UAE: Rain-hit car owner seeks action against insurance firm for not covering damages

Question: My car broke down and was out of service as a result of the storm that struck the emirate last April. The accident report issued by Dubai Police described the damages as a result of natural factors. I contacted the insurance company to get the car repaired or compensate me with the agreed upon insurance value.

However, the insurance company has refused. The car remains in the garage, even as I continue to pay for the bank loan I took to purchase it. What is the appropriate action to take against the insurance company?

Answer: You have to file a case against the insurance company before the Insurance Committee to repair the car or compensate you.

The Central Bank of the UAE has confirmed that the damage to vehicles resulting from the heavy rains in the country is covered by insurance provided the policy is a comprehensive insurance.

Moreover, Clause 5/ Chapter 2 of the Unified Motor Vehicle Insurance Policy against Loss and Damage, issued pursuant to the Regulation of Unified Motor Vehicle Insurance Policies according to Insurance Authority Board of Directors’ Decision No. (25) of 2016, assures that if the insured motor vehicle is lost, proves to be irreparable, or costs of repair exceed 50 per cent of the vehicle value before the accident, the insured value of the vehicle agreed upon between the insurer and the insured on signing of the policy will be the basis of calculation of the compensation of loss and damage insured.

This will be after deduction of the depreciation percentage of 20 per cent from the insured value, and taking into account the fraction of insurance period (ie. the proportion of the period from the commencement date of the insurance period to the date of the accident to the total insurance period).

On the other hand, Article 292 of the Civil Transactions Law confirms that damages shall, under all circumstances, be assessed to cover the prejudice sustained and the lost profit provided it is a natural consequence of the prejudicial act.