The Central Bank of Bahrain has issued a resolution regarding the Unified “Own Damage” Motor Insurance Policy (the comprehensive insurance policy), similar to the resolution on the Unified Compulsory Third Party Motor Insurance Policy.

The new 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, a statement said.

The third party resolution has contributed to resolving many complaints and has unified the procedures on dealing with claims arising from the compulsory third party motor policy, said the statement.

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, it said.

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.

Abdul Rahman Al-Bakr, executive director of the Financial Institutions at the CBB, said: "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." - TradeArabia News Service