What is the consumption rate?
The idea of depreciation that is applied to the subject matter of insurance is mainly due to the principle of compensation, which aims to put the insured in the same financial position than it was before the loss was achieved, and this method is widely used by insurance companies as a means of compensation for the actual value Damage caused by the covered loss, taking into account the shelf life of the spare parts consumed.
Example: If a car suffers an accident that causes the entire vehicle to be damaged after six months of insurance, and the value of the car is 100,000 riyals when purchasing the insurance policy, the insurance company will not compensate the insured for the full amount, but will deduct the amount of the car’s consumption For a period of six months.
Depending on the date of the first registration and use, the consumption rate for vehicles excluding taxis, public vehicles, and rental office vehicles reaches 5% in the second year, 10% in the third year, and reaches 15% for the fourth year, 20% for the fifth year, 30% for the sixth year and so above.
As for taxis, public vehicles, and rental office vehicles, according to the date of the first registration and use, the percentage starts from 10% for the last six months of the first year, to 20, 25, 30 and 35% for the first year until the fifth year, and rises to 40% for the sixth year and above.