CBB resolution on motor insurance

The Central Bank of Bahrain has issued a resolution on the unified ‘Own Damage’ Motor Insurance Policy (the comprehensive insurance policy).

It is similar to the resolution regarding the Unified Compulsory Third Party Motor Insurance Policy, that has unified procedures on dealing with claims arising from the compulsory third party motor policy.

The resolution has been issued to provide insurance products on sound and fair grounds and mainly to set the minimum benefits that cover the needs of the motor policyholders. The CBB, in consultation with the Bahrain Insurance Association, has included the most important benefits and coverages to identify the basis for settling claims.

Rate

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

The insurance company is obliged in the event of a covered damage occurring within 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 will also indemnify the insured for the damage caused to the vehicles’ windscreen, including the damages caused by weather and climate with a limit of BD300 after charging the applicable compulsory excess.

The resolution also indicates 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 per cent 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 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 BD50 will be calculated as a compulsory excess amount if the value of the vehicle is BD20,000 or less, and if the value of the vehicle ranges between BD20,000 and BD50,000, 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 BD50,000.

Value

An additional excess amount would be applicable on the insured (ranging from BD50 to BD200 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 holding a driving licence (recognised by the 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. 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.

Source: http://www.gdnonline.com/Details/749572