Question: A month ago, my factory was exposed to a fire and there was a great damage. I have comprehensive insurance. However, the insurance company refused to pay compensation on the grounds that the firefighting equipment in the factory is not working according to the technical reports. My question: what is the law’s position on the insurance company’s behaviour and what are the legal procedures that I must follow to compel the insurance company to pay compensation according to the insurance agreement? Do I legally have the right to request the insurance company to pay compensation for the delay in paying compensation in a timely manner?
Answer: As a general rule, the insured is responsible for fire damages that occur due to the fault of the insured or the fault of the beneficiary, even if it was a serious fault or caused by the subordinates of the insured, whatever their type of fault, and it is also responsible for the damages resulting from the fire even if this fire was caused by a defect in the thing insured. However, the liability of the insured for damages is finished if the damage is caused deliberately or fraudulently by the insured or the beneficiary so that the insured — by a voluntary act of him — has deliberately created the danger himself or through someone else.
What law says
This is indicated in Article 1038 of the UAE Civil Transaction Law: “The insurer is liable for damage resulting from the unintentional fault of the insured or the beneficiary”. Article 1039: “Notwithstanding any agreement to the contrary, an insurer is not liable for damages caused deliberately or fraudulently by the insured or the beneficiary. Article 1040: The insurer is liable for damage caused by persons for whose acts the insured is responsible, whatever be the nature of their fault” and Article 1041: “The insurer is liable for the damages resulting from the fire even if the fire broke out owing to a defect in the thing insured”.
As a conclusion, the insurer is responsible to pay the compensation to you and in case it refused to do that, you have the right to file a lawsuit in front of the court against the insured company and request any compensation like the payment for the fire damage and the compensation for the delay in paying compensation in a timely manner. The compensation is a matter estimated by the court and each element of damage is independent as per the documents submitted including the insurance contract, the expert report … etc. You also have the right to transfer the matter to a new expert.
It is decided In Dubai Higher Court in Civil Cassation No. 2021/407 that “when there are multiple elements of a single damage, each element retains its independence and does not merge with the other elements, and each element deserves compensation for it”.