94% residents don't have home contents insurance

Published Wednesday, November 13, 2013

One year on from the Tamweel Tower fire in Jumeirah Lake Towers, Dubai, UAE residents have failed to heed the warning and take steps to protect their home contents against fire and other potential risks, according to a study released on Wednesday by global insurer Zurich.

In a survey of more than 1,000 UAE residents conducted by YouGov, 94 per cent of respondents reported that they do not hold insurance cover for their home contents. This is despite 27 per cent of respondents admitting that the fire in Tamweel Tower on November 18, 2012, had encouraged them to consider purchasing home contents cover. Unfortunately, the majority never followed up their intentions with actions and their home contents remain uninsured.

The findings were most pronounced among tenants, with only 4 per cent reporting they have home contents insurance, compared with 22 per cent of home owners.

The survey results support Zurich’s direct experience in the immediate aftermath of the fire, with the insurer’s call center experiencing a 200 per cent spike in customer enquiries in the two weeks following the event, which then rapidly returned to normal levels.

Despite the low penetration of home contents insurance, the majority of respondents were aware of the risks that threaten their homes in the UAE. Almost half (49 per cent) identified fire as the biggest threat followed by electrical faults (16 per cent), theft (11 per cent), building faults (10 per cent) and flooding (10 per cent). A fifth (21 per cent) of respondents said they had personal experience of these risks, while almost half (49 per cent) reported that they knew of someone’s home that had been damaged due to one of these risks in the past five years.

“The JLT fire created a surge in awareness across the UAE about fire, risk and insurance, but this quickly dropped off and it is doubtful that it had a lasting, long-term effect on people’s attitudes,” said Brian Reilly, Chief Executive Officer of Zurich’s General Insurance business in the Middle East.

“Events such as the Tamweel Tower fire focus minds but their impact inevitably wanes. One year on, it appears that the home contents of most UAE residents are still inadequately protected against unanticipated risks.”

Zurich attributes the low insurance penetration levels in the UAE to two common misconceptions. Firstly, many tenants believe their possessions are covered under their landlord’s buildings insurance. However, this only covers loss of, or physical damage to, your home and the permanent fixtures and fittings. It does not cover the items in your home that are not permanent fixtures or fittings, such as furniture, appliances, clothing or personal possessions - home contents insurance is required to cover these items.

Secondly, many people think that their valuables are not worth insuring. A separate Zurich study from last year found that on average UAE residents underestimate the value of their home contents by almost half (44 per cent). In monetary terms, participants in the study underestimated the actual value of their home’s contents by between Dh27,500 and Dh360,000. The study found that the large discrepancy was explained by most residents failing to account for the accumulated value of possessions over time and the cost of replacing clothing.

“Home contents insurance is relatively inexpensive with cover starting from less than Dh1 per day. Unfortunately, from our experience, many tenants wrongly assume that their home contents are covered on the buildings insurance and that the value of their possessions is low. Both could be costly mistakes,” added Reilly.

Holders of home contents insurance by nationality

Emirati 20 per cent

Western 19.5 per cent

Arab Expat 4.1 per cent

Asian 3.8 per cent

What do you believe is the biggest risk to your home in the UAE?

Fire (external, from other homes / neighborhood) 29 per cent

Fire (internal, from within home) 20 per cent

Electrical faults 16 per cent

Theft/burglary 11 per cent

Building faults 10 per cent

Flood (internal, burst tap/faulty aircon) 7 per cent