Comprehensive vs Third-Party Insurance in the UAE – Which Should You Choose?

Abu Dhabi: Today, buying a car entails several key steps before you drive the car home. Right after the registration of your car, the next big step is insurance, which is mandatory, and consists of several key decisions. Because not all insurance policies are the same. While choosing the right insurance for your car comes with largely two options: comprehensive and third-party coverage. Both serve perfectly when it comes to protecting the vehicle and you on the roads, however, they do that completely differently.

And making an informed decision is vital, and in recent years, it is visible that car buyers in the UAE have become more aware of what they’re paying for insurance. The cost of repairs is going up, and the demand for comprehensive coverage has grown, particularly for new and expensive cars. At the same time, third-party insurance remains the cheapest legal option for older cars or those on a budget. So, which insurance is right for you? To answer that, we take a closer look to help you make the best decision. 

What Exactly Is Comprehensive Insurance?

Like the name suggests, a comprehensive insurance plan is the full package. This essentially means, it covers damage to your own car, whether the accident was your fault or not. It also protects you against usual mishaps like theft, fire, natural disasters, and sometimes even accidents outside the UAE, depending on the provider.

Let's take an example, if you scratch your bumper reversing into a wall, you’re protected as the policy pays. The same goes for your car being stolen from a parking lot; it’s covered. And if you get caught in one of the UAE’s sandstorms that damages your paintwork, you don’t have to worry; just claim through your policy.

But comprehensiveness doesn’t stop there, and goes beyond that.  Many UAE insurance companies in certain plans now cover roadside assistance, free replacement cars for a short period, or coverage when driving in neighbouring GCC countries. For premium, luxury cars, like BMW, Lexus, or Range Rover, this type of policy makes a lot of sense.

What About Third-Party Insurance?

Third-party liability insurance is the basic legal requirement, and so it covers only damage or injury you cause to other people, their cars, or their property. Your own car is not covered at all.

In other words, if you crash into someone’s Mercedes, their repairs are taken care of. But if your own car is written off, you need to spend money from your own pocket. So why is third-party insurance important, you might ask? They serve a purpose, apart from being legally mandatory and also helping others to get compensation when they are not at fault. 

For car owners, this type of insurance makes sense if you own an older car with low resale value, or if you simply want the cheapest option to get your registration done. In the UAE, many drivers of 7–10-year-old sedans choose third-party cover because it’s practical and cost-effective. 

Cost Comparison: Comprehensive vs Third-Party

While determining insurance costs, there are several factors at play. Such as a car’s value, driver’s age, driving history, and even nationality. To help get a general idea, the table is an indicator.

Type	Average Premium (AED/year)	Best For
Comprehensive	1,500 – 8,000	New cars, luxury vehicles, families, or anyone who wants complete protection
Third-Party	750 – 2,000	Older cars, budget buyers, or drivers who only need the legal minimum cover

Here is the thing: In terms of price, the comprehensive appears to be a lot pricier, but a single accident repair on a modern SUV can cost as high as, say, AED 20,000 or even more. That’s why many buyers opt for a higher upfront cost of insurance to avoid a larger bill later.

UAE Trends in 2025: What Buyers Are Doing

While it is difficult to capture an exact insurance trend in the UAE, it isn’t a static shift every year:

• Uptick in Comprehensive: This is not hard to know why. Today’s cars are equipped with all manner of sensors and electronics, and repairs are exceptionally expensive. Hence, it makes sense to be comprehensive as its coverage is no longer a luxury, but rather a necessity for new cars.
• Stable Third-party: since this is mandatory, old car users prefer this insurance to save money with basic coverage.
• Digital: Digital is a new buzzword in making life easier. This is true with insurance, as most insurers now offer instant quotes and online purchases, which makes life easier with less physical paperwork. 
• Value-added Services: To attract buyers with some extras, insurance companies offer some perks like free replacement cars, roadside recovery, or no-claims discounts.

This clearly underlines the market's rapid preference towards comprehensive insurance; however, third-party remains an option for cost-conscious car owners.

Factors That Should Guide Your Choice

When deciding between the two, think about:

• Car age and value: This is quite easy; if your car price is a lot more, say over AED 50K, comprehensive insurance is perfectly suitable for you.
• Your budget: You should consider the possibility of fixing your car if anything goes wrong. If the answer is no, then comprehensive is the right answer.
• Driving habits: if you’re a new driver or your driving is through busy highways or accident-prone areas, then buying insurance accordingly is what counts for the safety of you and your car.
• Loan requirements: If you finance your car, banks usually insist on comprehensive cover.
• Peace of mind: this is something every car owner prefers, and so having insurance provides not just safety but a lot of peace knowing well that if things go wrong, you can take care. 

Feature	Comprehensive Insurance	Third-Party Insurance
Coverage	Covers your car + others	Covers damage to others only
Extra Protection	Fire, theft, natural disasters	None
Best For	New or high-value cars	Older or low-value cars
Cost	Higher annual premium	Cheapest legal option
Your Vehicle Covered?	Yes	No

Real-World Example

Take two drivers in Dubai. 

Amir just bought a 2025 Nissan Patrol, which costs him AED 250,000. He bought comprehensive insurance for AED 6,500. Let's say about 5 months into his ownership, he gets into an accident, damaging his rear end, which costs him AED 25000. His insurance covered it fully. He is happy with the insurance policy.

Meanwhile, Mohammod owns a 2015 Toyota Corolla, estimated to be priced at AED 18,000. He chose basic third-party insurance for AED 1,000. A minor accident bends his fender, costing him AED 3,000, which he has no option but to pay himself. For him, that trade-off made sense, since the cost is limited. 

Which Should You Choose?

If you own a new or luxury car with a high sticker price, it is not a brainer to choose comprehensive insurance. It is expensive for sure, but then the value you get out of it is worth it for the peace of mind and financial protection.

If your car is older, with little resale value, third-party cover is what you should choose as a practical choice. It keeps your legal requirements fulfilled without much financial commitment.

Largely, most UAE car owners are categorised into these two buckets, while there is no one-size-fits-all answer. But thinking objectively about your car’s value and your budget will guide you toward the right policy.

Conclusion

Car insurance in the UAE is not just legal paperwork; it’s financial protection and safety. Comprehensive insurance is such a great way to keep your expensive car safe and save you from expensive costs with just an annual premium. While third-party, on the other hand, works fine for older, budget-friendly cars. What matters most is being realistic about your car’s value and your ability to handle surprise repair costs. While buying insurance, the focus shouldn’t be only about upfront cost or saving money, but rather about avoiding bigger losses tomorrow.