From November 1, 2020, the enforcement of the new regulations for comprehensive insurance of motor vehicles financially leased to individuals announced by SAMA is expected to begin.
The aim of the new rules is to oversee the contractual engagement between leasing companies and their individual clients in relation to insurance coverage for the financially leased vehicles.
Under Saudi Arabia’s traffic regulations, motor insurance is a mandatory requirement. However, there are two main subcategories of motor insurance in the Kingdom. These are:
Under this cover, the policyholder is protected from financial liabilities as a result of damages caused to third parties when the car is either in use, or stationary.
This cover is required to compensate third parties according to the terms and conditions set in the policy for all the sums that the policyholder is obligated to pay such parties. They include:
This policy is designed to provide coverage against damage caused to the insured vehicle, as well as the property of others in case of an accident.
Usually, the policy covers:
Additional coverage options under this policy include:
This is a type of motor insurance policy focused on covering vehicles that are owned under a leasing contract between a lessor and a lessee.
Essentially, an insurance provider commits to indemnify the beneficiaries of the insurance cover in case of damage or loss resulting from a risk covered under the policy from a premium paid by the lessor and lessee identified in the policy schedule.
Under this policy, the maximum limit of the insurer's liability for one event, as well as, during the lifetime of the Policy should not be more than SAR 10,000,000 (Ten Million Saudi Riyals) when indemnifying claims for physical and material damages, as well as expenses combined.
This policy is the focus of the new SAMA regulations for Comprehensive Motor Insurance.
SAMA directs that from November 1, 2020, any vehicle owned under a financial leasing contract shall be insured subject to the new rules.
The insurance coverage including policy conditions, provisions, or exclusions shall not exceed the minimum limits set by these new regulations.
Some of the key changes include:
Due to these changes, IHC team has been working extensively to develop unique and efficient solutions for our clients who sell leased cars. By integrating our advanced Tech solutions and leveraging our expertise and relations with insurance providers, we are able to develop customized solutions for our clients that can minimize the impact of change for them, and provide multiple financial, operational and technical benefits. All of these solutions are focused on our client’s competitive advantages, and full compliance with the new rules.