The Saudi Arabian Monetary Authority (SAMA) announced, the issuance of a decision to update the standardized policy for mandatory automobile insurance, which is scheduled to take effect as of 15/12/1439 AH, corresponding to 26/08/2018 AD. Among the most notable amendments to the standardized policy for mandatory motor vehicle insurance is that it now covers the driver of the insured vehicle who is 18 years of age or older and holds a driver’s license, contrary to previous practice, as the policy previously did not cover individuals under the age of 21. An obligation was also added requiring the insurance company to deposit the compensation amount after settling the claim directly into the beneficiary’s bank account via the International Bank Account Number (IBAN).
The amendments to the policy also included provisions governing the acceptance of claims based on an enforceable court judgment, allowing such claims to be filed by a natural person, their legal representative, or the legal representative of a legal entity that has suffered damage resulting from an unforeseen riskin the policy (the claimant), or upon the insured’s notification to the insurance company. Furthermore, the mechanism for settling claims for damaged vehicles that are repaired prior to filing the claim was regulated, such that the claimant provides the company with the actual repair invoices, and it is required that the accident be reported by the authorized party and that the company be provided with a vehicle damage assessment report issued by a licensed entity after the accident and before repairs are carried out.
According to the updated document, the timeframe within which the insured must notify the insurance company when making a material change (a change that increases the likelihood of a risk occurring or increases its severity) has been amended to 20 business days, whereas the period was previously ten business days. Conversely, the insurance company must notify the insured if it intends to increase the premium or refund a portion of it in the event of
a premium reduction.
The policy now also covers the insured or the driver if their driver’s license has expired, they caused an accident, and they renewed their license within 50 business days, whereas previously, if the driver’s license had expired and an accident caused by the insured or the driver occurred, this situation was considered one of the cases in which the insurance company was entitled to seek recourse against the insured without granting a grace period for renewal, In addition, the following has been added to the grounds for cancellation under which the insurance company and the insured are entitled to cancel the policy after its issuance: the existence of a replacement insurance policy covering the remaining period of the policy to be canceled.
Under the updated policy, the mechanism for calculating the premium amount refunded to the insured upon cancellation has been modified to be based on the number of days elapsed, taking into account a deduction of administrative fees (up to a maximum of 25 riyals) instead of the cancellation schedule, which was based on the policy’s validity period prior to the cancellation request and the proportional portion of the premium the company is obligated to pay the policyholder. Furthermore, the insurance company is not obligated to pay the remaining premium if there is a claim—related to the policy to be canceled and involving the same vehicle—whose value exceeds the amount to be refunded.
The policy grants the insured the right to file a complaint via the “SAMA Cares” website www.Samacares.sa if the company fails to settle claims within the statutory period without a valid reason, instead of going directly to the committees for the adjudication of insurance disputes and violations. Additionally, the statute of limitations for claims arising from the insurance policy has been amended to five years instead of three years, while granting the insurance company the right, if the vehicle is stolen or forcibly taken, to seek recourse against the party responsible for the accident, or against the insured if the insured fails to notify the competent authorities of the theft, in order to recover the amounts paid to third parties.
According to the amendments made to the standardized policy for compulsory motor vehicle insurance, certain cases of recourse have been moved to the policy’s exclusions. “Cases of recourse” refer to specific risks that, when they result in damage to a third party (the injured party), require the insurance company to compensate the injured party and then recover the amount paid from the insured; As for the exclusions—which are specific risks (not covered by insurance)—when they result in damage to a third party (the injured party), the party responsible for the accident is obligated to compensate them.
Among the most notable cases of recourse reclassified as exclusions in the updated policy are: reckless driving; use of the vehicle in any type of racing, speed trials, or performance tests; or if the vehicle is used in areas where the general public is not normally permitted to drive, such as within airports or seaports, unless the vehicle is used for commercial purposes within the permitted scope, and also in the event that the insured or the driver wrongfully admits liability for the accident with the intent to harm the company, or if the insured colludes with a third party to stage an accident, as confirmed in the accident report issued by the authority responsible for investigating the accident scene; and likewise, if the vehicle is used or operated as a work vehicle; The updated policy also prohibits the insurance company and the insured from agreeing to reduce the limits of liability set forth therein, which establish the minimum mandatory vehicle insurance coverage for civil liability toward third parties in accordance with the terms, conditions, and exclusions contained therein or attached thereto.
