Many UAE residents still overlook the need for home insurance when buying or renting property in any emirate, but matter experts caution that not having home insurance is a bigger-than-usual risk these days.
The primary reason still being when replacing all your belongings in case of a catastrophe can easily run into the tens of thousands of dirhams, as opposed to when paying a nominal amount each month can steer you away from irreversible damage to your financial health.
Home insurance coverage can extend to buildings, houses, individual contents or personal belongings in the home. Interior and exterior damage to the building’s structure, and loss or damage to personal assets or belongings in the home due to fire, water or natural calamity, are some of the incidents that are covered by home insurance.
Question#1 - How vital is it to have home insurance in the UAE?
Time and again it has been observed that apartments or homes are always at risk of being damaged by fires, leaks or flooding, electrical or wiring damage – that not only affects the home but most electronic devices, appliances and furniture as well.
While such events can be deemed as one-off accidents, it is best to make sure you are protected financially, particularly if you are in an apartment building where a fire, 20 or more floors away from your property could still affect your belongings.
Particularly when it comes to expats, which roughly make up about 85 per cent of the population in the UAE, leaving homes unattended for an extended period opens up the possibility of homes sustaining water damage (such as leaking pipes causing flooding), which can lead to significant loss and damage to personal belongings and other valuables, particularly if the flood is not discovered for a period of time.
The absence of home insurance results in residents taking up the burden of paying the expenses of rebuilding and replacing damaged items, and even damage to the contents and decor, and, in the worst case scenario, structure, of neighboring properties as well.
Question#2 - Isn’t it the landlord’s duty to have the home insured?
It is a commonly mistaken myth that it is the landlord’s responsibility to have insurance for the property, but this is incorrect. Legally, a landlord is only required to provide home insurance if the house is mortgaged, which will still only cover the physical structure of the house and not the contents of it.
Thus, if you want to secure the value of your belongings inside your home, it is advised that you take up home insurance, irrespective of whether you rent or own property in the UAE. If you are renting an apartment or villa you need home contents cover i.e. insurance which covers the loss or damage of your personal belongings, such as furniture, electronics, jewellery, etc.
This insurance will repair or replace your items following damage from fire, flooding, theft or vandalism. Your building’s landlord will most likely have an insurance plan on the apartment or villa itself, but it is the tenant’s responsibility to obtain it for their personal belongings if they are held responsible for the damage.
If you own a home, whether it is a villa or apartment, obtaining building insurance is key – this ensures that the structure of your home will be covered from any sort of damage that is stated in your contact.
However, this only covers the physical structure of the house and doesn’t cover the contents of your home. Home contents cover would be added to the coverage of your building insurance.
Question#3 - What to look out for when shopping for home insurance?
When shopping for home insurance in the UAE, make sure to look for a policy plan that’s right for you. There are around 50 licensed companies in the UAE that offer great insurance policies for homeowners, however, do not get swept away with fancy sounding promises from insurance brokers.
Before choosing any insurance policy make sure to compare every detail of the plan to understand how much of your property and valuables will be covered. Bear in mind, just as it is with any insurance, you will need to pay a premium (amount to be paid for a contract of insurance), so you need to evaluate which plan works for you at the best price.
Here’s a checklist to help narrow down choices to find the right coverage!
The first thing to check before you go ahead and sign the documents of any home insurance plan in the UAE is to evaluate the value that will be covered by the plan.
• Calculating what is the value of items in your house
If your house has items worth Dh40,000 and the insurance plan covers less than half of that, search for other options, as you would be paying a premium for a plan that doesn’t cover the true value of your possessions.
• Knowing specifically what items are insured and what isn’t
Insurance plans mandatory detail out what contents are covered, and what type of damage will be covered. Before availing the plan, with a fine tooth-comb, read the contract’s terms to get to not just know what the plan covers, and inquire what it doesn’t.
It’s quite common for home insurance providers to mention that “all household goods that are located within your premises will be covered” – however, it is then crucial to know the plan’s definition of what comes under household goods, as there is a chance electronics may not be counted as household goods.
• Know clearly the clauses of what is considered non-claims
If you are opting for a particular plan under the assumption that you will definitely get back your claim in case of any damage or loss, keep in mind that there are circumstances in which your claim could be rejected. Negligence and false claims are some of the reasons your claim could be denied.
Nevertheless, your policy document will state all the terms and conditions of your policy and it is best to thoroughly evaluate them before making the commitment.
Question#4 - What premium should be paid, what does that price entail?
Premiums vary depending on the level of coverage availed from the UAE-based insurer. Some firms offer as little as Dh400 plus VAT a year, which is a little over than Dh1 a day. With this premium value, buyers can get coverage of up to Dh100,000 for their household items.
Typically, for a two-bedroom apartment, the annual premium ranges from Dh600 to Dh800 for average total content value of Dh75,000. If there are some other expensive assets to be insured under personal belongings, then the premium varies accordingly.
Some of the coverages also include home assistance service that provides customers with support should they find themselves in an emergency situation that needs immediate fixing, such as a leak or a broken window.
In addition, some companies have launched a service that offers initial advice from an authorised local law firm for all labour and rent disputes as well.
Question#5 - Are products bought after insurance signing covered?
Home insurance in the UAE is generally based on the total appraised value of the contents of a person's home rather than distinct items. If someone buys new products and the value of the contents still sits within the agreed-upon insured amount, then they do not need to pay for additional insurance.
However, some insurers in the UAE request that if the total purchased items value exceeds 10 per cent of the total sum insured, then the insured needs to inform the insurer to make sure that these items are included in the cover. This may include additional charges. For lesser value items, they are automatically included in the cover.
Additionally, if someone buys an expensive item that needs to be covered exclusively - for example, a high-priced watch or an engagement ring – then you will need to pay extra if it goes beyond the fixed amount of coverage.
