The Central Bank of Bahrain (CBB) has issued a resolution on the Unified Own-Damage Motor Insurance Policy, in order to develop insurance services in the kingdom, to provide insurance on a sound and fair basis, and to set the minimum benefits for policyholders.
In a statement, the CBB said that in consultation with the Bahrain Insurance Association, it issued the resolution (No. 4 of 2020) to include the most important benefits and coverages and to set out the basis for settling claims for this class of insurance.
The CBB expects insurers to provide the insurance policy at a reasonable competitive rate with the possibility of adding other benefits that enhance the coverage offered to customers, subject to proper endorsement detailing the additional coverages and benefits. Insurers are prohibited from changing provisions of the standardised policy that violate the principles of the obligations of both the insured and the insurer.
According to this unified policy, the insurer is obliged in the event of a covered damage occurring within Bahrain during the policy term, to indemnify the insured against loss of or damage to motor vehicles, accessories and spare parts, if the damage results from accidental collision; overturning; consequent mechanical breakdown or consequent 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 by road, lift or elevator.
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% annually, but the value of the vehicle’s insurance after the third year is determined by the insurer with the approval of the insured, or based on the report of a technical expert and with the consent of the insured.
Excess & claims
The resolution specifies the excess amount 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 he is responsible for such accident, except for training and driving vehicles and other vehicles provided for in the agreement between both parties.
Mr Abdul Rahman Al-Baker, executive director of financial institutions at the CBB said, “The compulsory and additional excess amounts referred to in the policy are relatively lower than what is currently practised 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.”
In terms of the settlement of claims, the 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.
The resolution has included 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, and the insured’s providing false information, compensation for fines and penalties, etc.
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. M