Question: Three months ago, my car was involved in an accident and was declared a 'total loss' by the insurance company. Two months ago, they offered me a compensation amount of Dh20,000; however, I have yet to receive the payment. In light of this delay, am I eligible to claim additional compensation?
Answer: In response to your inquiry, the provisions outlined in the Insurance Authority's regulations and the Unified Motor Vehicle Insurance Policy against Loss and Damage, as issued by the Central Bank of the UAE, apply in this case.
Under UAE law, when a vehicle is deemed a total loss following an accident, the insurer is required to replace the damaged vehicle unless the insured requests compensation in cash. If such a request is made, the insurance company is obligated to consider it. This is stipulated in Chapter 2, Article 2(c) of the Unified Motor Vehicle Insurance Policy Against Loss and Damage, as outlined in Insurance Authority Board of Directors' Decision No. (25) of 2016:
"Chapter 2: Obligations of the Insurance Company
2. Upon the occurrence of an accident, the company shall:
c. Replace the damaged motor vehicle in the event of a total loss, unless the insured requests the company to pay the equivalent amount in cash. In such cases, the company shall respond to the insured’s request.
Furthermore, when a total loss occurs, the insurance company is required to settle the compensation within 15 days from the completion of the claim documents. If the company fails to settle the claim within this time frame, without providing satisfactory reasons to both the claimant and the Insurance Authority, it must compensate the beneficiary for any costs incurred due to the delay. This is specified in Article 7 of the Insurance Authority Board of Directors' Decision No. 25 of 2016:
Article 7:
- The company shall promptly pay the compensation amount according to the relevant policy within 15 days from the completion of the claim documents.
- If the company delays payment for more than 15 days from receipt of the completed documents without valid justification, the company shall compensate the beneficiary for any costs incurred due to the delay.
- Compensation shall be based on the motor vehicle’s market value, as determined by the agreement between the company and the insured, or based on an expert's evaluation or average market value from licensed showrooms.
Based on these provisions, the insurance company is obligated to settle the claim within 15 days of receiving the necessary documentation. Since your compensation has been delayed for over two months without a reasonable explanation, you may be entitled to additional compensation for any costs incurred as a result.
To address the issue, we recommend contacting your insurance company directly to request an explanation for the delay. If you do not receive a satisfactory response, you can escalate the matter to the UAE Insurance Authority for resolution. Should there be no amicable settlement, you also have the option of pursuing legal action through the relevant court in the UAE with jurisdiction over such matters.
News Source: Khaleej Times
