Q: I've just invested in a new home in a residential community in Dubai. I'm a first time home owner, with a young family. What do I need to consider in terms of protection and insurance for the home?
A: You deserve two rounds of congratulations. Firstly, congratulations on buying your first home - a family house is often a person's most valuable asset, and is a fundamental step to providing security and stability in the future.
Secondly, you deserve congratulations for making home owners' insurance a priority.
There is too little awareness of the importance of home insurance in this market, and the repercussions can be terrible if a disaster strikes.
In Europe, many mortgage providers insist you have home owners' insurance before they will provide you with financing. This provides both them and you with protection, if the house is damaged or destroyed. In this region, it is more usual for mortgage providers to ask that you have life insurance, to ensure that the financial side is covered.
However, any expert will tell you that home owners' insurance is critically important to cover both your home and its contents. It offers security and peace of mind, and ensures that one of the biggest financial investments of your life - your home - is protected.
When you're looking at insurance options, it's essential to look across the full range of policies available and consider what is right for you and your family.
For example, it is important that your home is insured for the actual replacement cost - the cost of rebuilding the house and replacing the permanent fixtures and contents - rather than just the market value of the house. "Under insurance" can be a real problem when people find they are not fully covered.
You also need to be aware of what exactly the insurance covers you for - are you covered in the event of fire or flood? As the recent cyclone Gonu in Oman demonstrated, if you live in an area that's prone to flooding, it's essential to have the right cover.
Some policies will contain provisions that enable you and your family to move into comparable accommodation while repairs are being made, which is also highly desirable.
In terms of home contents, your policy should protect household possessions like electronic goods, furniture and your books and CDs.
It's important that your possessions cover is accurate - that it reflects the correct value of the items - when you sign the policy. If you own valuable artwork or antiques, these may need to be insured separately, since all policies will have an upper limit.
If this all sounds complex, don't worry. If you look for a sound and reputable insurance provider, they will be able to answer your questions and help you balance the different risks, based on your environment. They will also help you evaluate the replacement value of your new home, and assess the need for content coverage.
You've taken a big step in buying your first home. Now, you just need to make sure you're protected moving forward.
The writer is an expert consultant at Nexus, a leading financial advisor in the Middle East. The opinions expressed above are the writer's and don't necessarily represent views of Gulf News. Readers are encouraged to thoroughly investigate all investment decisions. Please send your questions to advice@gulfnews.com.
