As Iranian missile strikes on the UAE prompt interceptions over populated areas, the risk of property damage from falling debris has become a concern for many. For homeowners, motorists and business owners alike, the question is whether existing insurance policies will apply – and what to do if they do not
The answer, according to insurance professionals, is that standard policies may be insufficient, as most household and commercial insurance contracts contain war exclusions – meaning a standard policy invoked by an event deemed war-related could be challenged or declined.
What is political violence insurance?
For residential property owners, the first step is a close reading of the policy they already hold, according to Ibrahim Karam, chief executive of R2S Insurance Brokers and partner of Dubai-based risk firm EIRS. “Coverage typically responds to falling debris if it causes physical damage but exclusions may apply for war-related risks, depending on the definition of the same.”
He advises homeowners to ensure the sum insured reflects replacement cost rather than a lower market or book value, and to check both deductibles and notification timelines with a professional broker. Where a gap exists, political violence insurance – as a separate policy – can cover it.
Political violence insurance is a specialist product designed to fill the gaps left by conventional policies. "[It] provides cover for terrorism, war and warlike operations, riots and strikes, and political risk,” says Sanjay Bhagwan Babur, chief executive of Cosmos Insurance Brokers. “It essentially buys back the standard exclusions in your standard policies.”
For car owners, the type of motor policy a driver holds determines whether their vehicle is covered for debris damage. “Comprehensive motor policies cover accidental damage such as falling debris, unlike third-party only cover,” Mr Karam says.
It is important for motorists, tenants, landlords and small business owners to review their insurance exposure, as the solutions for each are different.
“Tenants need contents insurance, while landlords require building cover. Businesses should secure property all-risk with business interruption. Individuals should also consider personal accident insurance to cover injury, disability or accidental death risks – all to include war risk cover,” Mr Karam says.
Currently, it is mainly businesses purchasing political violence cover, rather than individual property owners, Mr Babur notes. “The current available policies cover fixed non-movable assets – factories, warehouses, buildings – not movable assets like cars or lorries.”
That limits the product's reach for individuals but makes it a material consideration for companies with physical premises.
What business owners should consider
For commercial property owners and tenants, the gaps in standard policies can be more consequential.
“Business owners in the UAE should first understand that not all physical damage is automatically covered under standard property insurance policies,” says Aurélien Paradis, chief executive of AU Group MEA. “This is an area where many businesses assume they are protected, only to discover gaps after an incident.”
Physical damage is only one part of the risk picture. “It is also important for businesses to consider the financial knock-on effects of disruption. Even if damage is limited, temporary closures or slowed operations can delay invoicing and payments from customers, putting pressure on cash flow,” he adds.
Mr Paradis highlights trade credit insurance as a tool businesses may be underusing. “While it does not insure buildings, credit insurance helps protect a company's receivables if clients delay or fail to pay.
“In periods of uncertainty, protecting cash flow becomes just as critical as repairing physical assets … The key aspect for business owners is readiness, and it is not too late now to look into trade credit insurance options, even if the UAE remains a highly resilient and well-regulated market. Businesses can always be one non-paying client away from bankruptcy.”
Costs add up
For businesses considering political violence insurance, cost is a significant factor. Mr Babur says minimum premiums are about $30,000.
“Rates vary significantly and are changing every day based on the situation on the ground,” he says. “The rates vary between 2.5 per cent and 5 per cent depending on the location of the business – something near the airport or seaport would attract higher rates compared to something in the middle of the desert.”
For context, those figures represent a sharp increase from the pre-conflict baseline. “Before the war, the rates were 0.1 per cent to 0.2 per cent,” Mr Babur says.
Despite the cost, he expects the product to become a routine requirement. “Political violence cover is probably going to be standard going forward, and I'm fairly certain banks will insist on businesses buying the cover. The current rates reflect the level of risk – as things get better, these rates will also come down to more realistic, affordable numbers.”
