Question: My car was damaged in floods during the rains in Dubai in April last. I contacted the insurance company to obtain compensation because my car was beyond repair. However, the insurance company refused on the ground that the accident was the result of a natural disaster and is not covered by the insurance policy.
What is the law’s position on this? What is the appropriate action to take against the insurance company?
Answer: Chapter 4/ 8 of the Unified Motor Vehicle Insurance Policy against Loss and Damage, issued pursuant to the Regulation of Unified Motor Vehicle Insurance Policies according to Insurance Authority Board of Directors’ Decision No. (25) of 2016, excludes natural disasters from compensation by stating that the company will not pay any compensation in certain cases.
They include accidents that have occurred, caused, resulted or are related directly or indirectly to natural disasters such as floods, tornados, hurricanes, volcanoes, earthquakes and quakes.
The same policy defines the meaning of the natural disaster as any general phenomenon that arises from nature such as floods, tornados, hurricanes, volcanoes, earthquakes and quakes, and leads to extensive and widespread damage, and in respect of which a decision is issued by the concerned authority in the country.
On March 5, 2024, the Central Bank of the United Arab Emirates launched a new portal called (SANADIC) to register complaints against licensed financial institutions and insurance companies in the event of any dispute arising with insurance companies regarding compensation for rain damage.
On the other hand, the Central Bank confirmed that the damage to vehicles and homes resulting from the heavy rains resulting from the weather condition that the UAE witnessed is covered by insurance in the event of an insurance policy against the risks of loss and damage, or what is called comprehensive insurance.
In case you have comprehensive insurance, you have the right to file a case against the insurance company in front of the insurance committee and request for the compensation, on the bases of the Central Bank decision and that the heavy rain and its accumulation in certain places as a result of its failure to drain is not a natural disaster, in addition to the fact that the competent authority in the country has not issued a decision stating that the rain is considered a natural disaster.
As a general rule, the standard for covering floods and natural disasters depends on the insurance agreement signed between the insurer and the insured. When the insurance policy is concluded with the agreement of both parties to cover natural disasters, the insured company is responsible for covering the accident, taking into account that the insurer is not the one who caused the accident.
