HOME INSURANCE

    FREQUENTLY ASKED QUESTIONS

    home_insurance_alfred

    Home Insurance in the UAE: 'The Need to Knows'

    Year or year in the UAE, specifically Dubai, the city finds itself welcoming newly built apartment complexes and spacious villas to house the growing number of expatriates who have made the country, their home away from home. It goes without saying that homeowners, some others very meticulously, furnish their apartment or villa with plenty of affordable furnitures and house fixtures to their liking. So alongside this growth, why are only less than half of the population’s homes insured?

    Who is home insurance for?

    The common misunderstanding of home insurance is that only individuals who own their apartment or villa owners, can purchase this type of insurance. This isn’t true at all, as individuals who rent an apartment or villa, tenants, can also purchase a home insurance.
    So it’s a big YES to both landlords and tenants.
    The only exception would be for individuals in shared accommodations due to high risk associated.

     

    What are the standard coverages under home insurance?

    Across the many types of home insurance providers that can be found in the market, the following would be the common coverages available across all insurers.

    • Building is the permanent structure of your home made of brick or concrete and roofed with incombustible material. It can also include your garage or swimming pool that forms part of your property.
    • Contents are household items inside your home. This can include, but is not limited to your furniture, kitchen appliances, interior decorations and home electronics.
    • Personal Belongings is an optional coverage and are typically personal items that you carry with you frequently and outside your home. This can include, but again, is not limited to your watches, jewellery, laptops, mobile phones, or clothes. Most insurers extend coverage outside your home (worldwide) for up to 90 days.

    You can choose to insure only the building or only the contents of your home, but it’s not possible to insure only your personal belongings.

     

    How do I value my building, contents and personal belongings?

    • Building – The value, also known as ‘sum insured’, required is not the original purchase price or current market value of the building, but the rebuilding cost. This is simply the cost for rebuilding the property in the event that your home is damaged beyond repair.
    • Contents – The sum insured should be the total current value of all the items you own inside your home. To further simplify this value, it is the cost of replacement of your home contents if it were all completely lost in a fire.
    • Personal Belongings – Similar to how contents is valued, the sum insured for personal belongings should also be based on the total current value, i.e. cost of replacing all your items classified as a ‘personal belonging’. For items that appreciate, such as jewellery, it is highly recommended to have these valued on a yearly basis to ensure that you are insuring your expensive piece of jewellery at the right value. After all, it’s value might have increased more than twice or even more since your initial purchase!

     

    Do I need to provide a list or breakdown of all my contents and personal belongings?

    It really isn’t as daunting a task as most people think.
    Most insurance companies only require you to list or specify items above a specified limit. It is only if the value of a single item exceeds this limit that you are advised to or specify the item by providing its description and value.

     

    What does Single Article Limit (SAL) mean?

    Related to the above point, the specified limit is known as the ‘Single Article Limit’ (SAL). This limit varies between insurers and would apply to both the contents and personal belongings cover. Some of the existing limits in the market may range from AED 2,000 up to AED 40,000.
    This limit is the maximum amount an insurer will pay for a single valuable item in the event of a claim.

    So if your insurer’s single article limit for personal belongings is AED 10,000 and you happen to own a watch worth AED 18,000, and have not listed it in your policy, the insurer would only cover you up to AED 10,000 at the time of a claim.

     

    What if I don’t have the receipts or invoices? Can I still purchase a home insurance?

    You definitely can still insure your home even without these documents upon sign up.

    Receipts or invoices serve as ‘proof of value’ and become inherently important as supporting documents at the time of a claim, so make it a habit of keeping inventory of all your contents and personal belongings. Updated valuation letters or certificates and photographs are documents that should also be safeguarded to support a claim.

     

    What is the excess (deductible) and how does it affect me when I make a claim?

    The excess varies between insurers, and applies to all three standard coverages. It is the amount to be shouldered by the insured and is applicable for each and every claim. It is not an amount that is expected to be paid upfront for a valid claim, but rather the amount that will be deducted from the total claim amount payable.
    Generally, building has an excess of AED 1,000, contents AED 250 and personal belongings AED 250. In addition, most insurers also have an additional excess of 10% for items that exceed the SAL over and above the minimum excess.

     

    So how much do I get at the time of a claim?

