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24 February 2024

Bad weather leaves uninsured exposed

By Staff Writer



The penetration rate for home insurance and home contents insurance stands at less than five per cent in the UAE, which shows people are not protected against costs of flooding.

“Situations like the January rainstorms highlight the necessity of adequate insurance and demonstrate the challenges posed by the high number of under-insured and uninsured properties in the UAE,” said Michael Walton, Director – General Insurance, Nexus Insurance Brokers.

“Given that experts believe that climate change will result in more extreme weather in the coming years, it is likely that the associated problems are likely to increase, unless more people insure their assets,” he added.

One of the benefits of home insurance is that issues surrounding liability – such as over whether the master developer or local authority is ultimately responsible for bearing the costs of storm-damage – are managed by the insurance company. Clean-up costs are also managed by the insurance company on behalf of policy holder, who can get on with rebuilding and redecorating.

Lack of awareness around the accessibility of home and home contents insurance is seen as one of the reasons for the current shortfall in cover. With Dh100,000 worth of cover being available for premiums of around Dh400 a year, it is not thought that cost is a major factor in people’s decision not to purchase insurance, Walton said in a press statement.

Vehicle owners could also benefit from better awareness of the cover provided by their motor insurance.

Traffic chaos caused by the rains resulted in 1,307 vehicle accidents in a single day during the storms. Water-damages sustained by parked and partially-submerged cars also added to costs for many motorists. “It’s important for drivers to know that some insurance policies do provide coverage in the event of water damage to their vehicle, covered under the 'riot, strike, storm and flood’ clause,” said Angela Baldwin, Corporate Development Manager, Axa Insurance.

“If this protection is in place, the convenient claims processes that companies like Axa Insurance have in place enable motorists to get their vehicle back on the road much more quickly,” she added.

In 2007, insurance companies in the region saw a surge in claims in the aftermath of Cyclone Gonu. In Oman alone, total damage caused by the extreme weather conditions amounted to more than $4 billion.