Insurance Claim Denial Scenario: Fire Originating in Adjacent Warehouse in UAE - Can Insurers Refuse Coverage?
Frayed Nerves: Insurance Company Refuses Claim over Fire Spread from Neighboring Warehouse
By Mohammad Ebrahim Al Shaiba, Special to Gulf News
Feeling fed up, frustrated, and unsure about the stance your insurance company is taking? Let's break it down
You, as a warehouse owner, recently encountered an unfortunate incident - a fire erupted in a neighboring warehouse and somehow spread to your own premises. Determined to get compensation for the damages, you approached your insurance company, only to face a disappointing response: the company denied your claim, arguing that the fire didn't originate in your warehouse.
The burning question on your mind: can the insurance company actually dismiss your claim? Well mate, strap in, I'm here to sort this mess out for ya!
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Sooo, let's dive in deep and find out the truth of the matter. Based on the insurance contract, the insurance company is expected to pay the agreed-upon compensation upon the occurrence of the risk or event specified within the contract.
Look at Article 1034 of the Civil Transaction Law No. 30 of 2020 (for all you law buffs out there). This little nugget of wisdom notes that the insurer is bound to pay the insured or the beneficiary the encashed amount or the due compensation, as agreed, upon the occurrence of the risk or maturity of the fixed period in the contract.
But wait, there's more! Article (1037) of the same law in insurance against fire sets the insurer's obligation:
A - Damages resulting from fire even caused by earthquakes, thunderbolts, hurricanes, winds, cyclones, domestic explosions, damages caused by airplane and other air vessels crashes or events customarily included in this class of insurance.
B - Damages, which are the inevitable result of fire.
C - Damages to things covered by the insurance by reason of salvage measures, or measures to prevent the extension of the fire.
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If we take a deeper look, we'll notice that the UAE insurance regulations and Civil Transaction Law No. 30 of 2020 provide insurance companies with specific reasons to reject compensation claims. However, there's no clear mention on the origin of fire.
Typically, an insurance policy covers damages caused by certain events, including fires, except when explicitly ruled out by policy terms. Common exclusions might include undocumented causes, acts of war or terrorism, and events not directly related to the insured's property. But if the fire is directly linked to a covered event, such as an electrical issue on your own property, the insurer would usually cover the damages.
Now, to summarize everything we've covered so far:
Under UAE laws, whether an insurance company can reject a claim for a fire originating outside the insured's property would depend greatly on the specific policy terms and the application of relevant laws and regulations. If you feel your company is acting unfairly, consult a legal expert or examine your policy carefully.
The bottom line: don't let your insurance company push you around. Understanding your rights and responsibilities will put you in the driver's seat!
In this scenario, if the insurance policy does not explicitly exclude fires originating outside the insured property and the fire causing damage to the warehouse was a covered event or directly related to the insured's property, the insurance company may be required to cover the damages as per UAE laws and insurance regulations. Therefore, it is essential to carefully review the policy terms or consult a legal expert to determine if the insurance company's denial of the claim is justifiable.
Moreover, if the insurance policy contains common exclusions like undocumented causes, acts of war or terrorism, or events not directly related to the insured's property, the insurance company may have grounds to reject the claim. In such a case, the insurance company's stance on the claim might be valid, and it would be crucial to review the specific circumstances surrounding the fire to understand the situation better.
