Dubai floods should serve as home insurance wake-up call, experts say

'Shockingly low' rates of cover come into sharp focus after storms

Al Qudra is one of the areas affected by flooding in Dubai. Chris Whiteoak / The National

UAE weather live: Emirates hit by severe storms

Dubai’s severe floods should remind people of the importance of taking out home insurance, industry experts said.

The number of people in the UAE with the cover is “shockingly low”, with less than 15 per cent of UAE residents with home insurance, they say.

It is the trend across the Middle East. Inquiries about it only come during extreme weather events or fires.

But the cover could be a useful protection against the devastating floods across Dubai during the week.

“Take-up rates for home insurance are still shockingly low and we only seem to see an influx of enquiries whenever there is heavy rainfall, or news of a fire in an apartment block,” Andrea McNulty, head of product development at finance comparison site Yallacompare, told The National.

“Today there’ll be people facing the prospect of having to replace furniture, pay for alternative accommodation, replace food in a fridge/freezer that’s no longer running. A lot of the insurance policies will pay out in all of these instances.”

Home insurance typically can protect your property from risks including natural disasters, floods, theft and fire. People can take out cover to protect the building and also the contents.

Ms McNulty said there was “nowhere near enough” people with this type of cover, with less than 15 per cent of consumers in the UAE having a home insurance policy in place. In the UK, about 25 per cent of homes do not have any form of home insurance.

“It's one of those things that people will ‘eventually get around to’ but never end up purchasing,” she noted, stating calls to the company surged by 45 per cent since Tuesday and this was expected to continue into the weekend.

“A decent home insurance policy can cost from as little as Dh1 per day. Compared to the alternative of having to replace everything yourself if you don't have insurance, it's really a bargain. While home insurance might not fully undo the damage caused, it does provide a sense of security amid all the uncertainty.”

The aftermath

A major clean-up operation is now under way across Dubai, but evidence of the storms was still apparent across the country on Thursday, with some roads waterlogged, cars abandoned and homes under water.

The scale of the damage is still hard to assess. Ms McNulty pointed to Cyclone Gonu in 2007 that swept through the region. “That damage was estimated at over $4.2 billion,” she said.

Anthony Cerchiai, head of general insurance at Nexus Insurance, told The National it was too early to assess the scale of the cost but it could run into billions of dirhams.

“The best cure is prevention,” said Mr Cerchiai, also stating that home insurance was low in the UAE. “All the Middle East is underinsured as it is seen here mostly in terms of mandatory cover such as medical. It has not been popular."

Mr Cerchiai said calls to Nexus surged 10-fold since Tuesday and he urged people to also consider travel insurance as they would be in line to get compensation should problems arise. “Insurance is the proper way to do it,” he said.

Ms McNulty said insurance companies will be working “non-stop” to process claims and those affected should contact their company as soon as possible.

“Some insurers will have set time frames to notify them. This can be as low as 48 hours from when the loss occurred,” he said.

“Take lots of photographs of any damaged property. Don’t try to move a waterlogged vehicle yourself, you risk causing more damage."