Merits and demerits of insuring residential property in Dubai

People prefer to get their residential properties insured due to a number of benefits associated with it. People looking forward to live on rent in Dubai prefer to choose apartments, villas and hotels which offer a home warranty issued by the landlord. There are two types of residential property insurances available for the local residents in Dubai.

1. On rental property, an insurance of home and home appliances is available the premium of which is paid by the landlord.
2. For personal property, the owner himself pays the premium.

Insurance of residential property can include the insurance of property structure, interiors, paints, furniture and fixtures, kitchen appliances etc. It depends upon the person applying for the insurance which package of insurance best suits his requirements. There are a certain merits and demerits associated with insurance which are discussed below.

Merits
1. First of all, insuring residential property adds to its sales value. Dubai real estate sector is seeing great hike in prices during the recent few years but in 2009 and 2010 great decline in prices have been seen. If a real estate agent insures his property in Dubai, he can surely get a very good price for his asset. Even if he offers a serviced apartment for sale he can get higher rentals on insured property as compared to uninsured ones.
2. Insurance companies in Dubai provide different insurance packages that give you reasonable assurance of indemnification of loss if your building structure is destroyed or if your plumbing and electric systems stops working. In this way, it is a source of financial protection for you.
3. As with insurance policy, when you shift the burden of loss arising from the contingencies on the shoulders of insuring company by insuring your assets, you feel much relaxed. It relieves you of the stress and if you are a landlord, this residential insurance can attract large buyers for your property. This is very beneficial in the current situation when the demand of Dubai properties is low.

Demerits:

1. Insurance companies operating in Dubai are quite active and vigilant to identify the real cause of loss. They don’t indemnify for losses which they think could have arisen due to the negligence of the person and normal wear and tear of assets.
2. Secondly, insurance policy of Dubai properties requires a premium which is to be paid by the insurer during those periods also in which no loss has been occurred. It means the insurer has to pay a constant stream of premium if loss arises or not.
3. Sometimes, the insurance companies pay for your loss with an amount which is less than what you have claimed for. In this situation, it becomes difficult for you to adjust your whole loss against an insufficient amount. Besides that, insurance companies charge an additional fee on the time of loss indemnification which is again a burden for you.

Insurance policy adds to the sales value of the property. Real estate agents and investors facing losses due to decline in prices of Dubai properties should consider this an important tool to appreciate the prices of their properties and sell them at considerable profits even in this bad time.

William King is the director of Dubai Properties, Dubai Rent and property in Dubai. He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.