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Whether tenants or homeowners, people often spend large sums to transform a house into a home. Undoubtedly, your home and its contents are most likely among the biggest investments you have made. However, when it comes to protecting property and belongings, many in the UAE are reluctant to purchase an insurance product.
The UAE is a safe place to live in but the possibility of theft cannot be completely written off in any country. Moreover, news about fires has made headlines recently and a small fire or other accidents can ruin a home and all its contents.
Buying a home insurance policy can protect homeowners and tenants from accidental damage to property as well as loss of any items. PW looks at the key elements to be a smart buyer of a home contents insurance product.
“While products such as motor insurance are mandatory across the UAE and health insurance is required in Dubai, individuals are not obligated to purchase insurance for their home and contents,” says David Harris, Director — Direct and Affinity Channel at insurer RSA UAE. “Therefore, we see that residents are reluctant to opt for this type of cover.
“This can prove to be a costly mistake if the worst does happen and, alarmingly, our internal research indicates that approximately 97 per cent of the UAE population has no form of home or contents insurance.”
The reason for this is that most residents believe it is unlikely they would be victims of such unfortunate events, adds Harris. However, no one is completely safe from unforeseen events. And as the majority of UAE residents are not homeowners, they often disregard the need for a home insurance.
Furthermore, many expatriates, particularly Western ones, regard their stay in the country as temporary and often do not see the necessity for buying home insurance, says Harris.
There is a significant lack of awareness of these products and their importance among South Asian and Arab expats. “In doing so, people in the UAE leave themselves exposed to any unfortunate situations that may arise,” he says.
Know the product
Most insurance companies offer two types of products for building, contents and personal possessions insurance. Harris says, “There is a basic home insurance policy that provides cover against fire, natural calamities and damages from third parties up to a certain limit,
and the product has been developed for customers not familiar with home insurance.
“With this policy, customers do not have to disclose the list of their personal possessions, but are provided a total coverage amount up to an extent, with the cheapest package being Dh21 a month. Those looking for more extensive coverage can apply for Declared Sum insurance, which allows customers to define their list of items and estimate their value.”
Coverage and exclusions
When shopping for home insurance, it is essential to know the coverage inside out, i.e. compare levels of coverage and check the exclusions — not price alone. “Generally, all packages offered would have sections covering the building itself, the immovable contents and movable personal belongings,” says Avinash Babur, founder of Insurancemarket.ae, an insurance comparison website created by AFIA Insurance. “There is also an option to extend the policy to cover domestic help.
“Another important aspect of the cover is the thirdparty liability, which covers the landlord if the tenant is purchasing the policy and either way would also cover the neighbouring properties against losses arising out of the policyholder’s negligence,” he adds.
The policy buyer must also be aware of the list of exclusions before finalising a deal. Babur highlights the key areas that a home and content insurance policy would not cover:
a) Wear and tear damage.
b) Damage caused by cleaning, repairing, restoring or renovating.
c) Damage caused by vermin, insects, domestic pets, mildew or fungus.
d) Damage solely caused by mechanical or electrical breakdown.
e) Loss or damage caused by scratching, denting or chipping.
f) Loss or damage caused by any process of dyeing, washing, cleaning, restoring, reproofing, adjusting, maintaining or repairing.
g) Loss, theft or damage to reeds, strings or skins of musical instruments.
h) Loss, theft or damage to musical instruments in use.
i) Inexplicable loss and/or mysterious disappearance.
j) Any loss or damage occurring before the poilcy cover commences.
Some insurance companies may offer a good deal in the first year of the policy but may increase their premiums during renewal. Therefore, it is essential for the buyer to shop around after getting the renewal quote and look at price comparison sites to learn about market deals and make the right decision.
Normally, the cost of home and content insurance products is relatively small compared to the protection they offer. Babur says, “You are looking at paying a small percentage [usually under 1 per cent] of the total value of everything you own.
“For example, if your contents and personal belongings are valued at Dh200,000, you will most probably pay less than Dh2,000 to insure them.”
Don’t make assumptions on what damage will automatically be covered by a policy. Every company will have its own set of exclusions; Harris advises being aware of the extent of coverage and keeping an updated inventory of possessions.
“Certain areas that people should look out for when examining their package include business equipment around the house, tenants’ liability, single-item limit for precious belongings, cash kept at home, freezer contents and home emergency coverage among others,” says Harris.
He adds that insured individuals also have to understand that their policy will only cover the repair or replacement of damaged or lost items according to current market value. Additionally, since UAE residents may travel often, they need to check what their insurer’s limits for how long a property can be left unoccupied and remain covered.
For instance, at RSA clients can personalise their policies according to specific needs, wherein experts work with customers to discuss the potential for extending coverage beyond that of the standard 60-day period over which it is typically applicable.
Get a claim
The process of making an insurance claim varies from company to company. “Usually, there is a number you can call or you can email your claims manager,” says Babur. “You would be required to complete a claim form. You would also be required to provide an evidence to support your claim, [for example], a police report in the event of a theft claim.”
Source: Hina Navin, Special to PW