Slide 2: Personal vs Property Insurance

• Insurance is classified into property and personal insurance based on the insured risk

Personal Insurance

• Falls under if the insured risk is the person of the insured
• Also known as Insurance of Persons (التأمين على الاشخاص)
• Pertains to the insured individual and their body, health, or life
• Obligates the insurer to pay for the risk in the contract, regardless of actual harm to the insured
• Insured person is the focal point of consideration
• Does not carry indemnity
• Insured gets the amount even if they suffer no harm when the risk occurs
• Subject is the individual, threatening their life, health, or work

Property Insurance

• Falls under if the insured risk is the financial assets of the insured
• Focuses on the insured's financial estate (assets, liabilities)
• Indemnifies the insured or beneficiary for damages from insured risk within damage limits
• Characterized by its compensatory nature
• Safeguards the insured for harmful consequences affecting assets due to the insured risk
• If losses reduce the insured's financial estate, the insurer compensates
• Compensation is determined per damage extent
• Compensation depends on damages resulting from the insured risk
• The insurer compensates for damages of the insured amount
• If damages are less than the limit e.g. AED 50,000 instead of AED 100,000, the insurer pays an equal amount
• An insurer is obligated to compensate the insured/beneficiary with less of the two values if specifying a maximum insured amount

Types of Property Insurance

• Insurance on Assets (Property Insurance): covers damages affecting the positive side of the insured's financial estate e.g. damage to propety.
• Liability Insurance: provides coverage for damages that impact the negative side of the insured's financial estate arising from legal liability to third parties.

Insurance on Assets (Property Insurance)

• Compensates the insured for damage to financial estate due to insured items being exposed to risk
• The contractual relationship is between the insurer and the insured
• Varies depending on the risk threatening the insured items. Examples:
  • Theft insurance for theft risk
  • Fire Insurance for fire risk
  • Car damage insurance for car damage risk

The Dubai Court of Cassation rulings on Insurance on Assets:

• Fire insurance is a compensatory contract to indemnify the insured-or the beneficiary-for fire damages within the damage suffered by the beneficiary.
• Indemnity doesn't extend to third-party damages unless explicitly included in the insurance policy for civil liability
• Insurance contracts are time-bound agreements, insurance coverage applies during the specified period and does not extend to beyond policy terms

Other Rulings From The Dubai Court of Cassation

• Goal of Property insurance is to compensate the insured or beneficiary for damage as a result of the insured risk strictly within actual damage limits.
• The agreed insurance amount is the maximum insurer compensation
• It's "presumed" the predetermined is the the damage value in case of damages
• Insurer can challenge the risk, which enables the insurer to compensate for the actual value of the damaged property

2- Liability Insurance (Debt Insurance)

• This harm may arise from:

  • Acts of Others for whom one is responsible (liability for the acts of others)
  • Acts of Objects under one's control (liability for objects)

• Such occurrences lead to individual liability and the obligation to compensate for damages

• Liability Insurance:

  • Protects them from the risk of compensation claims.
  • When the insured risk of being accountable for compensation materializes, the insurer compensates the person designated in the contract

• Examples of Liability include:

  • Automobile
  • Professional
  • Environmental

Federal Decree-Law No. (48) of 2023 Regulating Insurance Activities Article (4)

• The business shall be divided into the following types:

  • Insurance of Persons and fund accumulation operations
  • Property and liability insurance

• Listed Insurance, their machinery and equipment and the related liabilities:

  • Fire
  • Land transport, marine and air cargo and the related liabilities
  • Aviation hull
  • Satellites, balloons and spaceships
  • Railway locomotives and coaches
  • Land vehicles
  • Engineering
  • Oil

• Miscellaneous accident insurance including miscellaneous is:

  • Personal accident
  • Guarantee and fidelity guarantee
  • Money, coins, securities, bonds in transport, or safe
  • Robbery and theft
  • Glass
  • Professional indemnity
  • Workman's compensation and employer liability

Key Characteristics of Liability Insurance

1. Compensation Obligation

• Insurer fulfills obligation that falls upon the insured due to the insured risk to the third party.
• Third party damage triggers insured's liability but doesn't cause insurer's compensation obligation

2. Triangular Relationship

• Third party may arise in the relationship of insurer/insured if:
  • The insurance contract designates the injured party as the beneficiary
  • The law names law provides the injured party with a direct lawsuit against the insurer.
• The injured party (the beneficiary) may bring a direct claim against the insurer for compensation, bypassing the insured's assets

3. Unlimited Coverage

• Liability insurance doesn't specify a fixed compensation amount in advance.
• Unknown extent of liability until it arises.

Types of Personal Insurance

• Life Insurance
• Non-Life Insurance for individuals

1- Life Insurance

• Addresses the risk of death
• Unlike other types of insurance-the insured must notify the insurer of any changes that may increase the insured risk during the policy term, but in a life policy the insured is not obligated to do so

Dubai Court of Cassation ruling on Life Insruance

• Under Articles 1032 and 1033 of the Civil Transactions Law, the subject matter of a life insurance contract is the risk related to the life of a person

• The insurer must assess the risk they are insuring against by scrutinizing insurer's situation Methods to do include asking specific questions about health

• Fraud is when the insured conceal's/provides false information about their health when entering the contract in bad faith leading to risk

• Insurer has the burden to provide in demonstration of bad faith the insured concealed their health condition, especially if they knew about the illness and it led to the occurrence of the insured risk being their death

• If fraud or bad faith is disproved, then the insurer must, cancel and return to the assured the premiums they have paid.

• If problems do arise from the following the assured shall pay sums, declare knowledge of information as to the risk.

Types of Life Insurance

• Insurance for Survival: the insurer pays if the insured survive until the agreed-term.
• Mixed Insurance that covers life and death: insurer pays beneficiaries if dies, or pays insured if survives

Non-Life Insurance for Individuals, Types:

• Insurance Against Physical Injuries obligates insurer for the payment of premiums to insured for medical. Insurer will cover primary injury cost and medical secondary cost
• Insurance Against Illness covers disability, and medical expenses included

Comparison - Property Insurance vs Personal Insurance:

• In Property insurance insured must suffer damage from risk to be payed and the insurer may not be obligated, this stems from a compensatory nature as explained in Article 1034 of the UAE Civil Transactions.
• In Personal Insurance, damage is not a necessary condition to receive the insured amount, explained in Article 1046 the UAE Civil Transaction.

Proportionality

• In property, between the compensation amount the insurer is obligated to pay vs. the damage. The insurer only pays an amount that corresponds to the actual damage,
• In Insurance on Persons which stems under Article 1043 of the UAE Civil Transaction insurers do not need to pay in portion between insured amount and value of damage.

Combining Proceeds

• Property Insurance proceeds occurs when the realization of the insured risk is alongside the sum, as explained in Article 1053 of the UAE Civil Transactions Law.
• Personal Insurance on persons are entitled to receive both.