You bought a laptop 3 years ago for AED 5,000.
Yesterday, a water pipe burst and soaked it. It is dead.
You file a claim. You expect a check for AED 5,000 to buy a new one.
The insurer sends you an offer for AED 1,500.
You are furious. “How can I buy a laptop for AED 1,500?!”
The logic behind this offer depends entirely on 3 words in your policy document. If you don’t check them
today, you might be paying premiums for a payout that will never be enough.
1. “New for Old” vs. “Indemnity”
This is the single most critical definition in Property Insurance.
Option A: Indemnity Basis (The Trap)
This pays you the Market Value of the item at the moment it broke.
It accounts for Depreciation / Wear and Tear.
Example: Your 3-year-old laptop has depreciated by 70%. It is only “worth” AED 1,500 on the
second-hand market. So they pay you AED 1,500.
Option B: New for Old (The Gold Standard)
This pays you the cost to Replace the item with a bran new equivalent model today.
Example: A new equivalent laptop costs AED 4,800. They pay you AED 4,800.
Always ensure your policy says “Replacement” or “New for Old.”
2. The “Single Article Limit” (Again)
We mentioned this before, but it bears repeating because it is the #1 reason for partial payments.
Most policies have a clause: “We will not pay more than AED Y for any single item unless specified.”
If you have a designer handbag worth AED 15,000, and your Single Article Limit is AED 5,000, and the bag is
stolen:
- They pay AED 5,000.
- You lose AED 10,000.
Check: Does your schedule list your high-value items? If not, send an Excel sheet to your
broker now.
3. The “Tenant’s Liability” Limit
Check the number next to “Tenant’s Liability to Landlord.”
Some cheap policies cap this at AED 200,000 or AED 500,000.
The Risk: If you accidentally burn down the apartment.
The Landlord’s insurer rebuilds it for AED 2 Million.
Then, the Landlord’s insurer sues YOU (Subrogation) to recover their AED 2 Million.
If your liability cover is only AED 200,000, you are personally bankrupt for the remaining AED 1.8 Million.
Ensure this limit is at least AED 1 Million (or equal to the property value).
4. The “Keys” Clause
You lose your house keys. You are worried a thief might find them and enter.
If you have “replacement of locks” cover, the insurance pays for a locksmith to come out, drill the lock, and
install a new secure system (Cost: AED 800 – AED 1,200).
If you don’t, you are paying that yourself. And if a burglar uses the lost key later? The claim might be
denied because there was no “Forcible Entry.” So changing the lock is mandatory for security.
Comparison: Cheap vs. Good Policy
| Feature | Cheap Policy (AED 200/yr) | Good Policy (AED 350/yr) |
|---|---|---|
| Valuation | Indemnity (Depreciated) | New for Old |
| Single Item Limit | AED 2,500 | AED 10,000 |
| Liability Limit | AED 250,000 | AED 1,000,000+ |
| Lost Keys | No | Yes (Up to AED 1,000) |
The price difference is the cost of two coffees. The coverage difference is life-changing.
FAQ: Final Checks
Q: I have a maid. is she covered?
A: Only if you have the “Domestic Helper” extension. It covers her medical expenses (accidents) and
repatriation in case of death. It often also covers “theft by maid.”
Q: Does it cover my bicycle?
A: Only if kept inside the property or locked garage. If left in the communal hallway or
unlocked outside, it is usually excluded.
find “Indemnity” or “Market Value,” call your broker and ask to upgrade.