On May 14, hundreds of residents at Zen Tower in Dubai Marina were caught in a quandary after a fire gutted 15 floors of their building.
All the residents were evacuated safely but most are left worried about the extent of damage covered by their building insurance. Although alternative accommodations have been provided, for now, there isn't any clarity if the contents of their apartment were insured.
Free rooms, drinks, meals for residents of Zen Tower following blaze
Did you know that tenants need to invest in an insurance policy?
Ashish Mehta, founder and Managing Partner of Ashish Mehta & Associates, says, "Tenants can take content insurance if the contents of the apartment are owned by them and not the landlord. The insurance company will assess the valuation of the apartment and issue an insurance policy accordingly."
Jacob Koshy, MD Northern Assurance, explains, "Each individual should take a content policy for their home. Otherwise, the building management association while taking an insurance policy covering the whole building and liabilities must take a combined policy including the individual flats. It is preferred to take a society policy and add the contents of each tenant or else, it is difficult to assess the actual value of individual flats."
As is the common practice, owners in a building form an association and share the premium cost of strata insurance as part of their strata fees and liabilities.
Does the policy cover the cost of alternative accommodation in fire accidents?
The level of cover under the home and contents insurance will depend on the type of insurance policy the tenant/building management buys.
"According to a new circular, up to 10 per cent alternative accommodation coverage should be included in the policy," states Koshy.
"A vital cover which is embedded in home policies is for alternative accommodation," points out John Waldron, Head of Private Clients at Nexus Insurance Brokers. "The home and contents insurance covers the insured against the cost of finding a place to stay if their own home is rendered uninhabitable due to an incident."
It is not the landlord's responsibility to provide alternative accommodation to their tenants in cases of fire while the repairs are underway. So, having an insurance cover in place can save the insured thousands of dirhams in the long run, if the property is extensively damaged.
What happens to your predated cheques if the apartment cannot be occupied?
Although there is a rental agreement in place, the tenant can inform the owner that the house is not fit to be occupied. "The tenant needs to communicate to the landlord to not deposit the predated cheques that the parties had agreed upon. If the owner doesn't listen, the tenant has the right to approach the judicial authorities and get an order against the owner," Mehta states.
The standard notice period of one to three months that the tenant and landlord consented to can be waived off in such special cases. And in case of disputes, the tenant or the landlord can approach the Dubai Rental Dispute Settlement Centre to get their grievances addressed.
Are more residents buying contents insurance?
Following the fire, UAE insurers are expecting that more residents would buy contents insurance in the wake of the recent blaze. However, the initial interest might be short-lived if previous incidents are anything to go by.
The companies saw the volumes of enquiries increase for three to four weeks after the Torch Tower fire last year. But the euphoria fizzled out in the weeks that followed.
Waldron believes many expats underestimate the value of the possessions they accumulate while residing here. "One or two years spent buying furniture, electronics, clothing and artwork worth can easily add up to many tens-of-thousands of dirhams. A simple contents policy with some cover for your personal effects can cost as little as Dh250 annually. At a cost of less than a dirham a day for cover, it represents terrific value for peace of mind in the possibility of the worst-case scenario arising."
Dubai resident Tuhina Banerjee couldn't agree more, when she says, "I think there's always an inherent risk in staying in a high-rise. Since I stay on the 25th floor, I feel vulnerable to fires. Getting insurance against my commodities is the only way out and Dh250 per annum is quite a reasonable amount to pay."
Does the insurance protect the tenant from the incurring fines?
If the fire originates from one particular flat, the tenant of that flat may be held liable for the mishap. But will the insurance cover the fine the tenant may incur? Ashish Mehta says, "It depends on how the insurance is structured. If the tenant has a policy and there is a fire, the insurance company will duly compensate. If the prosecution and the investigative agency find that he is responsible and the fire occurred due to negligence, then they will be charged and there will be proceedings against him. If the tenant is liable, the law will take its own course against him." \