UAE Law and Practice Contributed by: Farida Safwat, Elham Mobini and Ramy George, NHB Legal
NHB Legal 5703, Addax Tower Al Reem Island Abu Dhabi UAE Tel: +971 2 639 7685 Email: info@nhblegal.com Web: www.nhblegal.com
1. Key Drivers and Resolution of Insurance Disputes
1.2 Role of Policy Wording and Drafting Policy drafting and wording issues are key contribu- tors to insurance disputes in the UAE. A significant number of insurance disputes turn on interpretation of policy terms, including the scope of coverage, appli- cation of exclusions and deductibles, and whether policy conditions and warranties have been satisfied. Among the most contentious provisions are war, hos- tile acts, and terrorism exclusions, which vary con- siderably between policies. The inherent ambiguity of events arising from regional instability and climate- related events can contribute to disputes concerning the scope of coverage. Another area of frequent dispute concerns business interruption coverage, particularly under policies that require direct “physical damage” as a trigger for recovery. There is often disagreement between insureds and insurers as to what exactly constitutes “physical damage” for the purposes of coverage. The UAE has experienced heightened exposure to cyber-risks in recent times. Cyber-policies often give rise to disputes where insurers rely on the application of “war” and “hostile act” exclusions to refuse cover- age for state-sponsored cyber-attacks. Coverage disputes frequently arise from ambigu- ous drafting, inconsistent terminology, and differing interpretations of policy wording. In light of ongoing economic and geopolitical developments, a careful review of policy wording is essential to understand the scope of coverage and minimise the risk of disputes between insurers and insureds.
1.1 Common Triggers of Insurance Disputes One of the most frequent drivers of insurance disputes in the UAE remains coverage interpretation, more spe- cifically whether a loss falls within the scope of cover- age, and the application of policy exclusions, limits and deductibles. Property, construction, motor, marine and cyber- insurance are sectors that have generated the largest volume of disputes in recent years. Following the severe flooding in the UAE in April 2024, an unprecedented number of disputes arose across multiple sectors, including property, construction and motor policies, regarding the application of flood and catastrophe exclusions and business interruption cov- erage. These cases are still being litigated in the UAE courts. A growing number of disputes have arisen in the cyber-insurance sector, particularly with regard to ran- somware incidents and business interruption losses. In parallel, in the broader economic context, the rise in global inflation and reinstatement costs have increased disputes concerning valuation and adjust- ment of claims. Therefore, while coverage disputes remain the most common cause of insurance disputes in the UAE, the wider factual context in which dis- putes arise is being increasingly influenced by regional instability, growing cyber-related risks and climate- related events.
269 I NSURANCE L I T IGATI O N 2026
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