Insurance Coverage for Rain Damage and Business Interruption

 Last week in Dubai, a storm hit the Gulf Estates, resulting in unprecedented damage to vehicles and property. As a result, all eyes are now on insurance companies as policyholders seek compensation for their losses. It is anticipated that many insurance claims currently being filed are for damaged vehicles, property, and business interruption.

 While it is widely known that most insurance policies provide coverage for rain-related damages, the ability to successfully file a claim hinges on the precise wording and clauses within each policy, including its coverage and exclusions.

For example, a comprehensive vehicle policy explicitly offering protection against rain and natural disasters ensures coverage for rain-related damages. Similarly, property All Risk insurance policies, covering all risks including those arising from natural calamities, typically extend coverage for rain-related damages.

 It is important to note that while damages from heavy rain are generally covered, specific weather-related events such as storms, cloud seeding, hailstorms, and flooding may be excluded unless expressly stated otherwise in the policy. Therefore, insurance professionals and policyholders alike must meticulously scrutinize the terms, conditions, and exclusions of their insurance policies to ensure comprehensive protection against such events.

Regarding business interruption coverage, it is well known that if a business is operational within twenty-four to forty-eight hours after an incident, there may be no eligibility for a business interruption claim under the policy. However, as previously mentioned, the availability of any insurance coverage depends on the precise wording of the insurance policy and its coverage and exclusions. Therefore, it is very important to review the wording of the policy in place carefully before seeking insurance coverage.

As for standard homeowners’ insurance policies, such policies provide coverage for damage resulting from rain-induced flooding. The extent of coverage depends on the specifics of the claim, as these policies typically address perils associated with the property itself, such as accidental leakage within the property. However, some policies may offer the option to include flooding as a covered risk, potentially providing compensation for such damages.

An important factor to consider is that it is essential for policyholders to thoroughly examine and revisit the unique terms and conditions of their insurance policies. Regular review, preferably on an annual basis and in light of any new unprecedented events, is crucial. This practice helps identify any gaps in the required coverage and ensures that the insurance policy adequately protects against any risk.

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Should you wish to obtain further clarity on the above matters, please do not hesitate to contact our firm and speak to one of our corporate law experts.


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