Welcome to Lawgical with Ludmila, where we untangle legal knots so that you do not have to. I am Ludmila Yamalova, a U.S.-qualified lawyer based in Dubai. In each episode, we break down complex law into clear, practical insights that you can actually use. But today, we are taking a sharp turn toward a real-life case study—one involving a luxury car, a massive fire, and an even bigger fight with an insurance company.
Please note, all names of individuals, car brands, and companies in this episode have been changed to protect the privacy of those involved. Any resemblance to real entities is purely coincidental. Now, let us start with the case. Imagine this: you have just bought a brand-new luxury car, fresh from the showroom, worth about 3 million dirhams—almost a million U.S. dollars. You have taken out comprehensive insurance coverage, the kind that is supposed to protect you from any and all risks, including fire, theft, and accidental damage. You have even made sure that your car registration is in order. But then disaster strikes. While your brand-new car is being shipped to Europe from Dubai, it catches fire inside a cargo container at Dubai International Airport. The car is, for the most part, destroyed. Naturally, you expect your UAE-based insurance company to cover the damage.
Instead, you are met with resistance, evasions, and a series of illogical arguments designed to avoid payment. We were forced to take the insurance company to court— not once, not twice, but all the way to the Court of Cassation— to get our client the justice he was promised. This is a story not just about a car, but about a systematic failure in insurance accountability and a client who had to fight for his rights every step of the way.
So now let us start with the car. The car is brand new, as I mentioned earlier, worth more than 3 million dirhams—almost a million dollars—and it is a luxury car. Let us call it Velocini. It is fully insured with comprehensive coverage from Nebula Insurance, and the policy is as comprehensive as it comes. It clearly states there are no exclusions and that it is fully comprehensive, covering all of the UAE.
The insurance company is a UAE-based company and is properly registered in the UAE. The car was obviously bought and registered in the UAE as well. The purchase of the car took place in early January 2022. We are now in 2025. The reason we are discussing this story today is because we just finally collected compensation for the fire—fast forward almost three years.
The fire took place in January 2022. The car was purchased in early January 2022, and just a few weeks later, the fire also happened in the same month while the car was being shipped to Europe. Somehow it caught fire while in the container during cargo handling, only a few weeks after it was purchased, inside a container at Dubai International Airport.
As is the case perhaps in other jurisdictions in the West, certainly with insurance companies, the reason you get insurance is to have confidence and certainty that, in the event something happens, the insurance company covers compensation—whatever the compensation may be. If it is repairable damage, they will cover the costs to repair the damage. If it is irreparable damage, it is compensation for the full value of the item. That is ultimately how insurance works and the purpose of insurance. In many Western jurisdictions, certainly in the United States, when anything like this happens, it is more or less an administrative matter. All you need to show is that a fire happened and that you have insurance, and the company covers it. Then the burden is on the insurance company to decide whether it wants to seek reimbursement from another party that might have been responsible. There is a legal term for this, called subrogation. For example, if the logistics or transportation company made a mistake, the insurance company pays the insured first, and then seeks compensation from the responsible party.
Generally speaking, insurance works like this: the policy covers the specific vehicle. If the vehicle catches fire, it does not matter who created or caused the problem. First, the job of the insurance company is to provide compensation to the insured, and then figure out who might have been at fault and seek reimbursement accordingly. That is more or less how it functions in the West.
Our client, a European national, was very matter-of-fact about it when the fire happened. He thought, “This is unfortunate, but I have full comprehensive insurance. The car is brand new, literally straight off the showroom and into the cargo container. I have full insurance, so it will be no big deal. The company will cover it.” Remember, we were in January.
For the next almost six months—this is before we came into the picture—he went back and forth with the insurance company trying to get compensated. It just went in circles. The insurance company pointed fingers at the logistics company and the airport. The airport logistics company pointed fingers at the insurance company. Everybody pointed fingers at everybody else. No one wanted to take responsibility or provide compensation. The client was left stuck in an endless loop of referrals and excuses. Initially, the insurance company appeared cooperative, almost friendly, but their tactic was deflection rather than actual assistance. They made the client believe they were on his side and that he should be going after other companies to try to get compensation. Among other things, they even proposed that he should get the car fixed.