    • Building:
      If your apartment or villa were to be wiped out in a fire, resulting in a total loss, the amount you would be covered for in terms of the building would be the sum insured (rebuilding value), minus the excess.
    • Contents and Personal Belongings:
      Items that are beyond repair are replaced at a ‘new-for-old’ basis. This would be the general rule of thumb for contents and personal belongings covered under the total sum insured and are not valued above the SAL. So in an example, if your phone had been accidentally damaged and you make a claim for it, provided that it is beyond a repairable state, you would be covered up to the current market value of that exact or similar model. Remember that insurance is meant to financially restore you in the same position prior the loss or damage of the claimed item and is not a financial instrument meant for profit.
    • Listed items above the SAL:
      For items above the SAL and are listed on the policy with a specified value, provided that the item cannot be restored or repaired, the claim amount payable would be the value specified on the policy, minus the applicable excess.
    If you owned a watch worth AED 35,000 and your policy’s SAL was AED 10,000, provided this was listed on the policy and it was beyond restoration or repair, you would be covered up to the listed or specified value. Keep in mind that insurers expect a receipt, invoice or valuation certificate to further support the value specified on the policy for items that fall under this category.

     

    How much are the typical premiums?

    Building ratings range from 0.02% to 0.07%. Major insurers rate typically contents from 0.30% to 0.50%. Personal belongings are rated between 0.90% and 1.50%. The reason for the high rating is due to the higher risk associated with personal belongings as against contents which are things inside the home and so lessens the possibility of theft or accidental damage.

     

    What main factors affect premiums?

    Claims
    If you’ve had home insurance claims in the past, this would most likely affect your quote though it does still depend on the gravity of the claim and how long ago it had happened. If the claim was a relatively small amount, insurers will sometimes not load (increase) the premium. Insurers expect you to declare any claims you’ve suffered in the past six months to one year, the latter range depending on the insurer. Non-declaration could result in the rejection of a future claim or even cancellation of the policy.

    Optional Covers
    Personal Belongings is one of the standard coverages offered by all insurers, but is completely optional. Compared against contents, personal belongings is rated much higher, which simply means that the higher the sum insured, the higher the premium.

    Domestic help is coverage extended to your help inside the home and includes a payout in case of accidental bodily injury. It usually comes at a premium of AED 100.

    Loss of documents is optional for some insurers, though others have automatically built in this benefit at a . This cover would in case of accidental damage or loss of identification documents such as your passport, license or work permits.

    Your Preferred Insurer
    Major and international insurers who have been offering home insurance for years in the UAE have a bit more flexibility in providing complete and comprehensive benefits at very competitive rates as a result of experience and presence in the market. With a bigger book of clients for home insurance, the risk is easily mediated compared to small players. Also while other insurance companies might presently provide unbelievably low prices, the key point to remember when selecting your insurance company is be confident that it has the financial capability to cover you when the unexpected happens and you need to make a claim.

    Your Preferred Broker
    There are thousands of brokerages in the market and the years a broker has been in the market alongside their relationship of trust with insurance companies are some main factors to look out for when consider when selecting a broker.

    The greater experience and the trust, the greater are the chances of securing the best rate. Some brokerages even go the extra mile and commit to assisting you at the time of a claim at no additional charge.

     

    What is under insurance? (What NOT to do.)

    Under insurance is when the overall value of the things you own or the total sum insured is significantly lower than the actual value. For example, it’s valuing your contents’ sum insured as AED 150,000 when it should actually be valued at AED 300,000 – thereby undervaluing and under insuring your home contents. While the lower value does bring down the premium, most don’t realize that they’ve just substituted the complete peace of mind that comes with purchasing insurance, by taking on a risk.

    If you undervalued your contents at AED 150,000 (agreed sum insured), in the event of a fire which resulted in the total loss of your home contents, while you should have been covered for the agreed sum insured of your contents, insurers will pay even lesser than the agreed sum due to the under insurance clause on all home insurance policy wordings. How would the insurers know? Logically, before paying out claims, investigations are conducted and supporting documents are sought before paying out a claim, so when it’s verified during the claim process that your home contents is actually valued at a much higher amount than the agreed sum insured, the claim amount owed to you is reduced in proportion.

