Tenants and Homeowners Underestimate the Cost of Uninsured
Dubai, United Arab Emirates - UAE insurers are expecting a surge in residents buying home and contents insurance in the wake of Sunday’s Zen Tower fire in Dubai Marina, but say this increase is likely to be short-lived if it follows the same trend as previous incidents.
“We are definitely busier than usual with enquiries for home insurance since news of the fire, and this is a pattern we have observed after similar incidents in the past,” said John Waldron, Head of Private Clients at Nexus Insurance Brokers.
“When a fire happens, you do see that immediate response, and there is a brief surge in new business enquiries. After the fire in the Torch Tower last year, we saw a massive spike in enquiries coming into the market for maybe a three- to four-week period, but then the interest essentially reverts to typical volumes.”
Waldron says penetration rates of home insurance in the UAE are very low by international standards, at less than 10 percent of the population covered as per the most recent studies on the subject.
He believes many expats underestimate the value of the possessions they accumulate while residing here. One or two years spent buying furniture, electronics, clothing and artwork worth can easily add up to many tens-of-thousands of dirhams.
According to Waldron, there is a misconception as to the cost of home insurance in the UAE, as many clients are surprised by just how good a value proposition it can be.
“A simple contents policy with some cover for your personal effects can cost as little as 250 Dirhams annually,” he noted. “At a cost of less than a dirham a day for cover, it represents terrific value for peace of mind in the possibility of the worst-case scenario arising.”
As with tenants, property owners often underestimate the costs they could face in the event of a claim.
“If you don’t have any insurance cover, you’re going to be out of pocket, and that’s one of the things people don’t think about,” Waldron said.
“If you’re the owner of investment rental properties, home insurance policies will give you some level of cover against loss of rent as well. A big fire can put these buildings out of operation for a considerable length of time, and a landlord can be at a rental deficit for that period if not insured adequately.”
Waldron notes that people can also overlook the other benefits to having a home insurance policy beyond the usual covers against fire, flood, accidental damage and theft for their own contents.
“A vital cover which is embedded in home policies is for alternative accommodation, which covers the insured against the cost of finding somewhere to stay if their own home is rendered uninhabitable due to an incident,” he said.
“If there is a fire, it is not the landlord’s responsibility to provide alternative accommodation to their tenant while repairs are ongoing. Therefore, having cover in place for this through home insurance can save the insured thousands of dirhams in the long run, as costs can spiral for alternative accommodation if the damage to the affected property is extensive.”
Media contact
Mark Robinson, Wallis, +971 55 127 9764, nexus@wallis-mc.com
