If you found yourself in the middle of a building fire, whether or not you have insured the contents of the apartment in a building you are fleeing is not likely to be at the top of your agenda.
R M, a Kuwaiti who had lived in one of the serviced apartments at The Address Downtown since the building opened in January 2009, still had not even thought about it too much over a week after being forced to flee the building on New Year’s Eve.
“I’m not sure whether I was insured or not. I really don’t know,” she said. “I would have to look at the contract.”
She did not hear an alarm when she was at home on the night of the fire (Emaar has denied previous claims that its alarms did not sound), and only evacuated after hearing a commotion outside and seeing people head for the exits.
“I just heard doors slamming and then people were running through the emergency stairwell and I just did the same. I grabbed my bag and I went for the stairs. I had no idea that there was a fire. Some people were just running down with their bath towels [because] they were in the shower.”
Although she praised the evacuation procedure and the subsequent support she received from Emaar (which initially rehoused her at the new St Regis Dubai), she has still lost most of her clothes and some other belongings through smoke damage.
The entrepreneur and philanthropist Ramin Salsali did not get away so lightly. He owned four serviced apartments at The Address Downtown – two of which have been completely destroyed by the fire. One of these was his own private residence, which contained 12 pieces of art (he is a collector of contemporary art and has his own private museum in Dubai’s Al Quoz district).
“All of them burnt except for two sculptures that were semi-burned because the material resisted the fire – maybe they were pre-treated. But all of the other things were completely destroyed.”
Mr Salsali believes that he, and his fellow residents, are covered for contents insurance as part of the service charges that they pay to Emaar.
“In the maintenance fees that we paid, there is one item that says insurance for the contents of the household.
“When you read this, you’re obviously not going to [take out] any insurance as such because first the building is insured, and second the content is covered. That was the assumption.”
Whether it is correct, or if residents will be covered by Emaar’s own buildings insurance, remains to be seen. Emaar did not respond to a question about this matter, with a spokesman stating only that “discussions with the insurance companies are continuing regarding the claims”.
However, it sent emails, seen by The National, to residents this week that stated that Emaar was still working with the authorities and insurers to determine the cause of the fire.
“Until that is complete, you will appreciate that we are unable to comment finally upon liability aspects,” it said.
It said those who wanted to claim under their own household or travel insurance could do so and provide details of their policy to Emaar. It also asked all residents to submit claims for damaged or destroyed items within seven days.
In the meantime, Emaar is offering to rehouse all of the occupants of serviced apartments within its other properties.
“They are giving alternatives, but there is a value difference,” said R M. “The Address [Downtown] had a higher value.”
She argued that none of the alternatives offered the same services – or location – as The Address Downtown. Therefore, she faces taking a unit she considers to be inferior, or cancelling her lease contract and receiving 85 per cent of the money paid for the remaining rental period. The other 15 per cent is deducted for Dubai Municipality and maintenance fees.
The fire at The Address Downtown was the third major building fire to take place in Dubai in just over three years, but by far the most high-profile to date – occurring on New Year’s Eve in proximity to Burj Khalifa, the focal point for the emirate’s New Year celebrations. One result of this was that the number of inquiries for home insurance tripled in the first week of this year.
The Movesouq.com chief executive Bana Shomali said the jump in the volume of requests this year was “exceptional”.
“This incident caused many UAE residents to look at their own homes and ask themselves: ‘Am I protected?’”, said Ms Shomali.
One insurer said building insurance will only cover the repair of a building to the standard it was before any loss (from a fire, flood or other incident), as well as the cost of repairs, clean-ups and firefighting bills.
Insurers have also reacted differently to each fire. It took a long time after the Tamweel Tower fire at Jumeirah Lakes Towers (which occurred in November 2012) before remedial work began last summer, and the building remains unoccupied.
The insurer of the Torch Tower, Oman Insurance, has sought to move as quickly as possible to repair the parts of a building that were destroyed by fire last February.
Balaji Ganapathy, a senior vice-president of general insurance claims at Oman Insurance, said that two quarterly interim payments have already been made to the Owners’ Association and it has issued a no objection certificate to allow for the appointed project consultant to proceed with its rehabilitation.
“We have been seeking an early commencement of repairs for a matter of months,” said Mr Ganapathy.
“Presently, we understand that the repairs are merely pending formal contracts so that the work can begin.”
Homeowners within buildings need to consider obtaining separate insurance – either individually or through the owners’ association – to cover loss of rent and provision of emergency accommodation (for investors) or the cost of alternative accommodation (owner-occupiers), although mortgage payments while a building is out of action should generally be covered by compulsory insurance policies required as part of any home loan.
Tenants do not need to pay rent for any accommodation that is uninhabitable. Given that most rents in Dubai are paid in advance, they may have to cancel existing tenancy agreements and request refunds from landlords.
In most non-serviced apartments, tenants will not be covered for any losses unless they take out home contents insurance.
“The only exception would be the collapse of the structural integrity of the building itself, and/or the structural damage of the permanent fixtures and fittings, or due to the landlord’s negligence,” said Haris Milonas, executive vice-president of consumer insurance at Oman Insurance. “Generally, the tenant has full responsibility to ensure they have taken out sufficient coverage to protect themselves and their property against all eventualities.”
Despite this, take-up rates for home insurance remain low in the UAE. Although coverage is generally provided for 0.5 per cent of the total value insured (so it would cost Dh1,000 to insure a typical two-bed apartment for up to Dh200,000 of contents), more than 60 per cent of residents in the UAE do not bother to buy it.
Take-up rates fare much higher for homeowners (66 per cent) than renters (just 25 per cent).
“But this mindset is changing as renters and homeowners alike start to realise that home insurance provides critical protection from a risk that is becoming increasingly visible in Dubai,” Ms Shomali said.
Buying home insurance in the UAE - what you need to know
1. What type of insurance do I need?
If you own your property, you need buildings insurance. If it’s a villa, you need to buy it yourself, but if you are in a jointly-owned property such as an apartment, speak to the owners’ association as it’s their job to make sure that the building and its common areas are insured. You will pay for your share of the premiums, usually as part of the service charges imposed. The owners’ association should also be able to help provide a much more comprehensive package of insurance, including loss of rent cover for landlords with provision for housing tenants in temporary accommodation. You can buy this individually, but the benefit of going through an owners’ association is that they collectively bargain for a better deal.
2. Does that cover everything?
No. Whether you are a landlord or a tenant, you need separate contents insurance to cover loss of your furniture, clothes, valuables and the cost of replacing valuable documents such as passports and title deeds.
3. Who should I buy from?
You could buy directly from an insurer such as AXA or AIG, but a better place to start would be a comparison site such as Souqalmal or Movesouq, or a broker who will shop around for quotes for you. Before you start, make sure you have a good idea of the amount you would need to claim as that will affect the size of your premiums. Also, look closely at the fine print of any policy you’re offered because many insurers will want proof of ownership of high-value items such as expensive jewellery or watches. If you do not have this, you may not be able to claim for them.
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