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What are the general commercial liability policies in the UAE?

Commercial general liability (“CGL”) policies are a norm in the UAE. A CGL policy usually provides comprehensive liability coverage by encompassing different liability coverage under the same head, such a property coverage, personal injury coverage, medical coverage etc. A CGL policy thus endeavors to cover the various liabilities arising from operations, premises, products of a business under one policy.

The broadheads covered under a commercial liability policy in the UAE includes:

Property Damage: A CGL policy will cover the instances wherein property damage is caused to another person or company on account of your business operations. The Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates (the “UAE civil code”) defines property as ‘an object or right that has a negotiable value’. A broader description is also provided for ‘property’ under Article 97 of the UAE civil code, which states that, ‘Anything that may be subject to physical or legal possession, maybe exploited lawfully and is not by nature or by law non-negotiable, can constitute the subject matter or proprietary rights. Pursuant to the UAE civil code, any person who damages or destroys the property of another is required to compensate the same, and pay an equivalent value (ref: Article 300).

Personal and Advertising Injury: A CGL policy will cover your business against claims arising for instances of slander, libel, malicious prosecution, wrongful eviction etc. Article 293 of the UAE civil code recognizes the concept of ‘moral damages’ and states that: “i) Damages shall include moral damages. Shall be considered moral damages, trespassing against others in their freedom, honor, dignity reputation social standing or financial position; ii) Spouses and closet relatives of the family may be adjudged damages for the moral prejudice sustained by them as a result of the death of the injured. iii) Recovery of moral damages is not transferable to others unless its amount is fixed by agreement or a final court judgment”.

Bodily Injury: A CGL policy coverage protects you from damages arising out of bodily injury caused to other people or from damages caused to third-party property. Article 299 of the UAE civil code recognizes the concept of compensation for personal injury and states that ‘Damages are compulsory due for prejudice to the person. Unless otherwise agreed between the parties, either blood money or compensation for defect of sold value, in cases they are due, may not be added to damages’.
A key difference between different types of CGL policy is the concept of how claims can be raised. For example, a “claim-based policy” allows for claims to be raised during the policy terms regardless of when the underlying claim event occurred. However, on the other hand, a “occurrence policy” strictly goes by the concept of when the claim event occurred and stipulates to honour the claim only if the underlying claim event occurred during the policy term. It is usually seen that CGL policies in the UAE are mostly occurrence-based policies.

It is important to note that, even though the CGL policy constitutes a very comprehensive policy, it might still not cover all the risks and liabilities connected to a business. It is therefore advisable to conduct a detailed study to ensure that commercial liabilities unique to the business are identified and covered. Suppose the standard CGL policy is seen to lack in its liability coverage. In that case, ‘excess liability coverage’ can be purchased in addition to cover the claims that either exceeds the limit or are not part of the standard CGL policy. For example, a standard CGL policy may exclude from its purview the commercial liability coverage for product recalls or computer-related losses etc. A medical payment coverage may also be added into a CGL policy in order to cover third-party bodily injuries at a higher limit, regardless of the business’s liability or negligence in the incident.