    You risk losing out on a much bigger claim amount payable when you compare it to the few hundred dirhams you could have paid upon signing up to the policy to fully cover your contents for AED 300,000. This clause applies to the building, contents and personal belongings.

     

    What are the main liabilities I am covered for under home insurance?

    • Owner’s liability to the public covers you as the building owner for any accidental injury or damage to a third party person or property that had started in your own property.
    • Occupier’s personal liability is an interesting cover that is similar to the Owner’s liability, except that this applies to the occupant of the building and even extends to a worldwide coverage up to 90 days during the insurance period.
    • Tenant’s liability is a beneficial cover for tenants in case of any accidental loss or damages that makes them liable to their landlord.

     

    What are some other interesting covers under home insurance?

    • Loss of Rent or Alternate Accommodation:
      As a building owner who may rent out his property, landlords are covered in case of any damages to the property and also for a loss of rent as a result of not being able to take a tenant due to the damage.
    • Sale of Home:
      In case you’ve decided to sell your home, the individual who purchased it would be covered under the existing home insurance in case of any damage during the process of the sale (including paperworks) until completion of the sale.
    • Contents in Transit:
      Occupants with contents coverage under home insurance have the additional cover in case of any accidental damage to their contents during the moving of houses or apartments. The main condition is that the move would have to be handled by a professional mover.

     

    What if I own expensive jewellery and paintings?

    The UAE is home to a variety of nationalities and personalities, and with Louvre in Abu Dhabi, it’s no big surprise that there are individuals who have a taste for not only viewing, but owning artwork and antiques in their homes.

    The standard home insurance offered in the market may cover these, but it usually comes at extremely high premiums due to the high sum insured. Some insurers might not even be able to take on the high risk that comes with owning these and could outright exclude them from being covered.

    Major insurers have High Net Worth home products for this specific niche at much more reasonable premiums and guaranteed cover that could include unlimited, worldwide coverage for not only your jewellery, but also your contents and artworks. Under a standard home insurance, this coverage is limited to personal belongings only and restricted to 90 days.

    Home insurance may not be a mandatory insurance like car or medical insurance, but is still as important to ensure financial security for you and your family when an unexpected fire, leakage or theft occurs inside your home.

     

    For reasonable premiums that can be as low as AED 250 to AED 400 for home contents (depending on the value of what you own and what you insure), the benefits are numerous and extends coverage outside the four walls of your home.

    Select a trusted broker to give you the best advice on what would best fit your needs as the options can appear endless. Layer your ‘home sweet home’ with that extra blanket of security home insurance provides. You won’t regret it and it’ll make it all that much sweeter.

     

    Want to know more about the home exclusions?

    We only sell contents or buildings insurance we believe to be thorough, well designed and will not cause problems in case of claim. In general, however, the following things are excluded from insurance policies: – loss/damage resulting from war/terrorist activities – loss or damage dude to wear and tear, depreciation or any other gradually operating cause – liability arising out of any mechanically propelled vehicles – any incident or loss involving radioactivity – loss, destruction or damage caused by sonic bangs. – cyber risks and associated perils.

    This list is by no means exhaustive, each underwriter has their own conditions and exclusions – it’s best to check the policy booklet. You can get hold of them on our downloads page.

     

    Want to know more about the home policies and covers?

    Alfred really likes to deal with the big multinationals for home insurance. This way, we can be sure they won’t go missing if your apartment gets flooded and your lovely sofa gets ruined. They’re very well priced too – by insuring many houses across the region, they benefit from the law of large numbers and can push the prices right down. The best selling products on InsuranceMarket.ae’s shelves are written by AXA and Chartis. We can get you a simple comprehensive policy, specially designed for us to sell quickly and easily if this is what you’re after, but we can also spend a bit of time on it and craft something really perfect and appropriate for you if that’s what you need. For example, perhaps you like to go scuba diving. Normally, cover for this is excluded but we can get it included just for you. The biggest difference between the providers is the level of cover for your contents and for your personal belongings. The former refers to things sitting in your house, by your pool or in your garage. The latter includes watches, rings and laptops, and these are more expensive to cover. Each different insurance company has their own rates for contents and personal belongings, so let our shoppers help you see which company is best for you. Our covers generally include the following: – new for old replacement – tenant’s liability – legal liability – cover even whilst you’re on holiday – loss of keys – cover even when you’re moving house.