Find out how to protect your prized possessions

How to protect your prized possessionsImage Credit: Supplied

We all begin the year with noble intentions, but do your resolutions include being a savvy resident? Then one must-do is to insure the contents of your house.

Whether you are an owner or a tenant, property insurance brokers are urging UAE residents to buy home contents insurance to protect themselves against accidents and unexpected events. ''One must always be prepared for the unexpected,'' says Amit Mitbawkar, Senior Financial Planner at Acuma. ''There have been a number of fires in residential buildings across the UAE where people lost a lot of money as they did not have a home contents insurance cover. Having such a policy brings peace of mind as it insures your most precious possessions in the home.

''Your landlord or building owner insures only the external structure or the building where you live. This does not cover personal belongings and liability.

''Home contents insurance covers the cost of replacing possessions or contents inside the house in the event of destruction in a covered peril such as wind, fire, hail, lightning and theft. The company replaces lost or damaged items, or pays the value of content as agreed on the insurance quote,'' explains Mitbawkar.

However, home and contents insurance covers only unforeseen incidents, says Alison Fenech, Head of General Insurance at Nexus Insurance Brokers. ''For example, you go on vacation and a pipe inside your villa bursts and the house gets flooded. Firstly the homeowner or tenant will cough up a huge electricity and water bill. Secondly the flooding will destroy all the household items. With home and contents insurance in place, you not only get a cover for things in the house but also part of the water bill.''

The insurance will not pay any damages if the accident was due to lack of property maintenance.

Low cost

Premium for your home contents insurance policy depends on the value of the insured items and the benefits you choose. ''Premiums for contents insurance in the UAE are competitive compared to insured value,'' says Mitbawkar. ''You will be surprised to know that when you do a simple audit of your house, the items in the house can easily add up to about Dh200,000 in value. Premium for this value is only Dh600 a year in the UAE.'' It can go up to Dh2,000 for a maximum insured value of Dh2 million.

Though the rates are reasonably affordable, home contents insurance is yet to take off in the UAE. ''One of the main reasons is that expatriates believe that they are only here for a certain period of time and do not want to spend that extra money to insure their home contents,'' says Mitbawkar.

Fenech agrees. ''Unfortunately, people in the UAE find home insurance an additional expense rather than an investment.

''Western expats are more aware of home contents insurance, given that it is mandatory in certain countries.''

Mitbawkar believes there is another reason for this kind of insurance being uncommon in the UAE. Houses here are built using concrete rather than wood and therefore people underestimate the risk of accidents.

A 2013 insurance study noted that 94 per cent of the population in the UAE do not buy home and contents insurance. ''The mindset of people here has not changed despite the country facing regular earthquakes and fires in buildings.

''Out of our own client portfolio, less than 5 per cent people have home contents insurance,'' says Fenech.

Kinds of cover

There are two types of insurance. Most people go for the standard off-the-shelf policies, which provide cover for buildings, contents and third-party liability. Some policies cover accidents, death and repatriation of domestic helps. ''It is even possible to be covered for the loss of metered water and damage to plants in your garden,'' adds Mitbawkar.

The second type is the private client group policies, which offer comprehensive coverage for people who typically have home contents valued above Dh1 million, one or more vehicles valued about Dh400,000 and more, or a property valued around Dh4 million.

Home contents insurance coverage in the UAE by Acuma

- Unexpected events and natural calamities: Your home is insured against damage caused by events such as fire, lightning, earthquake, flood, storm, malicious damage, riots, strikes, water leaks, theft and more.

- New for old: Your contents are covered on a repair-or-replacement as-new basis except for clothing and household linen.

- Alternative accommodation: If your home is damaged by an insured peril and its condition is such that you cannot continue to live there, you will be paid reasonable expenses for loss of rent or alternative accommodation.

- Tenants' liability: This extension protects you against damage caused to the premises rented by you following an insured peril (fire, explosion, etc.) and for which you are held legally liable.

- Legal liability: This cover is for claims made against you by third parties who suffer injury, loss or damage following an incident at your home.

- While you're away: You're covered when your home is unoccupied for up to 45 days.

- Theft of keys: If keys to your home are stolen, you will be paid the cost of replacing locks.

- Frozen food: This covers deterioration of food in your refrigerator following its breakdown or public power supply failure.

- Visitor's personal effects: Personal belongings of visitors are covered if damaged at your home due to any of the insured perils.

- Contents in the open: Covers contents kept in the open.

- Moving of household items: This cover is for your contents while in transit when you move from one house to the other within the country.

- Worldwide cover against all risks: Personal effects including clothing, plus specified and listed items of jewellery, watches, musical, photographic and sports equipment, laptops or any valuable item that you carry outside your home on business or holiday or even daily use are covered optionally.

- Cover for domestic helps: This will protect you in case your domestic help sustains accidental bodily injury that results in death or permanent total disablement by covering medical and repatriation expenses.

- Loss of money and credit cards: Cover for loss of money and fraudulent use of your credit cards if stolen.

- Loss of passport, driving licence, residence permit and work permit: Covers costs in making duplicates if they are accidentally damaged or lost anywhere in the world.

- Accidental damages: The building and contents cover can be enhanced by taking this extension, which covers loss or damage in accidents.

Understand the types of property insurance policies

Source: Anjana Kumar, Special to Property Weekly


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