Higher Insurance Costs for Chinese Cars in UAE: Exploring the Reasons Behind the Price Differential Compared to Japanese and Korean Automobiles
Chinese cars taking over UAE roads have been a sight to behold, but their owners have been burdened with higher insurance premiums compared to Japanese and Korean counterparts. It's no secret that Chinese vehicles can cost up to 43% more to insure, and the primary culprits are perceived risks, exorbitant repair costs, and stretched repair timelines.
According to Hitesh Motwani, Deputy CEO at Insurancemarket.ae, the average comprehensive premium for a Chinese sedan or crossover is roughly AED 2,800 to AED 3,000, while Japanese and Korean brands settle at around AED 2,100. This pricing discrepancy has been largely due to weaknesses in repair networks and insurers' risk perceptions regarding Chinese brands.
Repairs for Chinese cars are often costlier and slower because of parts availability delays and a lack of specialized repair shops. Additionally, these cars heavily rely on dealer networks, increasing repair time and sometimes leading to complexity in repairs.
Insurance providers have also grappled with limited historical claims data, making it harder to accurately assess risk. To offset potential increased claim costs, they set higher premiums, further raising the cost of coverage.
However, don’t count Chinese car brands out just yet! As the after-sales service network grows, so too will parts availability and insurance premiums normalize closer to the levels seen with Japanese and Korean cars.
In recent years, confidence and trust in Chinese brands have surged significantly, with many brands making their mark in the UAE market. Today, Chinese brands represent over 10% of total car insurance inquiries, thanks to improved design, technology, extended warranties, and affordability without compromising on quality.
Brands like Omoda, BYD, Jetour, and others have secured their place in the local market. Notable performers include MG, Jetour, Geely, and Changan, with MG leading in lead volume and Jetour and Geely asserting dominance in the SUV and crossover segments.
Many initially viewed Chinese cars as temporary or cost-driven decisions, but customer feedback now shows growing brand loyalty and satisfaction—especially regarding tech features, fuel economy, and warranty coverage.
Insurers in the UAE have responded by building brand-specific risk models, partnering with authorized workshops and importers, and offering tiered pricing, all with the aim of leveling the playing field for Chinese brands. As more insurance data becomes available, providers will continue refining risk assessments, leading to fairer premiums and improved coverage options.
- Despite Chinese cars gaining popularity in UAE roads with brands like MG, Omoda, BYD, Jetour, and others, their insurance premiums remain higher than Japanese and Korean counterparts due to perceived risks, exorbitant repair costs, and extended repair timelines.
- As the after-sales service network of Chinese brands expands, it is expected that parts availability will improve, and insurance premiums will become comparable to Japanese and Korean brands, reflecting the growing confidence and trust in Chinese brands.
- To better understand and assess the risk of Chinese cars, insurers in the UAE have started building brand-specific risk models, partnering with authorized workshops and importers, and offering tiered pricing, aiming to level the playing field for Chinese brands.
- In response to growing brand loyalty and customer satisfaction, especially regarding tech features, fuel economy, and warranty coverage, insurers will continue refining risk assessments as more insurance data becomes available, leading to fairer premiums and improved coverage options for Chinese brands in the automotive insurance market.
