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The Impact of Dubai Fires: Fire Damage and Tenant’s Insurance – What Every Landlord & Tenant Needs to Know

by Michael Kortbawi

The recent Zen Tower fire in Dubai Marina is the just the latest in a spate of high profile tower fires to sweep the city in recent years - Tamweel Tower in JLT in November 2012, the ironically named Torch Tower in Marina in February 2015 and once more in August 2017, Address Hotel on New Year’s Eve 2015, Sulafa Tower in July 2016, and Almas Tower in April 2018: to name but a few. Thankfully, as with the preceding fires, yesterday’s Zen Tower fire resulted in zero casualties – a testament to the skill and efficiency of the UAE Civil Defence. However, the severity of such fires and their impact on residents should not be underestimated.
What Causes Such Fires?
While the combustion of high-rise buildings in the UAE seems to be common, the cause does not. In the case of the 2012 fire in JLT’s Tamweel Tower, it is believed that a carelessly disposed of cigarette caused the tower to catch fire. The infamous New Year’s Eve fire at the Address hotel was caused by an electrical short circuit. The cause of the Zen Tower blaze has yet to be determined.

Although the cause of the fires differs, the rapid spread of the blaze in each instance can be credited to the use of flammable aluminum cladding on the exterior of each building. It is estimated that at least 70% of buildings in Dubai constructed before the year 2009 are cladded with this non-fire resistant material. Following an update to the 2011 Fire and Life Safety Code, all buildings over 15 meters tall are required to be fire resistant aluminum cladding. However, the issue here is that the code is not applied retrospectively and existing towers will only have to comply with the new cladding regulations when the buildings are due for maintenance.
What is the position of a building’s residents in the event of fire?
In the event of a tower fire, the responsibilities of the property owner and the property developer are generally not understood very well by tenant; tenants often expect to be covered by the insurance policy held by either the property owner or developer which is unfortunately not the case. Generally, the property developer and the owner’s association are responsible for the areas in the property over which they maintain control, such as public areas – this does not extend to the tenants actual living space nor their personal possessions. Therefore, to obtain adequate cover, a tenant needs to take out his own individual insurance policy. If a tenant fails to do so, in the event of a fire, storm or flood they will have to bear the costs for any incurred damages themselves.

The UAE Civil Transaction Law, issued by way of Federal Law No. 5 of 1985 (“Civil Code”) regulates fire insurance coverage and the duties and liabilities of the insurance provider. According to the law, the insurer shall cover all damages caused by the fire notwithstanding the reason of the fire, provided that the damages are a direct result of the fire and have not been caused by deliberate or fraudulent actions of the insured or the beneficiary. The scope of insurance and therefore the compensation will vary, depending on the policy and the insurance company.

In the event of a fire that renders a building uninhabitable, the tenant may seek to terminate their lease agreement. Usually, lease agreements are cancelled by mutual agreement between the landlord and tenant or by order of court. The first step towards cancellation is to establish whether the tenant’s situation falls within the scope of the provisions of the Civil Code. If so, the next step will be to address a letter to the landlord detailing the situation, the grounds for the cancellation and the date of the loss of enjoyment, and requesting the return of all postdated cheques and the refund of prepaid rent from the appropriate date as determined by the Civil Code as well as any deposit. If the landlord agrees to the cancellation, confirmation should be obtained in writing and preferably signed by both landlord and tenant.

If the landlord refuses to comply with a request for cancellation, the tenant has the option to file a complaint with the Dubai Rental Committee which shall include a request for the landlord to pay the costs incurred by the tenant and the costs of the proceedings.
How Will Such Fires Impact on Residents’ Insurance Premiums?
As residents become increasingly aware of the risk of fire in Dubai’s high rise towers, we can expect to witness an increased demand for insurance cover. Despite the introduction of the Fire Safety and Life Protection code, many buildings throughout the city remain cladded with flammable material and are equipped with inadequate fire safety measures - meaning that the fire in Zen Tower is unlikely to be the last of its kind. Therefore, the need for tenants to obtain insurance cover is imperative. Underwriters have already begun to take note of the increased risk and have adjusted their rates accordingly.
If a tenant does not have sufficient insurance cover, there is a high probability that he will be responsible for covering the costs for all damages. In addition, a situation may arise where a tenant has to pay for a new apartment, while still having a financial obligation to continuing to pay rent pending lease cancellation. It is always advisable to get advice from a lawyer in order to proceed with the situation efficiently and on legally safe ground.

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