16 May 2024

Potential Impact of the UAE Rainstorms on the Insurance Sector and Policyholders in the UAE

Authored by: Rami Obeid

In Brief:

On April 16, the United Arab Emirates witnessed its heaviest rainfall in 75 years. It is anticipated that this recent flooding will cause an upsurge in insurance claims.

The anticipated increase in insurance claims is expected to lead to a range of legal challenges for both the insurance sector and policyholder. Some of the potential challenges are highlighted in this article.

Motor Policies

Insurance companies are expected to experience a spike in claims from car owners whose vehicles sustained damage due to the flooding.

Legal considerations arise in interpretation of policies and the extent of insurance coverage.

Third-party insurance does not generally cover damage to the policyholder's own vehicle in events like natural disasters. However, those with comprehensive insurance policies are generally covered for flooding, although this is not always the case and depends on the specific terms of the policy.

Claims under motor policies might be disputed if the damage is deemed to have resulted from the insured's negligence or lack of care. For instance, if a policyholder knowingly drove through deep water, an area known to be flooded, insurers may contest the claim.

Property Risk and Business Interruption Policies

Businesses affected by the rain are likely to file claims under property policies to cover the costs of repairing or replacing property damaged by water, as well as claims under business interruption coverage for losses incurred while repairs are undertaken.

Standard business interruption policies typically cover losses due to direct physical damage to the property. However, coverage for disruption caused by rain or flooding without physical damage might require specific wording in the policy.

Some policies exclude certain types of water damage or have specific requirements for a claim to be valid, such as a mandatory shutdown by the relevant authorities.

Another important consideration for potential business interruption claims is the deductible or waiting period applicable to the loss. Business interruption policies often include a waiting period before coverage kicks in. This period, typically 48 to 72 hours, must pass before the coverage applies, and only losses incurred after this period are considered.

Force Majeure

An important consideration in evaluating insurance claims is the application of any force majeure exclusion clauses in a policy.

The issue arises as to whether the rainfall experienced in the UAE qualifies as a force majeure event and is therefore excluded from coverage. This could lead to disputes over the categorization of weather events, whether they qualify as foreseeable or unforeseeable events, and the extent of coverage for such events.

As weather anomalies are expected to become more frequent due to climate change, insurance contracts might need to become more specific as to which types of climatic events are considered force majeure, for example by specifying certain thresholds of rainfall.

Furthermore, the anticipated rise in weather-related insurance claims before the UAE Court is expected to set precedents that will help shape how similar claims are perceived and managed in the future. This evolving legal landscape requires insurers to stay informed and possibly adjust practices in response to new legal precedents.

Re-evaluation of Risk Management Strategies

From a legal standpoint, the unexpected nature of rain in a region like UAE necessitates a re-evaluation of risk assessment models used by insurance companies.

Traditionally, insurers might not have prioritized flood damage as a significant risk in the UAE. However, changing weather patterns and unexpected rainfall events could prompt a shift in approach.

Insurance companies are encouraged to carefully consider the legal implications when modifying their risk models or adjusting policy terms. This includes ensuring that any changes align with insurance regulations and guidance issued by the Central Bank of the UAE.

Given the potential increase in weather-related claims, insurers must proactively review and update their risk management strategies to address the growing risks posed by rainfall and other weather anomalies. This may involve reassessing coverage limits, introducing new types of policy, or enhancing claims processing procedures to handle claims efficiently and fairly.

Additionally, insurers are encouraged to prioritize transparency and communication with policyholders regarding any changes to their policies or coverage. This not only helps manage expectations but also reduces the risk of dispute and legal challenge.


In conclusion, the recent unprecedented rainfall in the UAE is expected to cause an upsurge in insurance claims across various sectors, leading to potentially significant legal challenges for both the insurance sector and policyholders. Motor policies are likely to be subject to disputes over coverage for flood-related damage, while businesses affected by the rain may encounter complexities with property risk and business interruption policies, particularly regarding coverage exclusions and waiting periods.

The application of force majeure clauses in insurance policies adds another layer of consideration, with potential disputes over the categorization of weather events and the extent of coverage. As weather anomalies are expected to become more frequent, insurers will undoubtedly re-evaluate their risk management strategies and adjust policies to align with the evolving legal landscape and updated regulatory requirements.

For more information on this article or questions related to insurance, please contact Adrian Chadwick, Partner, Dispute Resolution and Rami Obeid, Senior Legal Consultant, Dispute Resolution at Hadef & Partners.


This article, together with any commentary, does not constitute legal advice. It is provided solely for information purposes on a complimentary basis, without consideration of any specific objectives, circumstances or facts. It reflects then current views of the writer which may modify in time and based on differing objectives, circumstances or facts. A writer's view may differ from views of colleagues and/or the firm. You should seek legal advice on each specific matter. Access to this article does not form an attorney-client relationship.