The Northern Emirates recently witnessed some of the worst floodings in the UAE’s history. The floods swept away vehicles and caused damage to homes, businesses and various other facilities. Road collisions and electric outages were reported, causing a spike in insurance claims across the country.
Luckily for many citizens and residents, car insurance is mandatory in the UAE. Regulations stipulate preliminary coverages to protect motorists in case of accidental loss. However, property and contents insurance are optional and therefore, many home and business owners or tenants still do not have insurance, incurring financial loss as a result of natural disasters or other risks.
Insurance coverage varies from one company to another, with specific exclusions and conditions based on the policy. All the details should be available in the terms and conditions section, which must be provided to the insured before confirming and paying for the policy.
It is extremely important for owners of businesses, homes and vehicles to read and understand their insurance schedules clearly before signing. Once a policy quotation is signed, it becomes a binding document like any other legal contract. As a customer, you must be given all your policy terms and conditions before providing your confirmation and making the payment.
If you are using a broker or an insurance agent, it is their responsibility to review, understand and negotiate the below items on your behalf.
What perils are covered?
A peril is simply the cause of the insurance claim, such as a fire, natural disaster or a broader form of hazard including ‘accidental loss’. Before signing, make sure you understand the perils covered under your policy.
What exclusions are listed?
Once you understand the perils covered, you need to familiarize yourself with the exclusions within these perils. This is where you may see certain exclusions for perils that are covered. For example, natural disasters may be listed as a covered peril, but earthquakes may be excluded within the same category of natural disasters.
How much is covered at a time of loss?
It is important to understand the potential payout of a certain loss and how it is determined. Some policies will state determining factors such as the ‘return to the same or similar condition’ of the peril insured against. This means the insurer may factor in depreciation when calculating the value of the insured asset.
What is your excess or deductible at a time of loss?
There is usually a minimum excess that needs to be paid by the customer for the claim to be covered. Sometimes, you may have various excesses in a single policy.
What covers are available to you at a time of loss?
You should be aware of the various covers that you can claim. For instance, residential or commercial tenants need to know whether the insurance policy covers ‘loss of rent’. This is useful in case of forced exit from a building due to damage that requires tenants to vacate the premises for repairs. Also, some policies may not cover certain equipment and electronics, for which may need to consider a separate insurance policy.
What needs to be submitted at the time of a claim?
Even when a certain loss is covered in the policy, failing to furnish the right documents at a time of loss could result in the claim being left unpaid by the insurer. It is very important to identify the necessary documentation at the time of binding and at the time of loss. This could be a list of items, pictures, receipts and statements.
How will the claim be paid?
It is crucial to understand the settlement options and who the payment will go to. As an owner of a building, home or vehicle, you should know whether a mortgage lender should be named on a cheque or other payment vouchers. Some policies may not offer the option of cash settlements, so take the time to understand how payments take place at a time of loss.
What declarations are required?
Some insurance policies require answers to questions before binding. Withholding information at the time of binding can lead to claim rejection. The insurance company has the right to know anything and everything about a risk they are insuring against.