Top tips on obtaining the right home contents insurance

Experts can't stress enough the importance of home contents insurance. Rumi M Sanjana, the director of general insurance at Nexus, outlines organising a policy and warns about the risk of underinsuring.

It is worth taking out home contents insurance to protect your belongings against possible damage from unexpected events, such as an apartment block fire. Delores Johnson / The National

Experts can't stress enough the importance of home contents insurance. Although it isn't mandatory in the UAE, Rumi M Sanjana, the director of general insurance at Nexus, says it provides vital protection against a range of unexpected situations. Here, Mr Sanjana gives his top tips on how to organise a policy and warns about the risk of underinsuring.

1 Don't get complacent

While crime rates in the UAE are relatively low, that doesn't mean you can afford to take your eye off the ball. What's more, theft is only one of the many scenarios that can conspire to deprive you of your valuables and potentially leave you out of pocket. Damage from fire, water, natural disasters and any number of other unintended or unexpected situations are all possibilities. You might be the most meticulous and careful person in the world but you cannot legislate for bad luck and unfavourable circumstances.

2 Get covered

If you have a lot of valuables - and even if you don't - it is worthwhile getting appropriate home contents insurance, which can be extremely reasonable. For example, the rate could be as low as 0.40 per cent of the total value per month for home contents cover and in the region of 1.40 per cent for personal belongings cover. The general rule of thumb used by insurers is that personal belongings should be about 40 per cent of the total value of contents insured.

3 Know your surroundings

If you haven't done so, now is the time to find out what is already covered by your building and landlord(s). Chances are, you're on your own. The key function of the UAE's so-called Strata Title Law is to transfer responsibility for maintenance and upkeep from developer to homeowner and, although some homeowners' associations are laudably proactive in both action and dissemination of information, this is usually just for building insurance.

4 Value your possessions

Make sure you are covered for the replacement value of your possessions rather than the original purchase price or depreciated value. For example, if your sofa is damaged, you want to ensure you are fully reimbursed for a new replacement.

5 Beware of underinsurance

It is important not to fall into the trap of underinsuring. One should ensure against this while collating the values for declaring the proposed sum insured to the insurer. Otherwise, in the event of a claim, you may receive only a proportionate share of the loss and not the full value claimed as, in the event of underinsurance, insurers would then apply what is known as the Condition of Average.

6 Stay in the loop

Irrespective of the policy you opt for, it is essential to be as engaged as possible. Insurance providers do not tend to verify the exact cost of your valuables at the application stage, so to save time in the event of a claim you should aim to be as accurate as possible when negotiating the policy and submitting values for insurance coverage purposes.

7 Don't bin the paperwork

Keep thorough records, including receipts and, where appropriate, photographs. Store these in a secure location - ideally off site, perhaps a safe at your office or bank. It is worth noting that you do not have to list all your contents, as most insurance companies in the UAE will only ask you to list specific items above a certain value for their reference. But it is always prudent to double check this point.

8 Ensure all possessions are covered

The policy can extend to cover cash and jewellery, but they need to be declared separately. Items that are to be insured outside of the home do not need to be included in the insured figure because there is a separate cover under home insurance available for those valuables.

9 Don't go it alone

To make sure you are covered in the best possible manner, you should talk to an independent financial adviser, fully understand your insurance policy, read the fine print and ask as many questions as you can about loss, theft or damage.