Marine insurance for leisure boats

Question: I have a slightly unusual question. Together with a group of friends, we have invested in our first boat. Two of us are experienced sailors; the others are enthusiastic amateurs. Is there such a thing as leisure boat insurance and can you get it in Dubai?

A: With more waterfront properties under construction across the UAE and wider region, there are more opportunities for people to purchase private or commercial boats. Indeed, one of the major appeals for many residents and visitors is the opportunity to have a taste of the marine lifestyle.

By investing as a group in a leisure craft, you all have taken shared ownership of an asset. As with all assets, it will be subject to depreciation overtime, and could potentially be involved in an incident that seriously reduces its value, such as an accident or fire.

The important answer is that yes, marine insurance for leisure boats is available in Dubai, and you would be wise to purchase the right policy before venturing out to sea. Insurance will not only provide a degree of security for the asset, and for the people who sail upon her, it will also secure your group's friendship, since - as with any shared asset - it will help avoid arguments over who is responsible for paying for any damage.

It is important to understand that generally insurers will only insure the names of the individuals that appear on the Registration Card issued by the Coast Guard and Ministry of Marine Affairs. Furthermore most marinas require that the owners have insurance otherwise they are not eligible to utilise the mooring facilities.

A lot of minor accidents or scratches are known to occur while boats are being removed or brought back to their berths. These minor or major accidents, as the case may be, can often involve a boat that is docked in an adjacent berth. Without insurance, your group will have to bear the costs equally. If the policy is the right one, it will help avoid having these awkward conversations. Collisions by small craft into million dollar yachts is a common occurrence.

Luxury yachts are big investments and like any other investment needs an insurance cover to protect the asset. It is important to have a comprehensive insurance premium that covers not only boat repairs incase of accidents, but also covers all valuables onboard should there be a problem.

Additionally, it is safer to include passenger insurance as with auto insurance, whereby passengers onboard your boat can avail of an insurance cover should there be an unexpected disaster or accident. In this case, you will not be responsible to pay any charges or refunding passengers onboard may claim. Additionally, your insurance will be invalid if you exceed the number of passengers stipulated by the Coastguard.

However, there are exceptional circumstances where the insurance cover may not be applicable, which you need to check before taking out the policy.

Many insurance exemptions are closely aligned to government boating and yachting regulations. It is important that you understand the national government boating laws, and realise where your insurance is applicable. As a result, it would be worth relying on the experienced mariners in your group as you're getting to grips with the craft.

The premium that you pay will be dependent on the value of the hull, where it is moored, where you propose to sail her, and most importantly, the depth of experience of the crew. The Arabian Gulf is a benign sea so insurers are keen to insure pleasure craft in this region.

I'd also suggest working with an expert in the insurance field who also has a comprehensive understanding of the workings of the marine industry and national regulatory laws. Shopping around for the best premium is always worth the effort - after all, you do want to protect your investment.

- The writer is Director of General Insurance at Nexus, a financial advisor.

The views expressed are the writer's and do not necessarily represent the views of Gulf News. If you have any questions, please send it to advice@gulfnews.com