Ian Jerrum explains the types of cover offered for caravans
There are more than 500,000 touring caravans and as many as 300,000 fixed site caravans in the UK requiring insurance. These can be worth anything from £1,000 to £30,000.
Many are insured under an extension to a household insurance policy, although stand-alone cover is also available. There are around 300,000 caravan club members in the UK, about a third of whom purchase cover recommended by their club.
The main sources of claims are theft and weather-related damage. The high risk of theft of and from caravans makes security a key concern.
Around 5,000 caravans are stolen each year, compared with around 20,000 newly-built caravans coming into circulation. The average value of claims for stolen caravans is in the region of £24,000. Fewer than 4% are ever recovered.
It is hardly surprising then that evidence of enhanced security measures can help secure a better deal for caravan insurance buyers. Some manufacturers now build in tracking devices, and caravan owners can purchase and install similar devices, thereby benefiting from premium discount in the region of 10%.
Most policies exclude:
Fixed-site caravans tend to be less at risk from theft because they often have better security arrangements, such as security cameras or permanent supervision.
In the case of weather claims, however, fixed-site caravans are more at risk than touring caravans. Caravans in coastal or cliff-top positions have little protection from the elements, particularly in the winter months, and incipient problems may go unnoticed for some time due to non-occupancy.
Flooding is increasingly a problem as UK rainfall levels continue to rise. In October 2000, for example, 123 caravans parked at a site in the South East were total losses when they were submerged under two metres of flood water.
The resulting claims totalled well over £2m. The floods of March/April 2000 cost caravan insurers around £20m, with 2,000 units written off. Flood saver devices have recently become commercially available, but remain a relatively expensive and unproven innovation.
Proposal forms are normally required from parties looking to purchase caravan insurance, although certain insurers are content to receive a simple 'statement of fact'.
Aside from more or less standard information about the proposer, such as details of previous losses, any criminal convictions and prior withdrawal or refusal of cover, proposal forms typically ask other details.
These include: sum insured for caravan and contents; make; model; country and year of manufacture; chassis or serial number; purchase date and price paid; and current market value. Details of heating and security are also required - and can significantly influence the premium charged.
Specific information required for fixed-site caravans is likely to include the address and postcode of the site, whether the site is registered, details of its supervision and security arrangements, its location.
For example, whether it is near the seafront or a riverbank. The proposal form also requires information on previous damage to caravans at the site due to storm or flood, and also whether the caravan is anchored.
Where touring caravans are concerned, insurers will want to know where the caravan is kept when not in use. They will also want to know if the proposer holds a full UK driving licence, about any cancellation, refusal or special terms imposed on motor insurance, and the method used to secure the caravan when left unattended.
While including loss or damage to the caravan and its contents if stationary or being towed, most policy wordings exclude damage caused by wear and tear, by pests, rot, damp, corrosion and other gradual effects. This also includes damage by pets, by mechanical or electrical breakdown, due to the use of solid fuel or unsecured portable heating appliances, while in use as a permanent residence, while being towed by anyone other than the insured, their family or travelling party.
Many policies include cover for recovery and redelivery where the caravan cannot be towed. Additional covers that may or may not be provided include the cost of hiring another caravan or accommodation during the remainder of a trip during which the caravan is put out of use. This also applies to restricted cover for European travel or recovery of the damaged caravan to the insured's home.
Some policies will also cover loss or damage while the caravan is being hired out, but loss or damage to contents may be excluded or subjected to restrictions during use by anyone other than family members.
Policies generally include some element of legal liability (typically up to a limit of £2m per event) for damages incurred by the insured in respect of bodily injury, death or disease to any person, damage to property arising out of the insured's use of the caravan. This normally extends to cover the family or legal representative of the insured.
Caravan insurance policies normally exclude liability cover while the caravan is being towed, as this should be covered by a motor policy.
Some policies take this a step further and exclude liability as long as the caravan is attached to a motor vehicle - an important point to be aware of.
Insurers are usually willing to offer a specific cover extension to provide legal liability cover to other persons using the caravan with the insured's permission.
Other things to be aware of include the availability of new for old replacement cover. Typically, this is applicable in the case of caravans under two years old, if fixed on a site, and under one year old for touring models.
There are schemes in the market now, however, that offer replacement 'as new' for three or five years under a standard policy, and even a premier policy that offers new for old for the first 10 years of the caravan's life.
In addition to the security discount touched on above it may also be possible to secure discounts of between 10% and 20% for no claims periods of between one and three years. Discounts are also available for policies that exclude contents cover. IT
' Ian Jerrum is managing director of Searchlight Solutions Insurance Training
Test yourself on caravan cover
Q1: What are the two main sources of caravan insurance claims?
Q2: What is the average value of claims for stolen caravans?
Q3: Roughly what percentage of stolen caravans are recovered?
Q4: Name two key items of information required in proposals forms for touring caravans.
Q5: What type of cover might be excluded while the caravan is attached to a motor vehicle?
1: Theft and weather-related damage.
2: Around £24,000.
3: Around 4%.
4: Any two from: (a). Where caravan is kept when not in use. (b). Whether the proposer holds a full UK driving licence. (c). Whether motor insurance has ever been cancelled, refused or had special terms imposed on it. (d). The method used to secure the caravan when left unattended.
5: Liability cover.