How a Car’s Insurance History Affects Its Resale Value When Buying Used!

Purchasing a used car in the UAE is not just about the mileage, model year and condition of the car. A car's insurance and accident record can directly influence how much buyers are willing to pay and how easily the car can be resold after the accident.
If you know a little about the vehicle's insurance history, you may be better prepared to avoid potential repair issues and to better estimate its value when you resell it.

What is Insurance History?

Incidents are documented in insurance history. For a used car in UAE, this history may indicate previous accidents, damage and repairs.
It can assist consumers in determining if a car has been involved in any of the following:

• Damage from collision or accidents
• Multiple insurance claims
• Major body repairs
• Damage to safety items

Insurance history should not be considered a complete vehicle inspection. A vehicle can have unreported repairs as well.

Why Insurance History Affects Resale?

The typical used-car buyer is somewhat more likely to choose a car with less risk and a well-established history. If the car has a history of accidents, potential buyers may be concerned about any underlying damage, repairs or decreased safety.
This results in a resale penalty. Even if the car appears as perfect as ever after repairs, the buyers may base their expectation of a discount on similar cars that have a clean history.
This effect may be more noticeable if a vehicle is sold privately or through a dealership. A dealer might consider accident history in a trade-in or purchase offer since it anticipates that future purchasers will negotiate about the history.

Not all Accidents have the Same Impact.

One of the most crucial factors is the severity of the accident.
A minor bumper/fender repair is considered differently than damage to the airbags, suspension, or chassis. An accident-free or repaired car that has photos and invoices can gain more trust than a car that has an unknown history of accidents.

Insurance History and Likely Resale Impact

How Much Value Loss Can an Accident Cause?

Unfortunately, there is no one universal percentage for accident depreciation. The value of two cars with similar histories can be drastically different when it comes to resale value.
UAE used-car market data in recent times has revealed that cars even with minor accident records could be sold at 8-9% less than a similar vehicle with a clear accident record. The amount differs depending on the extent of the damage and other cars.
If a similar clean history vehicle is valued at AED 100,000, the spread in the market is approximately 8-9%, which equates to AED 80,000-90,000.
More Damage = More Resale Risk.

Major Damage Creates Greater Resale Risk

Chassis and structure damage may result in vehicle alignment concerns, handling and crash protection concerns. Another consideration is airbag deployment; a buyer should be assured that the entire safety system is in proper working order.
Several accidents will also make a vehicle more difficult to sell. Several claims can put a buyer's mind to questioning how the car was used, even if they are relatively small repairs.
That is why it is sometimes better to buy a car that has one minor incident on its record, but is fully documented, than a vehicle that has several incidents documented and not explained.

Repair Quality Matters

History of insurance only reveals that something did happen, not necessarily how well the vehicle was repaired.
Quality repair can make a car look and feel as new, and correct mechanical repairs, while poor repairs can cause problems that either manifest months or years later.
If looking at an Accident History car, look for panel gaps that don't line up, paint discolouration, odd welding marks, misaligned panels, and replaced parts.
Invoices and photos of the damage are very helpful. They give the buyer the ability to know what has happened instead of just the seller's description.
If you have documented the work done, the resale value of your car will be maintained.

Documents Protect Resale Value

When selling the car in the future, you can make the sale smoother if you can explain what occurred and how it was fixed.
Useful records include:

• Repair invoices
• Accident photographs
• Parts replacement records
• Service records
• Inspection reports

It's easier to explain a documented minor accident than an unknown one that needs to be explained.

Check Vehicle History Before Purchasing a Vehicle

Do not trust what the seller tells you.
Buyers can also take advantage of the government's vehicle history services and other available services in the UAE to check the details of used vehicles. RTA services provide various reports related to vehicle purchase in Dubai, and accident history reports may also be available from various emirate systems.
The VIN or chassis number is significant in the process of performing history checks.

Get a Pre-Purchase Inspection

When the car has a history of accidents, a professional inspection is even more important.
The body, chassis, suspension, engine room, and safety systems of the vehicle should be checked by an independent inspector. Paint-depth measurements can also be used to determine which panels have been repainted.

Notice the:

• Chassis alignment
• Suspension components
• Airbags and sensors
• Panel replacement
• Welds, weld repair, weld joints, repairs, weld seam, reparations
• Wheel alignment
• Signs of water damage

The inspection will help you to better understand if the accident was cosmetic or structural.

Insurance History vs Current Condition

The ratings of any vehicle's accident history should always be taken into account along with its current condition.
A car that is older and has a pristine driving record could still have considerable wear and tear. On the other hand, if the car had a minor accident and the repair was done properly, then the car can be mechanically sound.
That is why buyers mustn't make a decision based on the accident record alone.
The more successful way is to think of "history + inspection + maintenance + price.

Factors that Affect the Resale Value

The price of used cars is only a portion of insurance history.

Should You Buy a Car With an Insurance Claim?

Yes, maybe but only if the discount is in line with the risk.
Don't rule out a vehicle from consideration because of a minor accident. It may be good value if the car has been well maintained or professionally repaired, passed a third-party inspection and is cheaper than similar cars that have a clean history.

How to Negotiate the Price?

Don't just ask for a discount based on insurance history; use it as leverage.
First, research the car to be compared against a car with a clean history. Then think of the severity of the accident, repair quality, mileage, and condition.
For instance, if cars with similar clean driving records are being sold at a price of AED 100,000, then a car with a bad record is being sold at AED 98,000.

Stop and Consider Your Next Sale!

Don't purchase something based on today's price.
When you're selling the car within the next couple of years or three, the next person looking to own the car might conduct the same checks you are currently making. A history of accidents could therefore have an impact on your future negotiating strength.

Conclusion

The car's insurance record can play a significant role in the car's resale value in the UAE. But an accident record doesn't necessarily mean a bad used car.
The most relevant factors are the severity of the accident, the quality of repairs, documentation, and condition of the vehicle at the time of the crash. Damage, whether minor or professionally repaired, could impact the resale value.
Looking for a vehicle with a pristine history record isn't always the greatest advantage. It's the car that is comparable to the risk that you're taking, as well as the condition, history and price.