Central Bank of Bahrain Issues Resolution in respect of Unified “Own Damage” Motor Insurance Policy (Comprehensive Motor Insurance Policy) and Specifies the minimum benefits of Motor Insurance
Published on 30 January 2020
Media Center  Press Release

Manama, Bahrain – 30 January 2020 – The Central Bank of Bahrain issued Resolution No. (4) for year 2020 regarding the Unified “Own Damage” Motor Insurance Policy (the comprehensive insurance policy), similar to the issuance of resolution No. (23) for the year 2016 regarding the Unified Compulsory Third Party Motor Insurance Policy, that has contributed to resolving many complaints and has unified the procedures on dealing with claims arising from the compulsory third party motor policy.

This resolution has been issued in an effort to develop insurance services in the Kingdom and to provide insurance products on sound and fair grounds and mainly to set the minimum benefits that cover the needs of the motor policyholders. Based on that, the CBB in consultation with the Bahrain Insurance Association, has studied the issuance of this resolution to include the most important benefits and coverages and at the same time to identify the basis for settling claims for this type of insurance.

The CBB expects insurance companies to provide this policy at a reasonable competitive rate with a possibility to add other benefits that enhance the insurance coverage offered to customers, subject to proper endorsement detailing the additional coverages and benefits. This resolution also indicated that insurance companies are prohibited from changing any provisions that violate the principles of the obligations of both the insured and the insurer.

According to this policy, the insurance company is obliged in the event of a covered damage occurring within the Kingdom of Bahrain during the policy term, and in accordance with the attached provisions, to indemnify the insured against loss of or damage to the Motor Vehicles and its accessories and spare parts, if it results by accidental collision or overturning or consequent mechanical breakdown or consequent upon wear and tear, and in the event of a fire, self-ignition or lightning or burglary, housebreaking or theft, by malicious act and whilst in transit (including the process of loading and unloading, incidental to such transit) by road, lift or elevator.

The company also will indemnify the insured for the damage caused to the vehicles’ windscreen, including the damages caused by weather and climate with a limit amount of BD 300 after charging the applicable compulsory excess.

The resolution also indicated the way in which the vehicle’s value (sum insured) is calculated, as the value of the vehicle will be determined for the first year of its life according to the value of the vehicle at the date of purchase, and the value of the vehicle’s insurance for the next two years will be reduced by no more than 15% annually, but for the value of the vehicle’s insurance after the third year, it is determined by the company with the approval of the insured, or based on the report of a technical expert and with the consent of the insured.

The resolution specified the excess amounts according to the type of vehicles, as the insured should bear the costs of repairs for each accident of the vehicle according to the type of classification in the event of his responsibility for such accident, except for training and driving vehicles and other vehicles that will be according to the agreement between both parties, while the insurance company is obliged to pay what more than this amount.

As for private vehicles, an amount of BD 50 will be calculated as a compulsory excess amount if the value of the vehicle is BD 20,000 or less, and if the value of the vehicle ranges between BD 20,000 to BD 50,000, the excess amount is BD100. However, the excess amount should be agreed on between the company and the insured should the vehicle value is more than BD 50,000.

With regard to the additional excess, the resolution indicated that in addition to the compulsory excess an additional excess amount would be applicable on the insured (ranging from 50 dinars to 200 dinars and according to the value of the vehicle) from the repair costs for each accident in the event he is responsible for the accident if the vehicle was driven by any person who has not exceeded the age of 21 years, or was at the time of the accident holds a driving license (recognized by General Directorate of Traffic) which has been in force for less than one year.

In addition, this Unified motor policy specified an amount of BD100 to be applicable on the insured from the costs of repair for the accident caused by unknown person.

Mr. Abdul Rahman Al-Bakr, the Executive Director of the Financial Institutions at the CBB stated: “these compulsory and additional excesses amounts referred to in the policy are relatively lower than what is currently practiced in the insurance market and may vary from one company to another and from one type of insurance coverage to another based on the insurance coverage offered by companies to the public. Accordingly, the resolution has set and unified the value of such excesses”.

As for the settlement of claims, this resolution will be subject to the provisions contained in procedures on dealing with claims arising from the compulsory third party motor policy issued in Resolution No. 23 of 2016. However, in the event that the company cannot provide used spare parts in good condition within two weeks and the insured caused the accident, the company is obliged to provide new spare parts, with deducting any applicable depreciation. In the event that there are no original or used spare parts available for the vehicle, then a cash amount will be paid as a final settlement of the claim, including the amount of the repair cost and the total cost of the new original spare parts after deducting the applicable depreciation.

The resolution  also includes a special section explaining the exclusions where the company will not be responsible for compensation in certain cases, including indirect loss and consumption or a decrease in the value of the vehicle or the result of overloading or pressure, damage that occurs as a result of loading flammable materials, the coup resulting from an increase in the number passengers or cargo from the legally prescribed, the insured’s providing false information, compensation for fines and penalties, or the insured or the driver has intentionally bypassed the red signal, and if the vehicle is intentionally going against the direction of driving, or in the case of the insured escaping from the scene of the accident, accidents occurring outside the geographical area of Bahrain, whilst the driver under the influence of alcohol or drugs at time of accident.

The policy also excludes loss, damage or liability caused by floods or storms and violent disturbances of nature, war, terrorism, nuclear weapons or radiation, and nuclear, biological and chemical pollution.

Mr. Al Baker added “The insured can request to cover some exclusions from the policy subject to additional premium. In addition, the insured may add and request some additional services that are not included in this policy, for example alternative vehicle or roadside assistance services, as well as in the event of a total loss, to cover the difference between the compensation value and the value of any financial obligations to financing parties to be covered by the policyholder, all of which can be provided by insurance companies with additional premiums”.

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