Cancelling car insurance in the UAE

The two unified UAE motor policies treat cancellation in opposite ways.

Under the Third Party Liability policy neither side may cancel during the term while the vehicle licence is valid, apart from three listed grounds.^1,2

These are version 2 of the forms, consolidated to 18 January 2021, as shown on the CBUAE Rulebook on 4 November 2026. An insurer may change a form only in favour of the insured or beneficiary, so a policy may be more generous than the form.³ Check your insurer’s own cancellation clause.

Each policy has its own Chapter Six

Three grounds end a Third Party policy early

Third Party Chapter Six para 2 lists these grounds for ending that policy before it expires. Total loss is handled separately in para 3.²

• Cancellation of the vehicle licence.
• A new policy issued because the vehicle details changed.
• Transfer of the vehicle title, shown by a certificate from the concerned authority.

Neither form says which Chapter Six governs a comprehensive policy

Tariff Table 2 covers the Loss and Damage and Third Party policies jointly.⁶ “Comprehensive insurance” is the CBUAE’s everyday name for a policy against loss and damage.⁷ Its consumer brochure defines comprehensive as third party liability plus loss and damage.⁸ Neither form says how its Chapter Six works alongside the other where one policy document carries both covers. Ask your insurer how it applies to your policy.

The refund scales differ after eight months

Both schedules are headed as percentages of recoverable premium. They give the same percentages up to eight months. After that, the Third Party scale is nil, two months before Loss and Damage reaches nil.^1,2

The insurance period runs up to the end of the thirteenth month.^1,6 On a 13-month policy, the last three months of a Loss and Damage policy and the last five of a Third Party policy sit in the nil band.

Chapter Six sets no deadline for paying a refund and does not state any premium refund after a total loss. The text gives no formula for the refund if the claims condition is not met.

Worked illustration with a fictional premium

The illustration reads each percentage as a share of the full premium paid, and counts time from the start date to the termination date. The schedules do not define either point.

Where the insurer ends a Loss and Damage policy, the refund is in proportion to time, not by short rate. On the same fictional AED 1,000 and a 13-month period, three months in force would leave ten thirteenths of the premium, or about AED 769. The short-rate figure for the same three months is AED 700.

Selling the car changes the position

Transfer of title is one of the three Third Party grounds. The Loss and Damage form names no sale ground. Its Chapter Three para 3 requires the insured to remain sole owner throughout the insurance period, and bars leasing the vehicle or signing a contract restricting ownership without the insurer’s prior written consent.¹

From 1 January 2027, Cabinet Resolution 174 of 2026 Art 113 adds a rule on ownership transfer. If the seller wants the policy back, the buyer provides a new policy matching the licence period. If not, the licence runs for the policy’s remaining term.⁹ Renewal steps are in the vehicle registration guide.

RTA issues an Insurance Refund Certificate when ownership transfers, for AED 120, once traffic fines are paid.¹⁰ In Abu Dhabi, TAMM lists a Vehicle Insurance Refund Certificate with no additional cost.¹¹ Ask your insurer whether it needs one.

Insurers publish their own terms. Dubai National Insurance lists refunds for a car sold or exported in the first 8 months, with 10 working days to process a valid request.¹² Check yours against Table 2.

A vehicle on the road still needs insurance

How Art 102(6) applies to a cancellation the insured asks for is not stated in that article.

Moving to another insurer carries three tariff rules

The insurer must immediately provide a free certificate of insurance experience for previous years, electronically or in writing (Article 2(4)). A claim-free record may earn a reduction of 10%, 15% or 20% of the minimum premium for one, two or three years, at the company’s option (Article 2(3)). The 10% loyalty reduction applies only at renewal with the same insurer (Article 2(3)(d)).⁶ See no claims discount.

Where two policies overlap, Loss and Damage Chapter One para 04 limits each insurer to its share of the total insured amount.¹ Third Party Chapter One para 09 divides compensation between insurers.²

Neither form mentions a cancellation fee

The word fee does not appear in either form. Tariff Article 3(4) bars an insurer, agent or broker from imposing or receiving any additional sum without a resolution from the Authority.⁶ The tariff also says its rates include all administrative charges and expenses (Article 3(1)(a)).⁶ Whether either rule reaches a charge made on cancellation is not stated.

Policybazaar’s cancellation guide says otherwise. It shows administration charges of AED 100 and AED 150 in worked examples, and says the Central Bank’s guidelines allow reasonable charges.¹⁶ Ask your insurer to show where your policy allows any charge.

A dispute over a refund starts with an official complaint to the insurer, which Sanadak requires before it will take a case.¹⁷ See the Sanadak guide.