until at least June.

Premium Hikes

Car insurance UAE premiums have been on an upward trend for the past three years. In January and February of 2025, the average renewal rates were reported to be 15%-20% higher than the previous year. Industry insiders point to the cautious pricing strategies of insurers, influenced by last year’s claims and losses as a key factor behind these persistent increases.

The rising costs are not limited to comprehensive policies alone, even those on Third Party Car Insurance are feeling the pinch. As insurers strive to balance their financial books amid a challenging claims environment, higher premiums are becoming the new normal.

Impact of April 2024 Floods

One event that significantly disrupted premium calculations was the severe flooding in April 2024. The rains led to extensive damage, forcing insurers to adjust their policies drastically. Vehicles that incurred even minor damage during the floods saw immediate premium hikes in the range of 20%-30% upon renewal. Meanwhile, even vehicles that didn’t file a claim experienced increases between 5%-15%, depending on factors such as vehicle model and age. For those who opted for agency repairs, the cost impact was even more pronounced.

The flood incident brought up the vulnerability of car insurance to natural events, leading insurers to account for higher repair and replacement costs, especially for vehicles with expensive components. This adjustment has taken a hold on the premiums of all policyholders, regardless of whether they made a claim or not.

What Does This Mean for Different Vehicle Models?

Based on the latest data from industry sources, renewal premiums vary significantly across different vehicle types.

• Toyota Corolla/Nissan Sunny: Comprehensive cover is now estimated between AED 1,200 and AED 1,500.

• Honda Civic/Mazda 6: Similar mid-range vehicles fall within the same pricing bracket.

• Camry/Kia K5: For these slightly higher-end models, premiums are expected to range from AED 1,500 to AED 1,800.

• Land Cruiser/Range Rover Sport: Luxury and high-performance vehicles could see premiums soaring from AED 3,500 to AED 5,500 or more.

• Electric Vehicles (EVs): While EVs were hard-hit during the floods due to high battery repair costs, their premiums have stabilized in 2025, with increases limited to 7%-10% for many policyholders, and some even experiencing flat or slightly lower rates if they have a claim-free record.

Key Factors Behind the Premium Increases

Several factors contribute to the rising motor insurance premiums in the UAE:

• Claim History and Losses: Insurers are pricing in the high number of claims and substantial losses from last year, including those triggered by natural events like the April floods.

• Vehicle Repair Costs: The cost of repairing vehicles, especially those with advanced or luxury features, continues to rise. This is a significant factor in determining the motor insurance UAE pricing structure.

• Risk Assessment: Insurers have become more cautious and are using more sophisticated risk assessment models. These models account for factors such as vehicle age, model, usage, and even geographical location, all of which affect your premium.

• Economic Conditions: General inflationary pressures and increased operational costs for insurers also play a role in premium hikes.

Navigating the Rising Costs

For car owners facing these increased costs, there are a few strategies to consider:

• Shop Around: Regularly compare policies and premiums. The market is competitive, and small differences in coverage can lead to significant savings.

• Maintain a Clean Driving Record: A claim-free history can help you secure discounts and reduce premium hikes over time.

• Review Your Coverage Needs: Evaluate whether your current policy meets your needs or if adjustments could provide a better balance between cost and coverage.

• Consider Bundling Policies: Some insurers offer multi-policy discounts that can reduce the overall cost of your insurance portfolio.

The Road Ahead

While industry experts suggest that a slowdown in premium hikes might occur around June 2025, the immediate outlook remains unchanged. With insurers pricing cautiously based on last year’s claims and losses, car owners should expect to continue paying higher rates for at least the first half of the year.

This evolving scenario calls for proactive management of car insurance policies. Consumers may need to explore tailored solutions or consult with independent advisors who can help navigate these fluctuations and identify opportunities for savings.

Final Thoughts and Policyhouse’s Role

In an environment where car insurance Dubai or UAE premiums continue to rise, affecting everything from basic third-party insurance to comprehensive policies, being well-informed is more important than ever. For car owners navigating these changes, understanding the factors driving premium increases and exploring cost-saving strategies is crucial.

At Policyhouse, we are committed to helping you get through these complicated times. Our platform offers transparent, expert advice to help you compare and select the best motor insurance options available. From policies that balance cost with coverage to offering tailored recommendations based on your unique driving profile, PolicyHouse is here to assist. Our smart technology and long-term partnerships with leading insurers ensure that you receive competitive rates and comprehensive coverage that meets your needs.

Stay ahead of the rising costs and ensure you are getting the best deal on your motor insurance, trust Policyhouse to guide you through every step of the process.