Address fire sparks big demand for home insurance

Enquiries for home insurance policies triple following a recent fire incident in Dubai.

Insurers typically see a spike in enquiries for home insurance policies in the wake of a disaster. Call it a knee-jerk reaction, but it's been a case of deja vu for local insurers following a spate in fire incidents.
Home services website MoveSouq.com saw the number of requests for home insurance tripling in the first week of 2016 compared to its weekly average of requests.
"The recent incident caused many UAE residents to look at their own homes and ask themselves, 'Am I protected?'", says Bana Shomali, chief executive of MoveSouq.com.
Dubai has historically had very low home insurance adoption rates. In a 2015 poll of 200 Dubai residents, MoveSouq.com found that more than six out of 10 (61 per cent) Dubai residents do not have home insurance.
 

The survey also disclosed that adoption of home insurance is substantially higher among homeowners compared to tenants. Two thirds (66 per cent) of homeowners had insurance in place to cover their home and contents, while only one quarter (25 per cent) of tenants had taken out home insurance.
A majority of expatriate tenants shun home insurance as they feel the UAE is safe and owing to their transient stint here. It has been observed that Western expatriates are more willing to take out home insurance in comparison with their Arab and Asian counterparts.
Says Nitin N., director of an interior design firm and a tenant in Dubai: "I haven't really thought about taking out home insurance although everything is insured at my workplace. When insurance companies approach me to take out policies, they usually talk of medical or car covers. I know home insurance is very cheap. But since Dubai is relatively safe, I haven't felt the need so far. But recent fire mishaps are making me do a rethink."
Ethnic preferences
"There is a higher insurance awareness among Western expats on the benefits of home insurance, as home insurance is common protection practice in the West. In comparison, such awareness is lower in the UAE. Perhaps because the UAE is a much safer environment and risks like theft for example are not that common. However, there are other accidents like fires and floods that can cause huge damage and these are instances that expats should look toward protecting themselves against," says Haris Milonas, executive vice-president and head of consumer lines at Oman Insurance.

According to Alison Fenech, head of general insurance, Nexus Insurance Brokers, tenants in the UAE are reluctant to take out such policies. "Since buildings are built from stone, they feel the risk is minimal. However, the material being used prove to be a high risk due to being combustible. They might also think that flooding is not a risk either, given the climate in UAE. However, we have seen instances where seepage and leaks occur on first rains."
If it's the cost that's deterring you from taking out a home insurance policy, consider this: The cost of a basic home insurance cover can be as low as Dh1 a day.
"Our annual plans range from Dh200 and go up to Dh1,140, depending on the specific covers that a customer will chose to protect their home and property," informs Oman Insurance's Milonas.
The lack of awareness and aversion to spend have resulted in the majority of buildings in Dubai being under-insured.
Contents insurance
However, as a tenant, it is your responsibility to take out contents insurance. The landlord or home owner is required to buy property insurance. So, what's the difference?
"Property insurance insures the physical structure of the property, including the permanent fixtures and fittings; whereas contents insurance is insuring damage or loss or theft of personal belongings which you may have purchased for the house or self. For instance, televisions, laptops, valuables," explains Sanjay Tolani, managing director and chief executive of Goodwill Insurance Brokers.

Contents insurance will also cover jewellery, kitchen equipment, clothes, furniture, money and important documents, like passports for example.
Simplifying the concept further, Fenech says: "Imagine you are selling your house. Anything moveable that you may take with you to your new home is considered as contents, the rest falls under building insurance. For example, you can take a refrigerator, but you are not expected to take your kitchen tiles."
A roof above your head
In the absence of adequate insurance cover, residents are often found frantically searching for accommodation options or move in with friends temporarily if their building is damaged.
"Most home insurance policies provide a cash benefit to be able to move into an alternative accommodation, and this is dependent on the policy or benefits a tenant or owner would choose. One of the key factors that most people forget to understand is that insurance policies can be modified to add/delete benefits which a client would require. If they cannot decide, many companies offer off-the-shelf products with the general covers," clarifies Tolani.
"Alternative accommodation is an option by default. If a client purchases a building policy, the limit is normally 20 per cent of the building's sum insured while under contents insurance, the limit is the same percentage of the contents sum insured. If a client takes a policy combining both, then the limit on the building value prevails," concludes Fenech.
- deepthi@khaleejtimes.com