But let us not forget: this is a brand-new luxury car worth about a million dollars. It caught fire. Even if you fix it, it will never be the same. A car of that caliber that catches fire is, in legal terms, a total loss. Under the insurance coverage in this policy in particular, if a car is totaled or is not salvageable, the insurance company’s obligation is to pay the full value stated in the policy—here, the actual value at the time of purchase, about 3 million dirhams. Under normal circumstances, perhaps in more established jurisdictions with more regulated insurance industries, that is exactly what would happen by default, without a prolonged legal battle. In no established economy would an insurance company tell a client to go fix a car that just caught fire and call it good. But that was essentially the tactic here. They kept telling the client they were on his side and that he should seek other redress—except the one he was by default entitled to: full reimbursement under his policy.
Exhausted and frustrated, the client engaged our law firm. We took over the communications and ultimately had to pursue legal action. From the outset, the insurance company refused to cooperate. They rejected requests for formal documents, including the policy itself. Think about it: an insurance policy is an agreement that sets out terms and conditions, coverage, and any exclusions. We asked for a full copy of the policy with all terms and conditions. They did not merely ignore us; they acted as if we had no business asking, and with surprising audacity implied it was improper to request these documents. Communications were unproductive. They were defensive, acted as if they could do no wrong, and tried to bypass us by contacting the client directly, steering him again toward “fixing” the car and attempting to undermine us as his legal representatives.
Unfortunately, this kind of conduct in this region, with these kinds of matters, is all too common—not only in insurance but broadly in business transactions. This sort of arrogance and dismissal often signals that the party does not have a solid legal foundation to back up its position. The more dismissive and regressive they are, the more likely it is that they lack legal basis. It is unpleasant and counterproductive.
It is important to highlight that we are not talking about a toaster that caught fire. We are talking about a luxury car—a massive asset. For many people, an asset of this value equals life savings. One could buy multiple properties for this amount. From the client’s perspective, he did everything right. He bought from a reputable dealer. It was a brand-new car with all documents in order. He obtained the insurance policy through the same dealer because it was recommended. He did not shop for the cheapest option. In his mind, he ticked all the boxes. This should have been an administrative and simple matter where the insurance company accepted its obligation. That is the only obligation insurance companies have: to compensate the insured. There is no other purpose.
Therefore, we tried to mediate before taking formal action. You still want to believe you can reason with counterparts. In other countries, this would have been resolved within weeks at most. Once we realized the dialogue was ineffective and had hit a wall, we decided to take legal action. Under UAE law, to start a case against an insurance company, you must first file a complaint with the Insurance Dispute Resolution Committee, governed by Cabinet Decision No. 58 of 2020. Whenever you have an insurance claim, you start with that committee and hope they resolve it. If they do not, you proceed to court.
We filed the claim. Since the incident happened in 2022, and the relevant law was introduced in 2020, the committee was still evolving. The process was somewhat opaque as to what to submit, how proceedings should take place, and which party bears which burden. Timeline: the car was purchased in early January, the fire happened later in January, and for about six months the client went back and forth with the insurer. During this time, he was out 3 million dirhams, had no car, had already paid logistics to ship the car to Europe, and was paying legal expenses to unwind a debacle. We filed the complaint with the committee at the end of August—almost eight months in. In September, after inconsequential proceedings—documents submitted, little discourse—the claim was closed, not rejected, allegedly because we had not submitted proof of damage and repair costs, even though the car was clearly totaled.
