Al-Tamimi: Insurance regulations for leased vehicles oblige the lessor to choose the best insurance companies and least expensive
The CEO of Insurance House Naji Al-Abdullah Al-Tamimi confirmed that the comprehensive insurance controls on vehicles included provisions that take into account the interests of both parties to the leasing process, and obligate the renter to be the actual user of the vehicle, and for the lessor to choose the appropriate insurance company.
This came in a working paper titled “Comprehensive Insurance Policy on Financially Leased Vehicles for Individuals” that was presented during a workshop held on Tuesday 26 January 2021 through direct transportation, explaining that the Saudi Central Bank has issued comprehensive insurance controls for vehicles leased out for financing for individuals. It shall be implemented as of November 1, 2020, which governs the relationship between the lessor (financing companies or banks licensed to practice the financial leasing activity) and the lessee (the owner of the benefit of the vehicle leased under the lease contract).
He added that these controls confirmed that the renter is the actual user of the vehicle, and the lessor insures the vehicle annually throughout the term of the financial lease contract, provided that this financing is done according to offers for at least three companies, and the lessor chooses the best and cheapest offer and presents it to the lessee, who He is not entitled to choose the insurance company, while the lessor must explain to the lessee the scope of coverage, provisions, and exclusions, as well as the method of repair, provided that all of this is clear in the insurance policy (a hard copy of it is in the hands of the lessee), and the lessee has the right to request additional benefits on the policy in case have found it.
Regarding the insurance premium, he said it that it is the subscription amount paid by the insurer (the lessor and the tenant), or whoever represents them to the insurance company in exchange for the company's approval to compensate for the damage or loss that the direct cause of its occurrence is a covered risk under the insurance policy, and this value (or premium) is calculated Annually by the insurance company based on the change in the insurance value and individual pricing factors.
He added that the lessee must provide the lessor with any material changes to his data that have been submitted to obtain insurance that affect the value of the insurance premium, and in return for that, the insurance company provides the lessor with the basic value of the insurance premium (which is the pricing that is applied without applying discounts due to individuals based on Underwriting instructions issued by the Central Bank), in addition to its value after applying discounts in the event the tenant is entitled to them .. confirming that the controls oblige the lessor to calculate the value of the insurance premiums of the lessee at the beginning of the financial lease contract based on the basic value of the insurance premium, as the lessor does at the end of each year Insurance by liquidating the amount that was paid to the insurance company and what was charged to the tenant and keeping it in the tenant’s insurance account and providing him with a copy of this account, and returning the excess amounts to the lessee resulting from the difference between the value of the basic installment before the deductions due after its application, or requiring the tenant to pay additional amounts in case The lessor bears the security amounts higher than what was withdrawn from the lessee in exchange for the insurance premium.
He stressed the commitment of the insurance company to give priority to the first beneficiary (the tenant) to buy the wreckage of the insured vehicle in the event that it is calculated as being totally economically destroyed at the value specified by the authority concerned with estimating the value of the wreck.
He concluded by saying that the settlement of accounts related to the insurance policy takes place within 30 days of the end of the financing contractual relationship between the lessor and the lessee.
It is noteworthy that the workshop was moderated by a member of the Finance Committee in the Asharqia Chamber, Zaid Al-Yaish