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Duties Structural repairs, wall whitewashing, plumbing pipe replacement, electrical wiring maintenance Provide essential services to tenants Need for the Act Vacant houses are increasing In recent years, the number of vacant houses in urban India has increased exponentially. The lack of appropriate legislation for the rental housing market stakeholders could motivate the government to pass the aforementioned bill. The percentage of vacant houses in India's major cities remains very high. While Gurugram has 25.8% of the total vacant homes in India, Pune is second with 21.7%, and Mumbai is third with 15.3% of the total vacant stock in India. Once the bill receives approval from all states and UTs, the vacant stock can be brought under the purview of organized rental housing, as stakeholders – tenants and landlords – may find it easier to bridge the trust gap and unlock the actual utility of this housing stock. Role of property managers The MTA is not silent on the role of rental housing intermediaries/brokers/property managers/rental agents, and it defines them, their roles, and the consequences of violation. Any person or legal entity authorized by the Landlord to manage the premises or acts on behalf of the Landlord, tenant, or both in a renting premises transaction and receives remuneration, fees, or other charges for his services will be included here. Furthermore, the MTA establishes accountability for property managers, requiring them to provide name, address, PAN number, Aadhar number, and contact information for submission to rent authorities. Property managers welcome the MTA because it will provide them with more opportunities in the residential sector in the future. The new dispute resolution framework Tenancy disagreements between landlords and tenants are common in India. Even though rent control laws exist in every state, conflicts are unavoidable. The lack of regulation has been one of the most significant deterrents to landlords renting out their properties. With the introduction of the MTA, a three-tier dispute resolution structure comprised of Rent Authority, Rent Courts, and Rent Tribunals was created, which would help reduce the burden on the Civil Courts by diverting the load on these authorities. Rent Courts/Tribunals with personnel not below the rank of Additional Collector/Additional District Judge shall make every effort to resolve cases expeditiously and within 60 days of receipt of the application or appeal. Challenges faced by the Act Force majeure The definition has included any situation of war, flood, drought, fire, cyclone, earthquake, or other natural calamity affecting the tenant's habitation in the premises rented out. Although the model tenancy act 2021 which states the residential and commercial tenancy, it is unclear how the definition has finally linked to the residential tenancy after expressing the types of events. The states must make some changes and clarify who is responsible and bears the risk during force majeure events. Digitalization The MTA allows uploading information and documents submitted by applicants/parties to the Rent Authority's portal. So, according to the statute, every district would have a Rent Authority and thus would be required to set up a digital platform. Instead of having a different portal for each Rent Authority, there is undoubtedly a need for a unified portal across the country. The Central Government should organize to save time and money. The availability of information is a well-established tenet of informed decision-making in the digital age. Any delay in establishing digital platforms or Rent Authorities could have serious consequences. Exclusion of certain property The MTA excludes property such as premises owned or promoted by the Central Government/State Government/Union Territory Administration/local authority/ Government undertaking/ enterprise/statutory body/ Cantonment Board/ company/ University/organization/ religious institutions notified by state government/ charitable trusts/ Auqaf under Waqf Act, 1995, or any building specifically exempted for the public interest. Such exclusion will keep a large portion of vacant stock out of the regulatory framework, requiring stakeholders to rely on other legal resources for dispute resolution. Under what circumstances can the Landlord break the agreement and evict the tenant? The Landlord cannot evict the tenant while the tenancy agreement is still in effect. However, the Landlord can apply to the Rent Authority for eviction on the following grounds: 1. If the tenant refuses to pay the rent according to the tenancy agreement terms 2. If the tenant has not paid the rent and other fees for two months in a row 3. If the tenant takes possession of any part of the premises without the Landlord's written permission 4. Even after receiving notice from the Landlord, the tenant misuses the property (including immoral, illegal, and public nuisance activities). 5. If the Landlord needs to do some construction work on the property, that cannot be done without vacating the property. 6. If the tenant has given a written notice to vacate the premises, the Landlord stands to lose money if possession is not granted. 7. If the tenant has made any structural changes without the Landlord's written permission Can a tenant or a landlord file a complaint against the other? Yes, both parties can file an application or appeal with affidavits and documents before the Rent Court or Rent Tribunal, as the case may be. The Rent Court/Tribunal acts under the Code of Civil Procedure for various purposes, including summons issuance, affidavit evidence, witness examination, and so on. The Court/Tribunal, on the other hand, is guided by natural justice principles and is free to regulate its own procedure. Does the agreement become null and void if the Landlord dies? Yes, in the event of the Landlord's death, the legal heirs of the deceased Landlord can file an eviction application with the Rent Court. Suppose the court determines that the applicant/legal heirs have a bonafide need for the premises. In that case, an order will be issued against the tenant for handing over vacant possession of the premises to the legal heirs of the deceased Landlord. What if the Landlord makes structural changes and raises the rent during the tenancy? Frequently, the Landlord begins construction work during the tenancy period and incurs costs for alterations, improvements, and structural changes that are not necessary repairs to be carried out in the premises occupied by the tenant, putting pressure on the tenant to request a rent increase. In such cases, rent can only get increased if the Landlord and tenant sign a written agreement before the work begins, according to Section 9(2) of the MTA. In addition, the said rent would be applied one month after completing work. To Conclude: The central government's intention appears to be toward progress and the formalization of the real estate market. The Model Tenancy Act’s goal is to make the country's rental housing market vibrant, sustainable, and inclusive. It will help alleviate stakeholders' concerns and enable landlords to unlock vacant properties and create adequate housing stock for all income groups, thereby addressing the issue of homelessness. However, the Act is still in its early stages and must deal with time-consuming procedures before implementation. The identification and appointment of personnel for Rent Authorities, Rent Courts, and Rent Tribunals would be a time-consuming process requiring adequate time for the MTA's on-the-ground implementation.