22 Jun 2026

The Impact of Insurance Knowledge Gaps

Did you know that ‘insurance’ is often used but often misunderstood by people? A recent survey by Policybazaar.com revealed that many UAE residents still struggle to understand several insurance concepts, especially products. This knowledge gap is not without consequence; it can actually have a detrimental effect by leading to underinsurance or unsuitable policy choices. The findings reported by Arabian Business show well why it’s  important to break down complicated terms into easy to understand language so that customers can make better decisions.

Common Insurance Terms Explained

Premium New H3 suggested

Another commonly misinterpreted term in insurance is ‘premium’, and no this doesn’t refer to a luxury item like a car, jewellery, or a service, it actually refers to the amount paid monthly or annually to keep a policy active. 

Coverage amount New

Similarly, another term, ‘coverage amount,’ which sets the maximum amount the insurer will provide in case of a claim, is also not widely known. 

Condition of average

Going further, if a property or asset is underinsured, insurers apply the ‘condition of average,’ reducing payment amounts proportionally to the level of underinsurance.

Understanding Motor Insurance Terms in the UAE

Third-party car insurance

Other areas of confusion among residents occur with car/motor insurance. ‘Third-party’ policies cover only damage or injury caused to others. 

Comprehensive car insurance

‘Comprehensive policies’ protect the policyholder’s own vehicle as well as third parties.

Total loss 

 Insurers may also declare a ‘total loss’, when repair costs exceed a certain percentage of the car’s market value, in which case the compensation is based on the vehicle’s current value minus the deductible.

Deductible 

An amount subtracted from the compensation based on the vehicle’s current value.

Does Insurance Cover the Driver or the Vehicle?

In the UAE, insurance usually follows the vehicle rather than the driver, meaning coverage applies as long as the driver holds a valid UAE license.

How ADNIC Helps You Navigate the Details

At ADNIC, we understand that for many people it can be difficult to wrap their head around each and every type of insurance, and that’s why we aim to provide suitable solutions that will both educate our clients and give the best insurance policy based on their needs.

 

Why Reading the Fine Print Matters?

In our experience, one of the most overlooked but critical aspects of insurance is the ‘fine print’, the long sections of terms and conditions that many policyholders ignore. In our industry we estimate that more than half of UAE residents skip reading these details, even though they specify exclusions, limitations, and additional charges.

Believe it or not, understanding these terms has real financial consequences. Studies have shown that many residents lack basic protection such as life insurance or retirement plans, leaving families exposed to financial risk, according to Arabian Business.

ADNIC’s Advice: Making Insurance Simple and Transparent

At ADNIC, our advice to our customers and clients is to always take the time to become familiar with key concepts such as premiums, deductibles, and exclusions. By doing this, customers can make more informed choices, avoid underinsurance, and ensure their policies meet their actual needs. Following these steps will mean insurance jargon feels far less intimidating.”