Inquiries into content insurance have increased in Dubai since a blaze ripped through a high-rise apartment block last month, according to financial experts in the Emirate, but few people have actually invested, despite the risk of losing all their possessions.
And with the additional risk of liability facing anyone responsible for a fire, or flood starting in their home, it is not just their material possessions they stand to lose.
Hundreds of people were left homeless after a fire tore through Tamweel Tower in Dubai’s Jumeirah Lake Towers in the early hours of Sunday, November 18, their possessions badly damaged by smoke, heat and water from the sprinkler system.
A survey carried out by the financial and non financial consumer product comparison site Souqalmal.com a short time before the blaze found that 86% of people didn’t have content insurance.
“This is of course worrying,” said Ambareen Musa, the website’s founder and CEO, “But what was possibly even more concerning was that 52% of people didn’t even think it was necessary for them to take out a policy.”
She said that many of these people said they were only in the UAE temporarily and therefore did not think it was worth spending the money on insurance.
“What these people need to understand is that they should be covered, not just for the value of their possessions, but also the liability as a tenant.
“If a fire or flood started in your home and caused damages to another person’s property, and was due to your negligence, or that of someone working for you, then you can be expected to pay for the damage caused,” Musa added.
And she said policies could also cover money lost through pre paid rent, or temporary accommodation.
In the days after the blaze there was an increase in the amount of interest in insurance policies.
And while no firm results have been collected, it does appear that there has been some take up in home content insurance.
A source at Zurich Insurance said there had been a 60% increase in the number of policies taken out in the UAE, but they said penetration of the market remained low.
We contacted Zurich regarding the issue but no one was available for comment.
But there is concern that this interest could possibly dwindle.
Financial expert Keren Bobker, of Holborn Assets said: “I have spent years advising people generally about insurance, but the uptake continues to be very low.
“People have a perception that they are somehow safe in Dubai, but burglaries and fires do happen.”
POLICY COVER RETHINK
She said that content insurance was among the cheapest in the country and added that it was essential that residents invested.
She added: “We want them to come out of the end of a year’s policy thinking it was money wasted, having not claimed. But at least they are covered for the worse case scenario.”
One such resident is Ryan Luis, who lived in an apartment on the 14th floor of Tamweel Tower. On the night of the blaze he was working at his laptop computer when he heard a crackling noise.
When he pulled back his curtains he was horrified to discover flames lapping up the side of the building.
He didn’t have insurance at the time of the blaze, and says he believes he stands to lose between AED 25,000 and AED 40,000 ($6,800 - $10,890) in damaged clothes and other property.
He explained: “My landlord has been good enough not to cash my last rent cheque, but I don’t know what is going to happen with regards to the security bond.
“When I find somewhere new to live I will get insurance this time. It’s not that I think I need it,” he said, “it’s just I can’t afford to lose this amount of money again.”
Even if people like Luis do start taking out insurance, the next challenge is to ensure they take out the right amount.
Many residents in the UAE are under estimating the value of their property by as much as 44%, according to a recent survey carried out by Zurich.The study asked customers to provide their estimate of the value of their property, which was then compared to the figure provided by a Zurich specialist adviser who would assess the same items.
On average, the participants in the study perceived the value of their home contents to be worth AED 199,700 ($54,370), while the actual average value was AED 337,350, a difference of AED 137,650.
Jeremy Baggot, General Manager, Zurich’s general insurance business in the Middle East, said: “Zurich’s study identified a common misconception among UAE residents that because they are renting and tend to purchase mainly functional items, the value of their possessions is low.
“Yet after just a few years in the UAE, many people will have accumulated a significant amount of possessions that would cost a considerable sum to replace in the event of a loss.”