The Saudi Arabian Monetary Authority (SAMA) announces the issuance of Rules for Comprehensive Insurance of Motor Vehicles Financially Leased to Individuals, which will come into force on 01/11/2020. These Rules aim to regulate the contractual relationship between the financing entities and their individual customers with relation to the insurance coverage of the financially leased vehicles. This step comes as part of SAMA's support to develop the practices in the insurance sector, protect policyholders’ rights, and ensure the fairness in insurance transactions.
SAMA clarifies through these Rules the rights and obligations of the policyholders "Lessor and Lessee" which fall under the framework of the finance-leasing contract on individuals’ vehicles, as well as explaining how to annually calculate the actual amount of the premium; based on the changes of sum insured and pricing factors for individuals. SAMA also mentions that the driving behavior of individual will have an impact on the pricing the insurance policy; in order to encourage individuals to have better driving behavior to be entitled to “no claims discount”, and any other discounts that might apply on them. In addition, the lessor and the lessee according to these Rules shall agree on determining the repair method and the annual depreciation percentage of the vehicle at the beginning of the contractual relationship, but the lessee can solely request additional benefits and opt the deductible amount.
To know more about the provisions of the Rules for Comprehensive Insurance of Motor Vehicles Financially Leased to Individuals, visit SAMA's website via the: http://www.sama.gov.sa/en-us/laws/pages/insurancerulesandregulation.aspx