UAE: Can a car owner request for additional damage compensation due to insurance’s settlement delay?

Queston: Three months ago, my car was involved in an accident and was deemed a ‘total loss’ by the insurance company. Two months ago, they offered me a compensation of Dh20,000, but I have not yet received the payment. Given this delay, can I claim additional compensation?

Answer: In response to your query, the provisions of insurance authority decision and the unified motor vehicle insurance policy against loss and damage issued by the Central Bank of UAE are applicable.

In the UAE, in the event of an accident, the damaged vehicle must be replaced if it is deemed a total loss, unless a request is made by the insured to receive the equivalent amount in cash. In this case, the insured’s request should be taken into consideration by the company. This is in accordance with the Chapter Two, Article 2 (c) of the Unified Motor Vehicle Insurance Policy Against Loss and Damage issued pursuant to the Regulation of Unified Motor Vehicle Insurance Policies according to Insurance Authority Board of Directors’ Decision No. (25) of 2016:

“Chapter two: Obligations of the Insurance Company

2. Upon the occurrence of an accident, the Company shall:
3. Replace the damaged Motor Vehicle in case of a total loss, unless the Insured requests the Company to pay them the amount in cash. In this case, the Company shall respond to the Insured’s request.”

Furthermore, in case of the total loss of the motor vehicle, an insurance company should pay the compensation within 15 days from the date of completion of the claim documents. If an insurance company delays settling the claim for more than 15 days from receiving the required claim documents, without providing satisfactory reasons to both the injured party and the Authority, the insurance company may compensate the beneficiary for any costs incurred due to such delay. This is in accordance with the Article 7 of the Insurance Authority Board of Directors’ Decision No. 25 of 2016 Pertinent to Regulation of the Unified Motor Vehicle Insurance Policies.

“In case of total loss of the motor vehicle, the company shall:

1. Promptly pay the amount of compensation, as the case may be, according to the relevant policy within a period not exceeding fifteen days from the date of completion of the claim documents.
2. If the company delays settlement of the claim for more than fifteen days from the date of receipt of the completed claim documents without giving convincing justifications to the injured party and the Authority, the company shall compensate the beneficiary of the coverage stated in the insurance policy for any costs suffered by them as a result of deprivation from the damaged motor vehicle.
3. Pay compensation for the value of the motor vehicle according to the agreement between the company and the insured in the insurance policy against loss and damage.
4. Compensation will be made on the basis of calculation of the market value of the motor vehicle for the damage covered by the motor vehicle insurance policy against third party liability, by an expert or by setting the average value of three proposals from licensed motor vehicle showrooms in the State.”

Based on the relevant provisions of law, an insurance company must settle compensation for a total loss within 15 days of receiving all required claim documents. However, since your compensation payment has been delayed for more than two months without a reasonable explanation, you may be entitled to additional compensation for any costs incurred due to this delay.

To address this issue, you can begin by contacting your insurance company to request an explanation for the delay. If you are not satisfied with the response, you may approach the Insurance Authority of the UAE to seek an amicable resolution. However, if there is no amicable settlement, you have the opton to take legal action by filing a case through the relevant court in the UAE that has jurisdiction to resolve the matter.