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Fire or flood: Dh1/day protects Dubai home

Home insurance policy can cost as little as Dh1 per day. (Ashok Verma)

By Shuchita Kapur

The plight of residents who’ve lost their homes and belongings in the wake of the recent fire in the Torch tower in Dubai Marina, has once again underlined the importance of securing your home against all kinds of accidents, whether they are natural disasters or the result of human folly.

With just Dh1 per day – an amount that is even less than getting a shirt ironed in Dubai – you can relax and secure your home and its contents in the case of any untoward accident.

“A home insurance policy can cost as little as Dh1 per day,” Alison Fenech, Head of General Insurance at Nexus Group, told Emirates 24|7, an amount that can may prompt many to take the vital step towards securing their financial future in case of a calamity.

Several residents who tend to procrastinate about getting home contents insurance often do so under the false belief that costs are prohibitively high, tagging it as just another added expense.

However, this is not the case. “If we have to give an example, a home contents insurance with a sum insured of Dh50,000 can cost Dhs150/annum,” says Fenech.

“In general, policies cost between Dh225-Dh1,863 for home content and associated coverage of up to Dh425,000,” Girish Advani, Head of Personal Banking, Consumer Banking Group, First Gulf Bank, told this website.

And the premiums are not going up any time soon after the recent fire tragedies in the country.

“Generally, premiums do not fluctuate after an incident is reported, and so coverage costs should not increase after this incident,” says Advani.

Fenech too says that “premiums have not increased per se, however if we keep experiencing these losses, premiums will increase in the long run just like everything else.”

Villa versus apartment

So, what exactly are the variables that will determine your insurance premium? Will the kind of property you live-in – villa, townhouse or apartment – be a determining factor?

Not really. “Prices do not significantly vary by property type, but rather on the type and extent of coverage amount selected,” says Advani.

“There is no difference in premiums. When it comes to pricing, insurers evaluate the premium based on the criteria given. Sums insured, location, and loss experienced are the main attributes.

“The higher the value of the contents, the higher will be the premium. Lower the risk, premium will be lower,” elaborates the expert at Nexus.

Another noteworthy thing here is that you really don’t need to provide the receipts to the insurance provider.

“Home insurance provides a blanket cover based on the selected coverage amount so you do not need to provide receipts of goods in your home to determine the total cost of your home,” says Advani.

Will it cover alternative accommodation?

One big question on the minds of those looking to get a home insurance is if they will be provided with alternative accommodation in case there is a fire in their homes and it becomes impossible for them to live in there.

Yes, that’s provided for but experts say it’s important to understand what kind of insurance you buy and grasp each aspect before you sign on the dotted line.

Typically, there are there are three kinds of home Insurance – building (structural), contents (all contents of the house like furniture, electronics, white goods) and personal possessions (worldwide coverage of all personal items such as jewellery, cash, credit  cards, laptops, phones, collectibles, etc.)

As per FGB, home insurance covers a tenant’s liabilities for damages to a third party (like your neighbour) caused by a fire, leak, damage to property.

It also provides alternative accommodation in case the property become uninhabitable and a complimentary document replacement service in case of damaged or lost IDs, passports, driver’s licence, etc.

Home Insurance can also cover your items in transit – i.e., when you move from one house to the other within the UAE.

“A typical home contents insurance policy covers fire, theft, flood, water damage, etc… equivalent replacement for damaged items, personal money, replacement locks, food in the freezer, valuables (jewellery, paintings, antiques, etc.), loss of metered water, loss of rent/alternative accommodation, occupier’s or personal liability, public liability, and more,” points out Fenech.

“Depending on what type of damage your home incurs, you could find yourself and your family with no place to stay for a while. For instance, if your home has been contaminated or there is a fire, you may find that you have to find alternative accommodation whilst the problem is being sorted. Some insurance policies will foot the bill for hotel or alternative accommodation whilst your home is being repaired. This is in addition to the valuable cover provided on your home and belongings,” he further adds.

Besides alternative accommodation, “if you wish to send your family to your home country, the coverage also pays for a one way ticket to the insured’s home country,” says Advani.

What will my insurance not cover?

Home insurance is to protect your place and you from the many kinds of losses that are included, but it is not a solution to all the problems and there could be some grey areas where the insurance claims may not be given out to you.

Claims are settled for losses/damages covered by the policy subject to its terms and conditions.  Policies will not cover damages/losses arising out of poor maintenance or wear and tear.

“For example, if you have constantly ignored changing or maintaining a pipe that has been seeping water and it breaks down suddenly (due to wear and tear) and your apartment is flooded, insurers may avoid paying out the claim,” says Fenech.

“If you have a switch which is shorting the electricity every time you switch it on/off, and it suddenly causes a short circuit that turns into a fire, then the policy may not apply. Another example is the sums insured. People may think that they would save on premiums by declaring lower values; however, when it comes to claiming their damaged property, the insurer will not pay the full amount, but the proportion of that amount insured. Other than these examples, insurers will not pay out if they find the claim is fraudulent and in such cases can declare the policy null and void,” he lists the reasons.