Making insurance claims for property damages

There is still a debate whether the developer or the HOA would be responsible in case a building catches fire and for the loss that arisesAlthea Rozario-Vimal, Associate, The Legal Group

Buying a home in the UAE involves spending a significant portion of your life’s savings. Therefore, mishaps like fire, which can destroy buildings, cause severe financial distress. Althea Rozario-Vimal, Associate at The Legal Group (TLG), takes us through the legal process involved in claiming insurance after such accidents.

Compensation from builders

The homeowners could claim compensation for all the losses that have occurred due to fire which was a result of faulty construction. The Law of Torts would allow homeowners to claim compensation. It is a remedy applied in civil proceedings granting relief to people who have suffered (homeowners in this case) from the wrongful acts of others (developers).

An expert would be appointed by the court to determine the loss that has occurred. Based on the report, the damages would be awarded, depending on the discretion of the judge.

In this situation, the developers could argue the clause of “time frame,” a period after the handover of a property beyond which a developer is not liable for the defects in the construction of a building. Here, the onus would be on the homeowners to prove that the fire was a result of the developer’s negligence during construction.

When fire is due to faulty construction, it can be stated that the developer would be accountable for a specific period of time for the losses.

As per the Construction Contract Provision in the Civil Defence Transaction Federal Law, the developer will remain liable for 10 years from the date of the completion certificate of the building to repair and cure any defects in the structural elements. Upon the completion of this time period, the responsibility would shift to the homeowners association (HOA) unless proven that the fire was due to the developer’s faulty construction.

Initially, as soon as the loss has occurred, it would be the HOA that would bear the cost, which could later be shifted to the developer depending on the circumstances. Once the damages have been awarded, as per the UAE law, it would be the HOA that would take up the responsibility of reinstating the property.

Settling the claim takes a varying amount of time depending on various factors such as the circumstances of the incident, extent of damage caused and how many units were affected.

Role of HOA

There is still a debate whether the developer or the HOA would be responsible in case a building catches fire and for the loss that arises.

Currently, all the HOAs in Dubai enjoy interim status. In such cases, it could still be argued that the developer is liable as his responsibility has not been transferred yet. Nevertheless, it is not just the developer who should be liable once handover is completed. Once the property has been handed over to the HOA, the HOA has to maintain comprehensive insurance of an amount equal to the repair or replacement value of the jointly owned property in case of destruction for any reason. HOAs are also required to get insurance against liability for damage to property or bodily injury to owners and occupiers. Since HOAs have an interim status, there are delays in acquiring insurance policies.

Types of home insurance

Home insurance consists of two kinds: building and contents cover which can be purchased individually or together. The former covers the physical property and its permanent fixtures; the latter covers valuable possessions included in the policy.

The important factors to be taken care of when getting an insurance are to make sure that the liability coverage is not too restricted and to obtain insurance for replacement. Make sure that you are well aware of policy exclusions. If the contents cover has been obtained, list them properly and separately to avoid excessive claims. Ensure your house is not underinsured at the time of loss to avoid penalties and that your policy covers “force majeure.” Carefully read the policy wording to avoid obstacles when receiving the claims. Also, once the damage has occurred, make the claim as soon as possible. Make a list of all the things that have been lost, keeping in mind not to throw away anything however badly it has been destroyed. This would allow the insurance adjuster to make a proper evaluation of the loss.

Source: S. Dhar, Special to Freehold

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