The committee seemed to place a burden of proof that was not clearly grounded in specific regulations. How do you prove damage and repair costs beyond photos of a burnt car? And if the car is irreparable, how do you prove repair costs? There was little opportunity for debate. The complaint was closed. Another issue arose: we did not have the full police report. Because the fire happened at Dubai Airport, Dubai Police attached to the airport investigated and issued a report. All the client had was a one-page document confirming the date, investigation, and that the car caught fire. We sought the full report, but obtaining it was difficult: the police said they would issue it upon a court or authority request, while authorities said they would not review the file until we had the police report. A circular argument.
When the insurance committee closed the complaint without resolution, we chose not to appeal there but to go to court. We filed in the Court of First Instance in December 2022. In the UAE, there are three levels of courts: Court of First Instance, Court of Appeal, and Court of Cassation. Dubai’s Court of Cassation is the final court. We ultimately went as high as we could go.
At a high level, the courts issued decisions in our favor from the beginning, but they were not satisfactory. The Court of First Instance issued a partial decision, compensating only part of the car’s value. The Court of Appeal adjusted that value but again only partially. Our position remained the same: it was a brand-new car, fully comprehensive insurance, no exclusions, and the car caught fire in neutral conditions at the airport. We requested compensation for the full insured value—3 million dirhams—considering the car a total loss. We did not want the remnants of the car, nor did we want it fixed; we wanted the full insured value, and the insurer could keep the remains. We also requested damages for loss of use and related costs. The main request, however, was the full insured value.
Ironically, the Court of First Instance offset compensation by the supposed current value of the burnt car. For example, with a policy value of 3 million, the court’s appointed experts determined the burnt remains were worth, say, 1.5 million, so the court awarded the difference—about 1.5 million. That was not satisfactory.
Timeline: we filed in December 2022, and by July 2023 we received the first judgment—only seven months, which is notably quick by global standards. Litigation in the UAE, especially these days, proceeds faster than in many countries. Although the client might have accepted that partial award, legally it was not correct, so we appealed. The other side also appealed, seeking to avoid any responsibility. We filed our appeal in August 2023, seeking recalculation. The Court of Appeal issued another decision, confirming parts of the first and updating others, but it was still partial—around 1.7 million. We then filed a further appeal to the Court of Cassation in September 2024. After a year of appellate process involving additional expert reports and inspections, the Court of Cassation issued its decision only two months later, in November 2024.
Within two months, the Court of Cassation issued a decision fully in our favor, agreeing with our original position: the car was a total loss, it was properly insured, the insurer had the obligation to cover the damage, and the policy required payment of the full insured value—3 million dirhams. The court awarded the full amount.
You would think that with a final judgment from the highest court, the insurer would pay. They did not. It took another eight to nine months to actually receive payment. We had to file enforcement proceedings. In the UAE, once you have a final judgment and the other party does not pay, you file for enforcement within 30 days. Through enforcement, you can request freezing bank accounts and other assets, and because it is a money judgment, you can have funds transferred to court to satisfy the judgment. We did exactly that. The UAE’s enforcement process is now efficient and centralized. Banks respond to the courts directly. We identified bank accounts with sufficient funds, had them frozen, and requested transfer of the judgment amount to the court, which then transferred it to our client. Payment ultimately happened through enforcement, not voluntary compliance.
Let us talk about the arguments raised by the insurer. They were, to put it mildly, creative. One argument was that the client had switched to export insurance and that the original policy had expired because the car was being exported. There was no evidence of this. Only two weeks had passed between purchase and accident. We obtained documents from the RTA confirming that the car registration was active and that there was no export insurance. They also argued the client had deregistered the car, which was false and, even if true, irrelevant to the core obligation.
Another argument was that fire was excluded. In the UAE, there is a Unified Motor Vehicle Insurance Policy that applies to all cars. The exclusions in that policy do not exclude fire. The insurer also argued that fire damage was an indirect loss, which was unfounded. We showed the policy text and emphasized that we took fully comprehensive coverage; there was no optional “fire add-on” to select. The suggestion that an additional fire insurance existed was incorrect.
