TENANTS LEFT COUNTING THE COST OF TORCH BLAZE AND A LACK OF COVER
Home insurance sales rise after Dubai tower fire but too many in the UAE are still not aware of a need for policies
Home insurance sales have increased after the recent Torch tower fire as residents learnt from the tenants’ errors, insurers say.
Tenants affected by the fire, the second in one of the world’s tallest residential buildings in two years, had hoped they would be covered under insurance held by their landlords or building management.
But insurance companies say that unless tenants had separate cover, their belongings would not be insured and they would not be entitled to other accommodation.
Fewer than 10 per cent of people in the UAE regularly buy home policies, insurers say, and the rise in sales after the Torch blaze on August 4 is likely to be short-lived.
“We usually see more activity in our call centre, stores and website right after an event like the Torch tower fire,” said Samaa Al Azzawi, chief of marketing with AXA Insurance Gulf.
“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 past 12 months, July 2016 to July 2017, we have recorded 20 per cent growth in policies for AXA’s home insurance portfolio in the UAE. Despite this increase, purchasing home insurance has not translated into an ongoing practice as this behaviour gradually drops over time.”
Ms Al Azzawi said tenants expecting compensation from their landlords’ insurance would be disappointed.
“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.
“If your property is damaged and uninhabitable, your insurance should also cover you for alternative accommodation. This is not the responsibility of your landlord.”
That was news to many tenants at The Torch. “I thought we would be covered by the landlord’s insurance,” one said. “I have not found out anything about insurance yet.”
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 school starts, so I haven’t 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 the insurer RSA UAE, said there had been a 50 per cent surge in enquiries since the fire but warned that tenants and homeowners should be diligent about home cover.
“In comparison to many markets worldwide, the GCC region has a relatively lower-level penetration for home and contents insurance,” Mr Dooley said.
“In the UK, about 75 per cent of householders have some sort of a home insurance policy, while in the UAE it is as low as 6 to 7 per cent, which leaves a significant number of householders exposed to this risk without protection.”
Awareness of what their policies covered was crucial for both landlords and tenants, he said.
“If the building you rent is uninhabitable due to an insured event, what happens?” Mr Dooley asked. “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.”
Insurance premiums were unlikely to rise because of the Torch fire, Ms Azzawi said.
“Rate reviews are common practice and are linked to market trends rather than a single event,” she said.
“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 landlord is only legally responsible for any loss occurring to the structure and integrity of the building