Buying the right homeowner insurance

I am planning to buy property in the UAE. What are the different types of homeowners insurance available in the UAE, what do they cover and what do I have to think about when taking out a policy?

In many parts of the world buying home insurance goes hand-in-hand with obtaining a mortgage for the purchase of a property.

However, in the UAE this is not always the case and as a result it is estimated that more than 95 per cent of home owners here do not have insurance to cover their property or belongings.

This is because many people think that they only need to take out general insurance to protect their property against theft, and as the UAE has a very low crime rate residents here think they are unlikely to be affected.

But home insurance also covers your property and its contents in the event of damage from fire, water, natural disasters and unintended accidental damage, all of which are potential dangers in the UAE.

Home insurance is usually broken down into building insurance, which covers damage to your actual property; the walls, floors, and contents insurance which covers damage, theft or loss of your personal possessions.

Cost details

Building insurance is determined by how much it would cost to rebuild your home — it could be less costly to rebuild your house than to buy a similar one which encompasses the land.

Most insurers can create bespoke policies for individual homes. However, there are also fixed plans that cover lower-cost properties to higher-cost homes. An important point to consider when choosing your policy is if you want to have the added benefit of the insurance policy paying for alternative accommodation while your home is being rebuilt.

There are also other areas that can be included in the insurance, such as tenants' liability, personal liability and cover for domestic maid's death and repatriation expenses. The premiums could range from Dh400 to Dh700 to Dh1,400 depending on different scenarios.

However, if you live in an apartment block in a building having multiple occupations in Dubai you should be aware of a new law called the "Strata Title Law" that essentially transfers the responsibility for maintenance of all properties from the developer to the homeowner.

Homeowners Associations have been set up which are required to take out building insurance to adequately protect the interests of owners, tenants and other occupiers.

Each unit owner will be asked to chip in to the total cost rather than individuals insuring their own villa or apartment, which may make the process more cost-effective.

Alongside home insurance it is also wise to take out home contents insurance to cover your personal possessions. However, make sure you use the new replacement value for all your personal items to calculate the necessary insurance cover, rather than the cost value, as a sofa you've had since 1997 is likely to be significantly more expensive in 2010.

The writer is Director General Insurance, Nexus Insurance Brokers LLC. Opinion expressed here are the writer's own and do not reflect that of Gulf News. If you have any questions, please e-mail to advice@gulfnews.com.