April 25, 2021, midnight

Your Money will Come Back to you

Dear Client, the Central Bank of Saudi Arabia recently announced the issuance of comprehensive insurance controls for vehicles leased to individuals, which aim to regulate the contractual relationship between financing entities and their individual customers, in relation to insurance for financing leased vehicles. This type of insurance policy provides comprehensive insurance coverage for vehicles owned under financing lease between the lessor and the tenant.

However, what is important in the subject is one of the most prominent new controls contained in these controls, which are as follows:

(The tenant is entitled at the end of the contractual relationship to recover the excess amount of premiums paid (discount) or to pay the "additional amount" carried by the lessor, which is higher than what was withdrawn against the insurance premium)

Well, how can I get a discount on the amount of insurance I paid every year?

We will explain the steps and examples to answer this question:

● At the end of each insurance year, The Tayseer Arabian Company calculates the amount paid to the insurance company, calculates it on the tenant, saves it in the tenant's account and provides it with a copy of the account.

● At the end of the contract, The Tayseer Arabian Company returns the excess amounts to the tenant, which resulted from the value of the base premium before and after the application of the outstanding discounts in case the customer does not make any traffic accident by car.

Illustration:

Year 1:

• Vehicle value: SR 100,000

• The value of the basic insurance premium: SR 4000.

• The value of the insurance premium after the application of discounts2800 Riyals: for example a 30% discount no claims

• Arab Facilitation company calculates the insurance premiums on the tenant at the value of the basic premium (4000) riyals and saves the amount of the difference between the basic insurance premium and the premium after applying discounts (2800-4000 = 1200) riyals in the account of the insurance tenant

Year 2:

Vehicle value: SR 80,000 (after applying 18% decrease in car price)

The value of the basic insurance premium: SR 3200

The value of insurance premiums after the application of discounts (40%) :1920 SR (3200-1920=1280) SR

Added to the insurance tenant's account with the difference from the first year

Year 3:

Vehicle value: SR 70,000

Base premium value: SR 2800

If no discounts are calculated for causing traffic accidents on the vehicle by the tenant, no amounts are added to the tenant's insurance account because he is not eligible for discounts at the end of the contract.

The amounts calculated on the tenant and what has been paid to the insurance company are liquidated as follows:

What was calculated on the tenant as insurance in 3 years financing for the car 4000 +3200 +2800 = 10,000 riyals

What was paid to the insurance company from facilitation company 2800 +1920 +2800 = 7520 Riyals

10000 - 7520 = 2480 riyals paid to the tenant or deducted from the last payment

Note: Insurance discounts are refunded only for car rental contracts signed after November 1, 2020 and do not apply to the above

As such, it has been explained that the customer receives a discount and is now your responsibility as a customer to maintain the funded car and not to commit traffic accidents in order to enjoy the discount at the end of the financing contract.