What insurance do property buyers need in the UAE?

Buying a home in the UAE can be a sound investment, but protecting is key

DUBAI. UNITED ARAB EMIRATES, 04 AUGUST 2017. A massive fire rips through The Marina Torch tower's southern corner. One of the many onlookers take a mobile phone picture. (Photo: Antonie Robertson) Journalist: None. Section: National.

Have you had enough of renting and prefer to put your money towards investing in your own property in the UAE? Around six in 10 UAE residents plan to invest in property in the UAE or overseas in the next 12 months, according to a YouGov poll from property investment company IP Global last month. The new retirement visa, allowing expatriates to extend their stay in the Emirates by five years - is expected to further boost these home ownership aspirations.

This appetite for home ownership in the UAE, however, is not always matched by an awareness of the insurance cover you need to protect your new asset.  Here’s what you should know:

Protect the structure of your home

The decision to buy a home is often connected to other major life decisions such as getting married or having children. It’s no surprise then that homeowners prefer to avoid any “unnecessary” costs, such as home contents insurance, as it is considered a 'nice-to-have' rather than a 'must-have'. However, insurance should be a top priority.

For starters, building insurance is essential. For villas, this is the responsibility of the owner, but for apartment blocks, it is the responsibility of the building owners' association or the managing developer of the tower. The top mistake many homeowners make is assuming that a building policy will protect their belongings. Remember, building insurance only covers the physical structure and should not be confused with individual contents insurance. Apartment owners and tenants need their own policies to cover their personal belongings.

Buyers should ask basic questions before committing to a purchase. This includes an overview of the developer and the property history as well as a thorough check of the plumbing and electrical systems. This will give you clear expectations of what you require from your building insurance policy.

If you require a mortgage to finance your purchase, the bank expects you to have buildings insurance and life insurance in place. While buildings insurance is mandatory in the UAE, home contents cover is not - that is up to you.


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Protect your belongings

Safety fears are common for homeowners, especially during the summer months when families are away on holiday and dread the risk of a fire, burglary or accidental flooding damaging their property and belongings. Having no home contents insurance means no protection, so choose a policy that offers ample cover for contents and personal possessions within the house. This should include furniture, as well as personal possessions such as watches, jewellery, devices and art.

Remember, a home contents policy covers:

• anything fixed inside the house such as furniture;

• personal possessions we take outside the home, such as mobile phones, watches, jewellery, or even your golf clubs. This covers you against fire, explosions, lightening, earthquakes and other unexpected events;

• liability for both tenants and landlords; this can include accidental damage caused by a toddler drawing his favourite superhero on a TV or sofa. It also covers liability towards any third party for accidents up to a certain limit, to protect against compensation in legal cases.

How much it costs

Contrary to popular belief, home insurance is affordable, starting at Dh21 a month - less than Dh1 per day. If you own a two-bedroom apartment worth Dh1.1 million with insured home contents and personal belongings amounting to Dh175,000, the estimated annual insurance premium would be around Dh1,445.85. This represents 0.1 per cent of the combined value of your home, contents and personal belongings. For renters with the same contents, the premium would amount to Dh992.25. Remember, what others pay is not a good indicator of your outlay.


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How to get a quote

Numerous insurance portals exist in the UAE that compare options available on the market.  Fill out information about your home and contents to generate a quote; for more detailed cover, seek the advice of an insurance broker.

Read the small-print

Check the policy and make sure it covers your needs. Be aware of the extent of the coverage you have and update the possessions’ inventory. Never assume anything is automatically covered. Business equipment, tenants’ liability, precious belongings, cash kept at home, freezer contents and home emergency coverage are elements that might not be included if you bought a basic policy.

If an item is damaged, the insurance will either pay the repair costs of your damaged items or replace them at the current market value. Additionally, since many UAE residents travel extensively, they must check their insurer’s limits on how long a property can be left unoccupied and remain protected.

Making a claim

To make a claim, you must prove your loss. Take plenty of photographs of the contents you want  insured, particularly any valuable items. Receipts of your purchases will also come in handy, so keep them in a safe place for further corroboration. If you don't have receipts, insurers will still pay out using photographs or any other proof a customer submits to evaluate the value of an item.

David Harris is the director of distribution for the insurer RSA in the UAE and Bahrain