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Home Insurance – Low uptake exposing UAE Residents to risks

Home Insurance’ is often ignored, misunderstood and most definitely under-rated. Here's what you need to know

After the Dubai Marina’s Torch Tower blaze in 2015, 86% of survey respondents did not have home insurance Home insurance doesn’t just cover your home contents, but your valuable personal belongings too The online comparison and purchase of home insurance plans has been made possible with the launch of insurance aggregators in the UAE

Whether you’ve just moved into a newly purchased property in the UAE, or signed a new rental contract to move into a stunning apartment, there’s got to be one important to-do on your checklist. Enter the humble ‘Home Insurance’ – Often ignored, often misunderstood and most definitely under-rated.

The Souqalmal.com team had conducted a countrywide survey four years back to understand how UAE residents viewed home insurance. Results from the survey, which was conducted shortly after the infamous blaze that engulfed Dubai Marina’s Torch Tower in 2015, were alarming to say the least. A massive majority of the respondents (86%) did not have home insurance, and 45% did not see it as a priority. Nearly one-third of the participants admitted to not knowing how to go about buying a home insurance cover, with 20% considering it too expensive a financial commitment.

In fact, another older survey conducted by Souqalmal.com back in 2012 after the Tamweel Tower fire, showcased the same indifference towards home insurance among UAE residents. Over 85 per cent did not have a home insurance cover at the time. And 52% did not consider it a priority, despite the average value of their home contents being anywhere between AED 100,000 ($27,248) to AED 150,000 ($40,872). 

Other sources echo a similar sentiment as well. Back in April 2016, AXA Gulf CMO Fabrice Benard, revealed that 95% of the UAE population does not have home insurance. Another 2016 report by Qatar Insurance Company (QIC) showed that less than 1 per cent of homes in Dubai are covered under a home contents insurance plan.

Fast-forward to 2019 – The most recent survey conducted by Dubizzle Property this year shows that 63% of their 1,400+ respondents had not insured their home or its contents, and 75% weren’t interested in doing so in the future either. 

All these findings and revelations leave some unanswered questions. The biggest ones being… 

Read: Lack of awareness about home insurance leaves 63% of UAE residents susceptible to major losses and damages

Have homeowners and tenants become desensitized to the risks their homes face? 

A residential tower being caught in flames, displaced tenants losing all their valuables, homeowners witnessing their apartments get destroyed – If none of those visuals make people want to immediately sign up for a home insurance cover, there’s a serious wake-up call that’s needed.

Insurers and insurance aggregation platforms, along with property developers, property search portals, the government and media, are all collectively responsible for building awareness around home insurance.

Are residents fully aware of the wide gamut of benefits that come with home insurance?

There’s a whole lot more to home insurance than financial coverage against damage due to fire, flooding or theft. For instance, you get compensated for the cost of securing alternative accommodation if your house is rendered uninhabitable. Additionally, you’re financially covered against third-party liability claims running into millions of Dirhams.

Home insurance doesn’t just cover your home contents, but your valuable personal belongings too. Personal Possessions Cover is an optional cover that you can opt for with a standard home insurance policy. It helps extend your insurance coverage beyond the physical premises of your home, to include personal possessions that are carried outside the house regularly. At an additional premium, personal belongings like clothing, watches, bags, personal electronic devices and other valuable items specified while applying for the policy, can be insured against loss, theft or damage.

Read: Rent-to-own: an alternative way to finance your own home in the UAE

Why do people still think home insurance is expensive?

With insurance companies in the country repeatedly advertising home insurance rates of lower than AED 1 per day, it should be common knowledge by now that home insurance is quite affordable. In fact, home contents insurance plans start at a reasonable AED 250 on Souqalmal.com. 

If you’re planning to buy a property through a mortgage, you’ll have to pay for mandatory home insurance (only covering the building and external structure of the home). This will set you back by a minimal 0.03% – 0.05% of the property value per annum. This is normally recovered monthly along with your finance installment.

Is it still a challenge to find the right home insurance?

The online comparison and purchase of home insurance plans has been made possible with the launch of insurance aggregators in the UAE. These platforms take away the need to call individual insurers, visit their websites and get a quote from each. 

Online platforms are simplifying home insurance purchase by listing multiple insurance products on a single page for the user to browse through. You can review policy features, benefits, coverage limits, and even select add-on features to make your insurance plan more comprehensive. Comparing your options online is also a tried and tested way to do an apples-to-apples comparison and select a policy based on your budget and specific requirements. And you obviously end up saving considerable time and effort in the process.

Read: Buying your dream home? Dark Data can help

Home insurance – Understanding the nitty-gritty

Demystifying home insurance is the way to go, if we want more people to seriously consider it as part of their annual to-do list. 

And just as important it is to understand the benefits, it is equally important to explain the limitations and exclusions to help people make an informed choice. For example, there are various circumstances under which your claim may get rejected – Leaving your home unoccupied for longer than 60 consecutive days (or as stated in the policy), neglecting home maintenance and making a claim caused by such damage, providing false or exaggerated facts while making a claim, not securing the house properly leading to a burglary, not reporting theft to the police – The list goes on.

The home insurance policy document will state the terms as well as exclusions under the policy. Policyholders must go through these carefully, to avoid invalidating the policy cover. 

Over the past few years, companies like Souqalmal.com have launched various endeavors to educate UAE residents about the benefits of home insurance. The company has leveraged its popular Money Doctor blog to help create awareness about home insurance, bust the myths surrounding it, and simplify the jargon, terms and conditions related to the topic. 

For more info, click: https://www.souqalmal.com/bh-en/car-insurance/ ; https://www.souqalmal.com/financial-education/bh-en/