Caravanning is a popular pastime for many in the UK, but what are the risks and available covers. Steve Dutton explains
The arrival of the holiday season brings thoughts of short breaks away from home, and the more self sufficient among us choose camping and caravanning as the best way to enjoy thoset breaks.
Caravanning brings pleasure to many as a relaxed and carefree way of holidaying. However, it is like a red rag to a bull to many others, such as the Jeremy Clarkson’s of this world, who find themselves following a sedately-driven car and caravan combination, along a winding single track road. But love them or loathe them they are here to stay.
Caravan insurance is sometimes offered as an extension to a household policy though more generally it is sold as a separate policy. However whichever way it is sold the cover is basically the same.
Most policies are set out in three distinct sections – the caravan and equipment, the contents, and the legal liability.
The policy booklet will first define the caravan – the wording will refer to the caravan, trailer tent or folding caravan shown in the associated insurance schedule.
The caravan is taken to include the unit itself, its fixtures and fittings, awnings, furniture and equipment such as gas bottles and security devices.
It will be covered when stored or being used by the insured and also if it is loaned to the insured’s family and friends. It is not covered under this policy if it is let for hire or other payment or reward.
Geographical limits under the policy are similar to those for taking possessions away from the home. These would mean the caravan is covered in the UK, Channel Islands, Isle of Man and temporarily in Europe for a given period, for example 60 or 90 days.
Cover for the caravan will be on an ‘all-risks’ basis and will automatically include the following extensions:
• Dismantling or removal of debris after an accident
• Protection and removal to a specialist repairer
• Delivery after repair to the insured’s home or the caravan’s usual site
• Loss of site fees and the reasonable costs of hotel accommodation or hiring of a replacement while the insured’s unit is unusable.
Generally, cover is on an indemnity basis, that is, the claim settlement will reflect wear and tear. However, some insurers will provide cover on a ‘new for old’ basis, but because of the rapid depreciation, usually only on units less than five years old.
The contents of the caravan are also covered on an ‘all-risks’ basis and includes contents actually in the caravan, the awning or towing vehicle. Typical contents include:
• Personal possessions
• Household goods.
The cover on the contents will be subject to limits and single articles will usually between 10% and 20% of the contents sum insured.
If the policyholder has a separate household policy, possessions may be covered away from the home under the household policy where higher limits may apply.
All caravan policies include liability insurance. This covers the insured’s legal liability for injury to a third party or damage to the third party’s property caused by, or in relation to, the caravan.
A typical limit for legal liability will be around £2m. Exclusions within the liability section will include injury or damage caused while the caravan is being towed and injury to employees of the insured.
Third party liability cover excludes injury or damage while the caravan is being towed. This is because third party liability cover is legally required for all motor vehicles and this extends to provide cover when caravans or other trailers are being towed. So this is already covered under the motor insurance policy.
Some insurers also provide personal accident cover if the insured or anyone staying with them is killed or disabled as a result of an accident. Cover is usually provided for capital sums of £10,000.
As with all insurance policies there are exclusions relating to the cover provided. There are both caravan specific and general policy exclusions.
“Caravan insurance is sometimes offered as an extension to a household policy though more generally it is sold as a separate policy
A caravan policy is based on ‘all-risks’ cover and the general ‘all-risks’ exclusions will apply including:
• Wear and tear
• Mechanical or electrical breakdown
• Damage caused by domestic pets
• Cleaning, restoration or repair
• Damage from any gradually operating cause
• Risks covered elsewhere in the policy or in another policy.
There are also additional caravan policy exclusions including:
• The policy excess
• Theft of the caravan while left unattended, unless immobilised or protected against theft
• Theft of contents unless involving forcible or violent entry or exit
• Theft or loss arising from deception, fraud, or use of stolen, forged, or invalid cheques, bank notes etc.
• Loss or damage where the caravan is overturned due to storm or flood, unless it is securely anchored to the ground
• Damage to tyres unless caused by an accident to the caravan or vandalism.
As with all insurances, when a person wants to take out cover, either as a policy extension or as a separate policy, the insurers need to gather information to help them decide whether to accept the risk; and if so on what terms and at what premium. Typical underwriting questions will include:
• Make, model, manufacturer
• The age of the caravan
• Market value of replacement depending on new for old or indemnity basis. (The premium is calculated by applying a rate to the total value of the caravan and its contents)
• The address at which it’s kept
• Is it used by the owner alone or do friends and relatives use it?
• Is it rented out for profit?
• The security of the van; wheel clamps etc.
• Is it a touring caravan or at a fixed location?
We have now looked briefly at the cover afforded by a caravan policy and also at the main exclusions. We have also looked at the main underwriting considerations. We will finish by providing a short test. IT
‘ Steve Dutton is the business development manager of The Broker Academy
This article and the accompanying questions are all taken from BrokerAssess the CII’s online learning system where caravan insurance is just one of over 250 courses available to study. For further information on Broker Assess please contact the support team on 0844 800 8559 or email: firstname.lastname@example.org