For many investors searching Dubai properties for sale in 2024 is rather widespread. But it is important to know extra information. Insurance of apartments and houses in Dubai is not mandatory for all its residents, but the risks of losing a premises or building are the same here as anywhere else. Therefore, most homeowners in the emirate have insurance. But they’re not the only ones: renters also insure the apartments and houses they rent. Considering all the important details and nuances, we’ll discuss why this happens and how to insure your property.
Who is required to insure a property?
According to UAE law, developers and owners of multi-storey buildings must insure them against all major risks. Thus, all apartments in both low-rise and high-rise residential complexes are insured at purchase and in the future.
As for private villas and townhouses, their insurance is voluntary. However, if we are talking about buying a house with a mortgage loan, and if the owner wants to mortgage such a property, then any bank will require that this property be insured.
What does the insurance policy cover?
Insurance companies consider the following cases:
- Fire. The cost of restoring or repairing the building, as well as possible evacuation costs, accommodation of residents in a hotel or rented accommodation, and other additional expenses, are reimbursed.
- Natural disasters. Damage from floods, hurricanes, earthquakes, sandstorms, and other natural disasters is compensated.
- Vandalism. The insurance compensates for damage if the building or part of it was damaged due to vandalism, robbery, or hooliganism.
The landlord will also be compensated for loss of rent if the tenant is forced to leave the apartment due to the impact on the building.
It is important to understand that building insurance and insurance of apartments and their contents are two different types of insurance. The first covers damage caused to load-bearing structures, walls, roofs, places, property, and common areas (lobbies, halls, elevators), as well as the building’s entrance doors and window units. And property inside the apartment – furniture, household appliances, electronics, personal belongings, and so on – must be insured separately.
In addition, most of the insurance compensation is received by the owner of the building and not by the owners of the apartments, who only have to cover the specific damage caused by the incident to their residential premises.
But taking out separate insurance for specific apartments is possible (and recommended). Then, in the event of, for example, a local fire, flooding that occurred due to unintentional actions of the owner or tenant living in them, or vandalism that accompanied the robbery of the premises, the insurance company will cover the costs of eliminating the consequences.
For an insurance company to operate in the UAE, it must obtain a license. There are approximately 50 licensed insurers in Dubai.
Tariffs and calculations
You can preliminary estimate the cost of the annual insurance payment using the following formulas:
- 0.1% of the amount of insurance coverage per year – for a building.
- 0.5% of the amount of insurance coverage per year – for property.
Important: if the house is located near the Persian Gulf or on one of the artificial islands in it, then insurance will be more expensive than usual since, in such locations, the risks of natural disasters increase.
An insurance policy for a small studio in an inexpensive area can cost 350-450 dirhams ($95-122) per year. The level of insurance coverage will be up to 100 thousand dirhams ($27.2 thousand).
The insurance coverage specified in the contract must be greater than or equal to the value of the property and/or property located in it.
When studying an insurance contract, you need to pay attention to the documents that will need to be provided upon the occurrence of an insured event and the conditions under which the company makes payments.
You should also remember that insurance companies, as a rule, do not compensate for damage if no one has been in the home for more than 60 days in a row.
It is worth clarifying in advance what the stages of the claim review procedure are if they arise and also studying the list of accompanying documents that will be required for it.
For tenants who rent an apartment or house with furniture and appliances, it is important to check with the owner whether this property is insured. If not, it is preferable to take out insurance. Otherwise, it may turn out that the tenant will have to pay the landlord the cost of the lost items under unfavorable circumstances.
Companies often make special offers to new customers that can be extremely beneficial. For example, they may offer to insure the property inside the apartment and the equipment you take with you on vacation. And suppose the insured person is kidnapped while on vacation. In that case, if the laptop is stolen, he will be able to receive compensation – of course, if he contacts the police in time and then provides the insurance company with evidence that all search measures have been taken. At axcapital.ae you can not only find a property but also discover a lot of useful information.
You should always carefully review insurance documents before entering into any dealings with an insurance company and choose the best offer available at that time. It is also important to remember that building insurance will not cover damage within a specific apartment. But if you insure these apartments separately, you can be sure of receiving compensation for such an insured event.