Can UAE insurers reject rain damage claims on your car?
Question: Can my insurer deny a claim if rain damages my car? What are my rights under UAE law, and in what situations can such claims be rejected?
Answer: Pursuant to the query, the provisions of the UAE insurance law are applicable.
In UAE, the motor vehicle insurance is regulated by the Unified Motor Vehicle Insurance Policy Against Loss and Damage, issued pursuant to Insurance Authority Board of Directors’ Decision No. (25) of 2016 (consolidated version as on 18.1.21), currently administered under the Central Bank of the UAE.
This policy establishes the framework governing an insurer’s liability to indemnify an insured for damage to a vehicle. As a general rule, losses arising from external causes are covered under a Comprehensive Motor Insurance policy. On the other hand, a Third-Party Liability policy is limited to covering damage caused to third parties and does not extend to loss or damage to an insured’s own vehicle. Accordingly, where an insured vehicle sustains damage due to rain and the applicable policy is limited to third-party coverage, an insurer may be within its legal rights to decline a claim.
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When an insured holds comprehensive cover, an insurer’s obligation is derived from the Unified Policy, which under Chapter Two – Obligations of the Insurance Company, obliges an insurer to indemnify the insured for loss or damage to the vehicle arising out of accidents unless such loss falls under a legally recognised exclusion. While rain or water damage is not specifically listed, it is generally treated as an external accidental event and therefore covered unless the policy contains a clause excluding weather-related incidents, flooding, or natural disasters.
Further, insurance is a contract, and once an insured pays a premium, an insurer becomes legally obligated to compensate for losses only in accordance with the risks, terms, and conditions expressly agreed in the policy. This is in accordance with Article 1026 of the Federal Law No. (5) of 1985 Concerning the issuance of the Civil Transactions Law of the United Arab Emirates.
"Insurance is a contract whereby the assured and the insurer cooperate in facing the insured risks or events, and whereby the assured pays to the insurer a specified sum or periodical instalments, and if the risk or the event set out in the contract materialises, the insurer pays to the assured or the person stipulated as the beneficiary a sum of money or a regular income or any other pecuniary right.”
Furthermore, the Chapter Four of the Unified Motor Vehicle Insurance Policy – Exclusions, outlines circumstances in which an insurer may lawfully refuse indemnification. This chapter excludes losses arising from deliberate acts of an insured, intentional damage, or when a vehicle is used for purposes not specified in the policy such as racing or testing. It also excludes loss caused when the vehicle is operated by a person without a valid licence, when used beyond permitted geographical limits, or where an insured fails to take reasonable measures to prevent the damage. If an insurer can demonstrate that rain damage occurred under a scenario that meets one of the listed exclusions, or where negligence can be established refusal of compensation may be permissible.
However, where a policy is comprehensive and no exclusion under Chapter Four applies, an insurer should honour a claim. If a claim is rejected, an insured may escalate the matter to the Insurance Dispute Resolution Committee of the Central Bank of the UAE, i.e. Sanad/Sandak platform. Therefore, refusal to cover rain damage is lawful only where the policy structure, Chapter Four exclusions, or contract terms substantiate such a denial; otherwise, you may have grounds to dispute and seek redress under UAE insurance regulations.
Applicable laws:
Unified Motor Vehicle Insurance Policy Against Loss and Damage, issued pursuant to Insurance Authority Board of Directors’ Decision No. (25) of 2016, currently administered under the Central Bank of the UAE
Federal Law No. (5) of 1985 Concerning the issuance of the Civil Transactions Law of the United Arab Emirates
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.
