Trump Tariffs: UAE Car Insurance Premiums Could Rise — Even If Showroom Prices Don’t

UAE car buyers may not immediately feel the pinch from the latest round of US tariffs on imported cars and parts — including a steep 25 per cent duty on fully assembled vehicles — but a new cost may soon hit them where it hurts: insurance premiums.

While dealership prices in the UAE are expected to remain stable, insurance industry insiders are cautioning that repair costs, claim delays, and total-loss risks could quietly drive premiums higher in the months ahead.

Car Prices Stable, But Repairs Could Get Costlier

Auto dealers across the UAE say they are well-stocked and equipped with diverse sourcing channels — including from Japan, South Korea, and Europe — to absorb price shocks without hiking showroom prices. But parts and components used in repairs often rely on global supply chains, many of which are now tangled due to the ongoing US-China tariff standoff and rising freight costs.

“Insurers are always watching the cost of claims. If parts take longer to arrive or cost more, that reflects in what customers pay over time,” said a UAE-based insurance underwriter.

Longer Repair Timelines Could Trigger More Rental Claims

Delays in the arrival of replacement parts can also extend repair durations, which may result in more frequent or longer rental reimbursement claims — a coverage clause that compensates drivers for a rental vehicle while theirs is being serviced.

“Even if you don’t see it on the surface, this kind of inflation in back-end costs often leads to rate adjustments a few months down the line,” said a Dubai-based insurance broker.

Risk of More Total-Loss Claims

With global car prices still elevated, some vehicles that might previously have been repairable could now be deemed total losses — as repair costs exceed the depreciated market value. This scenario often forces insurers to pay out for a full replacement, which is typically more expensive than repairs.

Such changes in claims dynamics can influence how insurers assess risk and calculate premiums, especially for mid- to high-end vehicles.

Should UAE Drivers Be Concerned?

Not immediately, say analysts. The UAE’s diverse import network, flexible sourcing, and robust dealership inventory help insulate the market from direct price spikes seen in the US and other tariff-affected countries.

Still, experts caution that if global inflation continues or if further trade restrictions emerge, the ripple effects could surface in your next policy renewal.

The good news? Premium hikes are likely to be gradual. Insurance firms typically wait several quarters before adjusting rates and are subject to regulatory oversight in the UAE, which helps prevent sudden or unjustified increases.

What Can Drivers Do?

Until then, UAE motorists are advised to:

• Compare quotes at renewal time

• Ask about bundle discounts (home, auto, health)

• Choose car models with easily available and affordable spare parts

“Even if that shiny new car doesn’t cost more upfront, protecting it might,” added the insurance broker. “The economics of repairs — not purchase — may be the real story in the year ahead.”