Perhaps the most striking argument was that the airport is not a road, and the insurance only covers incidents on the road; therefore, the airport would be outside coverage. Legally and logically that is incorrect. If coverage applies across the UAE, then Dubai International Airport—located in Dubai, in the UAE—is covered. The insurance expert even floated this theory, which the Court of Cassation pointedly dismissed, noting the absurdity that the lower courts entertained it.
They also argued failure to prevent the fire—blaming the client for not taking reasonable precautions. The car was brand new, placed in a locked cargo container in a restricted area. The client had no access to it. In any case, absent intentional misconduct, the insurer’s obligation stands; negligence by third parties is handled through subrogation, not denial.
They blamed the logistics company. Again, even if true, the insurer must pay the insured first and then seek recovery from the party at fault. That is how insurance is supposed to work.
They insisted the car was not a total loss and was repairable, referencing vague, untranslated repair quotes. We are talking about a luxury car whose chassis caught fire. The Court of Cassation rejected this and held that a luxury car cannot be economically restored after a fire and that the total loss was beyond dispute.
Throughout the litigation, the courts appointed experts—common in the UAE—to determine factual elements. There were two: an insurance expert and a technical (engineering) expert. The technical expert attempted to determine cause a year after the fire, with the car in storage. For a highly sophisticated vehicle, that task is unrealistic for a single inspector. We submitted evidence of similar fires with the same model in other jurisdictions, including U.S. technical reports, indicating a product defect—a “lemon” in U.S. parlance. From a legal standpoint, the cause did not matter for coverage, absent insured misconduct. The insurer pays first and seeks reimbursement later from any responsible third party.
Legally, we relied on the UAE Civil Code, including Articles 1026–1030 regarding the insurer’s duty to compensate regardless of third-party fault, and Article 1037 addressing fire and total loss coverage. We cited the Unified Motor Vehicle Insurance Policy (notably Chapter 4 on exclusions), and Cabinet Decision No. 58 of 2020 defining the Insurance Dispute Resolution Committee’s role. Since then, in 2023, the law changed: insurance disputes start at the committee (now under the Central Bank), and the committee’s decision is treated as equivalent to a Court of First Instance judgment. Appeals then go directly to the Court of Appeal, effectively shortening the process.
We also relied on judicial precedents. From a legal perspective, this was a straightforward case. The law and policy language were clear. Unfortunately, it still took the committee process and three court levels for the final and highest court to enforce that clarity.
In the end, the Court of Cassation awarded the full 3 million dirhams, plus court fees and interest (note: legal fees are generally not recoverable in UAE local courts). The court recognized that a luxury car cannot be economically restored after a fire, confirming the total loss beyond dispute. The judgment also criticized the lower courts’ acceptance of illogical arguments, such as the notion that Dubai Airport is not within the UAE for coverage purposes.
Despite this judgment, we still had to enforce aggressively—freezing bank accounts and even the company’s license—to get paid. Payment came only when funds were seized and transferred through the court.
To summarize: there were misstatements of law by the insurer, procedural stalling, and disrespectful conduct. The legal journey took over two years from fire to final payment—almost three years in total. Without legal intervention, the client would have received nothing, as evidenced by the six months of runaround prior to our involvement. This case is a cautionary tale for policyholders in the UAE: even high-value, fully compliant policies can face denial. Insurers may act in bad faith and use gray arguments to delay or escape liability. However, the law is clear and ultimately favors the insured. The Court of Cassation applies the law clearly and effectively.
We hope this case signals a shift in insurer conduct. While the UAE is a civil law jurisdiction and not strictly bound by precedent, courts do consider it in practice. By litigating this case to conclusion, we hope to have contributed to a useful precedent that encourages insurers to honor their obligations.
That is all for this episode of Lawgical with Ludmila. If you found this episode useful and you like what we do, you can find more on our website at lylawyers.com. We are also on Apple Podcasts and Spotify, and for the full experience you can watch our video podcast on YouTube. Until next time, stay informed, stay safe, and keep things Lawgical.
