It is absolutely necessary to have motor insurance in the UAE. With more than 200 nationalities driving in Dubai, quality of driving is variable and accidents do occur. In case you have caused an accident resulting in a fatality, you will be liable to pay diya (blood money) to the family of the deceased. Diya sums can range from AED 200,000 to AED 500,000 in addition to fines for damage to public property. If you are unable to pay, you may face a long prison term.
With proper motor insurance in place, you can protect yourself from such eventualities, assuming also that you are driving with a valid UAE driving license, have not consumed alcohol or drugs and your car is legally registered. There are also rare instances of injuring/killing a camel/goat etc for which diya will need to be paid to the owner.
The most recommended motor insurance is to have comprehensive motor insurance, though if your car is very old, the very least is for you to have a third party motor insurance. A comprehensive motor insurance will usually cover your own car from accidents, fire, explosions, burglaries and vandalism as well as offer third party coverage for death or injury to a third party or damage to his/her car or property.
Before finalizing your comprehensive motor insurance, you should check all clauses and the fine print, since motor insurance policies may differ when it comes to geographical coverage (recommended to have Oman coverage since there are some Omani enclaves within the UAE and GCC if you drive to neighbouring GCC countries), coverage for driver’s household members and passengers including employees, medical expenses coverage, agency repair, roadside assistance, temporary replacement car, a no-claim bonus when renewing your insurance and whether the policy covers off-road driving for 4WD vehicles.
From August 2010, the RTA has made it even more convenient for car registration by permitting 5 insurance companies to do car registration while you are doing your motor insurance. If your vehicle is more than 3 years old (newer vehicles need not be tested), you can get your vehicle tested at Tasjeel or other authorized tests centres and then proceed to RSA Insurance, Fujairah Insurance, Oman Insurance, AXA Insurance and Noor Takaful Insurance for car registration and insurance. Do note that other insurance companies listed in private links can also offer motor insurance.
From October 2014, motor insurance companies have a shared database to determine insurance premium based on the accident history of the motorist, rather than previous general parameters such as age, nationality and driving experience.