What are the general policies in commercial liabilities in the UAE?



September 23, 2022



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Commercial liabilities are understood to mean liabilities of a business. In today’s world, given how much investment one puts into the business and the risks associated with it, it is very common for a business to obtain a coverage which protects the business.

Some of the matters which are generally protected from legal liabilities in commercial liabilities policies may include: property damage, bodily injury, personal injury and product or operations of the business or injury that occurs on the business premises. These have been briefly explained in the following paragraphs.

Property Damage:

Property has been defined as any object or right that has a negotiable value under Federal Law No. 5/1985 On the Civil Transactions Law of the United Arab Emirates State (Civil Transactions Law). It is further understood to mean anything that may be subject to physical or legal possession, may be exploited lawfully and is not by nature or by law non-negotiable and can constitute the subject-matter or proprietary rights.

Property is typically classified as movable and immovable property. Article 101 of the Civil Transactions Law defines immovable property as anything which is settled and fixed in space and cannot be moved without deterioration or alteration of its shape. Everything else is movable property.

Article 300 of the Civil Transactions Law also states the following, “Without prejudice to the general provisions on damages, whoever damages or destroys the property of another, shall be liable to replace it, if fungible, or pay its value, if ad valorem.”

Bodily Injury:

This is understood to cover physical bodily injury, including sickness or disease that is caused to a person.

Under Article 299 of the Civil Transactions Law, 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.

Personal & Advertising Injury:

This is generally understood to mean protection from actions which harm a person’s reputation, or right to privacy, such as libel, slander, defamation, disparagement of a person’s goods, products or services, etc., infringing upon another person’s copyright, trade name or slogan in the advertisement, amongst others.

A commercial liabilities coverage may cover such actions. Under the UAE laws, moral damages may be claimed by a person if he has suffered distress which has harmed his honour, dignity, reputation, social standing or financial position. This has been provided under Article 293 of the Civil Transactions Law.

Article 293 of the Civil Transactions Law states as follows.

  • “1-Damages shall include moral damages. Shall be considered moral damages, trespassing against others in their freedom, honour, dignity reputation social standing or financial position.
  • 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.
  • Recovery of moral damages is not transferable to others unless its amount is fixed by agreement or a final court judgment.”

The commercial liability policy may provide for a claims-based policy, which means that the insurer will pay those sums that the insurer becomes legally obligated to pay as damages for bodily injury, property damage, etc. only after a claim has first been made against an insured during the policy period.


For a business operating in the region, a commercial liability coverage may be essential to obtain in this day and age, and could help protect your business in the event of an unfortunate incident.

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