The UAE has recently been subjected to severe flash flooding, following record rainfall. The flooding has affected businesses of all stripes, whether from direct damage caused by the water, or disruptions stemming from road closures, power cuts and other business closures. We will explore the legal ramifications of the flooding, particularly as it relates to insurance coverage and claims.

Impact on Insurance Claims
The recent flooding is expected to increase claims related to motor, property, and business interruption insurance. This rise in claims is likely to bring several legal challenges for both policyholders and insurers. Key points of concern include:

Property and Business Interruption Claims
Businesses impacted by the flooding are expected to file claims under their property insurance policies to cover repair or replacement costs due to water damage. They might also seek compensation for business interruption during the period their properties were unusable.

One issue that may come up is whether the policyholders took adequate steps to prevent further damage. Insurers might argue that the failure to take precautions or to minimize losses could be seen as a breach of the policy terms. Many property insurance contracts contain clauses that exclude liability when policyholders fail to take reasonable measures to prevent additional damage.

Another factor in business interruption claims is whether the required deductible or waiting period was met. If a business was able to reopen within 24 to 48 hours after the flooding, it may not meet the threshold to activate coverage.

Motor Insurance Claims
Insurers are already processing claims from vehicle owners impacted by the floods. Those with only third-party insurance won't be covered for their own vehicle's damage due to natural disasters. However, comprehensive insurance policies may cover flood damage, though terms may differ. Both insurers and policyholders will need to examine the specific terms of their agreements.

Insurers may dispute claims if they believe the damage resulted from negligence, such as driving through flooded areas despite warnings.

Force Majeure Clauses
Force majeure clauses, often excluding coverage for "acts of God," will play a role in determining coverage. While these clauses typically omit natural disasters, most property insurance policies include flood coverage.

Professional Indemnity Claims
The floods may also trigger claims against construction professionals like architects and builders if structures failed to meet waterproofing standards. Dubai's building regulations mandate that buildings must be designed to manage moisture effectively. Poor waterproofing can lead to damage, mold growth, and potential health risks. Professionals could face indemnity claims for defense costs and damages if they are found liable for waterproofing failures.

Post-Flood Duties and Rights
After the flooding, businesses and insurers need to carefully evaluate their rights and responsibilities. Policyholders are generally required to:

• Take reasonable steps to prevent further damage.
• Inform relevant authorities about certain types of losses.
• Follow the specific claims procedures outlined in their insurance contracts.
• Provide necessary evidence and documents to their insurers.

Subrogation Rights
Once claims are paid, insurers may pursue subrogation to recover losses from third parties responsible for the damage. This is especially relevant in cases involving construction or maintenance failures where multiple parties may have contributed to the damage.

Source: UAE Insurance Authority Law: United Arab Emirates. (2007). Federal Law No. 6 of 2007 Concerning Insurance. Retrieved from UAE Government Portal.