Home insurance sales up after Torch fire but ‘residents lack knowledge of coverage’

Insurers say more people need to be aware of the benefits of insurance, as only about 6 per cent have cover in the UAE

The second fire at The Torch tower in Dubai Marina in 2017. Protecting your property is not just about the building but also the contents of your home. Antonie Robertson / The National

Sales of home insurance policies have increased after the recent Torch tower fire, insurers said, and many who saw their apartments destroyed were caught out with no coverage.

Tenants affected by the fire - the second in two years - said they hoped they would be covered under the landlord’s or building’s policies.

However, insurance companies have said that unless separate coverage was purchased, the tenants’ belongings would not be insured nor would they be entitled to alternate accommodation.

Less than 10 per cent of people in the UAE regularly buy home insurance policies, insurers said, and while there has been a spurt in sales straight after the Torch blaze on August 4, they say this is unlikely to translate into long-term buying of protective cover.

One of the most frequently asked questions was whether a tenant is covered under a landlord’s insurance, said Samaa Al Azzawi, chief of marketing with AXA Insurance Gulf.

“The landlord is only legally responsible for any loss occurring to his building or property - the structure and integrity of the building. This does not cover any of the tenant’s contents or personal items,” she said.

“If your property is damaged and uninhabitable, your insurance should also cover you for alternative accommodation. This is not the responsibility of your landlord.”

Other questions included people asking if buying insurance after a fire would cover any previous loss.

“This is not possible as we do not backdate policies,” Ms Al Azzawi said.

“We usually see more activity in our call centre, stores and website right after an event like the Torch Tower fire.  We do see a peak in sales after big fire incidents as customers become more aware of the risks involved and understand the need for home insurance.

“As much as we would like to be able to say that all those who enquire end up buying a policy, and thus peace of mind, this is not the case.

“In the last 12 months - July 2016 to July 2017 - we have recorded 20 per cent growth in policy count of AXA’s home insurance portfolio in the UAE alone. Despite this increase, purchasing home insurance has not translated into an ongoing practice as this behavior gradually drops over time.”

Many Torch tenants were unclear whether they had coverage.

“I’m thinking of day-to-day. I thought we would be covered by the landlord’s insurance. I have not found out anything about insurance yet,” said a tenant.

Another, who had only moved in this year, said: “I have just been focusing on finding a place to stay for when my family returns and schools start so I have not had time to find out details about the insurance. Most of my apartment was destroyed and this will cost me a lot, apart from searching for a new place. So if I’m not covered by my landlord’s insurance then this is a big additional loss for me.”

Chris Dooley, chief executive of RSA in the UAE and Bahrain, also said there was a surge in enquiries - a 50 per cent jump - since the fire but warned that ongoing awareness was required among tenants and homeowners.

“In comparison to many markets worldwide, the GCC region has a relatively lower level penetration for home and contents insurance. In the UK, for example, about 75 per cent of householders have some sort of a home insurance policy, while in the UAE, it is shockingly as low as 6 to 7 per cent, which leaves a significant number of householders exposed to this risk without protection.”

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Awareness of what a policy covered was crucial for both landlords and tenants, he said.

“If the building you rent is uninhabitable due to an insured event – what happens? Are you financially impaired? Be aware of the benefits you can receive as part of your home insurance policy, including replacement of damaged contents and alternative accommodation should your home become uninhabitable following a fire or other calamities,” he said.

Insurance premiums were unlikely to rise specifically because of the Torch fire, experts said.

“Rate reviews are common practice and are linked to market trends rather than a single event,” Ms  Al Azzawi added.

“There is no way to predict what the future price of home insurance may be, however, it will not change overnight as a result of The Torch tower fire.”

The basics of home insurance 

Tenants are advised to take a home contents insurance cover, which companies say is available for as little as Dh1 a day, as soon as they move in.

Landlords should get insurance coverage that protects the structure of their villa or apartment.

It should be noted that the building or the landlord’s insurance does not cover the tenant’s belongings or personal items.

Knowing about liability is also important for tenants. Tenants are liable for damages caused by them while they live in the apartment, so if a fire is caused by them then the landlord will need to be compensated for any loss.

If a tenant causes damage to a rental property, the tenant is legally responsible to pay the landlord for any repairs needed to the property. This is known as tenants’ liability.

If a tenant causes damage that goes beyond the rental property and affects others, and the tenant is found to be at fault, they are legally liable to pay for damaged incurred by both the landlord and those the tenant caused damage to. This is known as occupiers’ liability.

If a tenant’s property is damaged and uninhabitable, the tenant’s insurance should also cover them for alternative accommodation - and this is not the responsibility of the landlord.

Source: AXA Insurance Gulf