Home insurance: How much UAE tenants will get
Tenants can get temporary lodging worth up to 20% of insurance value
Published: 15:19 June 5, 2016
Cleofe Maceda, Senior Web Reporter
Dubai: With home fires becoming more frequent these days, tenants have been advised to have an insurance in place. This will help minimize any financial losses caused by any unforeseen event. However, only a small proportion of households in UAE, about 6 per cent, are insured – one of the lowest in the world.
The good news for those six per cent is that they won’t just get a compensation for the damage to their belongings, they are also entitled to an alternative accommodation if they are forced to temporarily relocate, financial experts said.
By default, the temporary lodging benefit can be up to 20 per cent of the total value of the contents insured, according to Phil Ashkuri, head of general insurance at Nexus Group. So, if the contents insured are valued at Dh100,000, tenants will get up to Dh20,000 worth of alternative accommodation.
This sort of protection is necessary especially since temporary lodging provided by landlords is not enough. “In many cases, temporary lodging provided by landlords is not sufficient – and this can put tenants in a detrimental situation if their home will require many months to restore,” said Ashkuri.
Besides, property owners are not obliged to pay for any damage caused by fire, emergency or any tragedy. “According to UAE law, the landlord’s building insurance is only required to cover damage to the property itself,” Ashkuri said.
“So, for example, if there is a fire that engulfs your apartment or a burst pipe that leads to water damage, the insurance will cover the repair of the property, but will not cover any personal belongings that may have been lost or destroyed from the incident. In addition, a personal home contents policy can also pay for similar damages incurred in neighbouring homes and apartments, under the liability clause.”
The alternative lodging benefit can be in addition to the cover provided by their landlord as part of the building’s insurance policy, explained Ashkuri. “It should be viewed as a great added benefit of purchasing personal home contents cover, which is primarily designed to provide peace of mind in the event that personal belongings are tragically lost in an emergency, such as a fire, theft, or flood.”
The uptake of personal home insurance in the UAE remains staggeringly low. New figures based on Nexus Group’s customers show that only six per cent of households have home contents cover, compared to 70 to 75 per cent in the United Kingdom.
Misconceptions about insurance are leading a lot of people to take home contents insurance for granted. There’s a common misconception that owners of properties are responsible to pay for any damage in cases where tenants’ valuables are damaged due to fire, water leakage or flooding. Others also firmly believe that tragedy will never hit home.
“It’s easy for people to fall into the trap of thinking ‘this will never happen to me’ but the truth is we’ve seen it time and time again – it could happen to anyone,” said Ashkuri.
Insurance premiums are largely dependent on the value of belongings being insured. A tenant who wants to insure an apartment with appliances, furniture and other belongings valued at Dh92,000 will only have to pay Dh400 per year.