Low awareness of contents insurance leaves people exposed
Content insurance is now in the news because over 100 families may have lost all their savings and belonging in a massive fire that broke out on the north side of the Al Tayer buliding in the Al Nahda area of Sharjah on Saturday.
In January, a fire had ravaged the Al Bakar 'A' Tower in the Al Tawuun area of Sharjah as well.
"Policies are based on the insured value of the property. For contents insurance alone, we have agreements with a number of insurers available for our tenants and individual owners for as little as Dh500 per annum for a fixed level of cover," says John Stevens, Director, Asteco Property Management.
"But hardly any tenant buys a contents insurance policy," he states.
Contents insurance is insurance that pays for damage to, or loss of, an individual's personal possessions while they are located within that individual's home. It is usually sold alongside home insurance, but can also be purchased as a stand-alone policy, especially for those who are renting rather than owning their home.
Asked if the property owners they deal have property insurance policies, Stevens says that landlords do for industrial all risk (in case of loss), third party liability (in case of accidents caused) and what is also becoming more in demand is loss of rent insurance, in the situation that a building is damaged or uninhabitable.
"On projects that we are managing, we are implementing a standard requirement where proof of appropriate insurance is necessary when leasing out their unit or upon payment of service charges."
As a case scenario - 'A' owns an apartment and is cooking but leaves urgently forgetting to turn off the saucepan. This causes a fire and damages neighbouring apartments as well as the building itself. In this situation the unit owner would be liable for the consequential damage.
"So it is very important as an owner whether residing in the property or renting it out that they have contents as well as consequential insurance in place," Stevens adds.
Asha Ramesh, an Indian expat buying a hi-rise apartment in Al Wadha Road, Sharjah, says: "I have been staying on rent since I moved to the UAE. I haven't in seven years taken any home insurance policy."
He adds: "I always thought about it, but I may consider taking one now after hearing about the two building got ravaged in fire in the past four months."
But do interim owners associations in Dubai take adequate insurance cover for their full buildings?
Adequate insurance of the owners associations is mandatory under the current regulations and is the responsibility of the owners association manager and board to ensure that it is in place and at the correct level.
"Owners associations should ensure that regular reinstatement valuations are undertaken to guarantee the insured value is correct at least every two years."
He estimates the cost for a formal reinstatement valuation to be in the range of Dh10,000 to Dh35,000 depending upon the size and complexity of the project.
"The risk of under-insuring a property would mean that in the case of a total loss there may not be sufficient cover to allow for the reconstruction and rebuilding of the project. So by trying to reduce the service charge, at the expense of appropriate insurance cover, could ultimately cause the owner a much greater loss," he emphasises.
© Emirates 24|7 2012
