Don’t Slip Up - Insurance
Bryony George reports on the most common holiday park insurance claims…
Specialists serving the industry have confirmed storm damage was the top holiday caravan insurance claim last winter, accounting for 20 per cent of all holiday caravan claims. Other common claims were escape of water and boiler damage, often caused by frozen pipe damage, highlighting the importance of draining down static caravans or lodges from November until mid-March, if they’re not in use. But one of the biggest risk facing most park operators remains liability claims, primarily from members of the public but also from employees. It is now no longer unusual to see claims north of £10m and there are numerous examples of claims no approaching £30m. “Park operators need to be mindful that their limits of indemnity for such incidents are set at the time of the incident but the eventual settlement, assuming the Park is found to be liable, is set based on the regime at the time of settlement,” advises David Moffat, Associate Director of specialist insurers, Wilby. “Given such claims take a long time to bring to a conclusion a Park could find itself without enough cover and they would be liable for any shortfall.”
David explains: “Insurers are rather focussed on this area following various changes to the Ogden Rate by the Government, which is a rate used by insurers and solicitors to calculate payments on serious, life changing, injuries, i.e. incidents involving paralysis. “As an example, a claim involving serious injuries say seven years ago but settled three years ago might have been settled for £3m - £4m so if the Park had £5m Public Liability cover at the time of the incident they would be fine. “If the same incident was settled today using the current Ogden Rates the settlement might be £12m to £15m and given the park only had £5m cover at the time of the incident they would now be facing a rather large bill which could threaten the very existence of the Park,” says Andrew. He adds: “It should be noted that the chance of a park operator causing the sorts of injuries needed to get to these levels remains as remote as it ever was but the chance of not having sufficient cover has increased considerably and as such operators need to review their cover now as they aren’t in a position to buy extra cover once the worst has happened.”
Another growing area of cover that operators need to consider is Cyber Insurance. The sorts of cyber policies now on offer covers much more than simple Data Protection issues. It will provide some cover for other things such as Business Interruption or Loss of Revenue if the Park Operators Computer System is hacked or affected by a virus or other Cyber incident. Traditional Business Interruption cover is based on a physical loss, such as fire, and would generally take no notice of the loss of revenue if the computer system was badly affected at the height of the summer. There are specific policies that will provide cover for data and system recovery, cyber extortion, privacy and network security liability, cyber-crime, telecommunication fraud amongst other areas of cover. Of course, no two holiday park businesses are the same, which means that every business’s insurance requirements are unique. Park owners should therefore seek out specialist cover specifically tailored to suit the needs of their individual business. Comparing what’s on offer from different providers will also be a useful exercise. Some covers, for example Employer’s Liability and Motor cover, are not only essential but are a legal requirement. Other covers need to be proportionate to a park’s individual risks and liabilities. Paula Hudson of Compass Insurance, who offer cover through its Binnacle scheme, advises: “So, a small park with no central facilities may find themselves well protected by a park-specific commercial combined policy. “Conversely a larger, multi-amenity park may need to increase some of the standard covers on offer by purchasing ‘excess layers’ such as property, public and employer’s liability cover. Common sense would suggest that the more facilities and services offered by a park, the higher the number of risks they may face, Paula points out. She continues: “Equally the nature of the service will dictate the size and seriousness of the risks that may apply. “For example, parks with a swimming pool will face more risks than a park without one; parks with a multi-depth pool featuring water slides and a wave machine will face more risks than parks with a small, single-depth pool that has no add on features.” Park owners and managers have a legal responsibility to manage risk, for example under Health & Safety Legislation, with some on-site facilities and operations requiring particularly careful supervision. Says Paula: “In the best-case scenario, a park owner will be able to provide comprehensive documentation to show that they had taken all reasonable steps to assess, manage and mitigate the associated risks. “Alongside other pertinent information, this documentation may need to be examined by a regulatory authority, such as the HSE, as well as the park’s and claimant’s insurers and solicitors.” Coastal parks, advise Leisure days, can be most at risk from flooding and stormy weather, as well as those near rivers and in exposed areas. Leisure days works with more than 1,000 parks who, in turn, introduce their customers to protect their business. “We handle thousands of customer claims, which range from simple accidental damage, to fires and floods that can wipe out multiple holiday caravans in one event,” says Gareth Walker, Head of Leisure days insurance. “Our most common customer claims are often weather related. Remember the Beast from the East, Storm Emma and Storm Doris in 2018 and then the severe flooding in 2015? “These weather events led to a huge spike in static caravan insurance claims for storm damage, flooding and damage caused by frozen pipes – highlighting the importance of park customers having the right level of specialist insurance cover. Holiday parks are continually checking their customers have adequate insurance in place and will write this into their park terms and conditions. Making sure customers have insurance gives parks re-assurance damaged units will be fixed, or removed and replaced, keeping the park looking its best. Choosing to work with an insurance partner can also boost income streams with parks earning insurance commission in return for introducing customers to the policy. Park operators need to look for specialist insurance cover for their customers, making sure all customers are adequately insured and that they’re dealing with a specialist and reputable insurance provider. There are some specific policy benefits worth looking out for. ‘New for old’ cover is essential for when disaster strikes and will make sure customers have the right sums insured to replace their damaged, written off unit with a brand new one. The main perils should also be covered, such as fire, flood, storm and theft. Look for benefits such as debris removal, so any badly damaged units can be removed quickly from your park, as well as pay-outs for re-siting and re-connection costs, and also use a provider who has experience of settling claims quickly, with prompt repairs and replacements.
Caravan Guard clients are always issued advice on how to take precautions to protect their pride and joy during these colder, winter months, as well as how parks can help owners drain down and advise on lagging any exposed pipes or adjusting boilers appropriately. It’s also worth checking that owners have taken any outdoor furniture and other outside equipment inside to avoid any external damage when windy weather strikes. Customer or parks have to report the claim first. If it’s a big event then the park would tell their Business Development Manager and we would arrange for specialist loss adjustors to attend the park and assess the damage. We’re well versed in handling multiple losses on parks after severe weather events such as flooding or storm damage. Our dedicated Claims Liaison Team make sure customer claims are handled quickly and fairly, keeping everyone informed along the way. The team also won Claims Team of the Year at the UK Broker Awards 2019. To make sure all park customers have extensive insurance cover in place so they are fully protected should the worst happen and to encourage customers to keep their unit in a good state of repair. Look closely at an insurance policy’s features and benefits, as well as the support you receive from your insurance provider, throughout the year, and in the event of a claim.
There are some claims that tend to affect parks more often than others. For example, the Compass claims team won’t be surprised to see claims for frost and water damage on holiday caravans over the next few months. Similarly, we may expect to see some theft-related claims, which tend to spike during periods of no occupancy. Equally, there are some claims that can be no more predicted than they are likely to occur on the same park again anytime soon, for example the ‘tornado’ wreaked havoc on one of our customer’s parks a few years ago. This varies greatly. The best-case scenario for a park owner or a caravan owner is that if they need to make a claim, the claim is approved quickly and paid-out in full. However, as aforementioned, this will always depend on whether or not the park has purchased adequate cover in the first place. If the insurer will need evidence to defend a claim such as evidence of risk management in the event of a liability claim being made against the park then the outcome of the claim will also depend on whether or not relevant risk management, operating procedures and systems, training etc are in place and have been adequately documented. Park owners are encouraged to see beyond price. For example, a broker’s approach to claims in times of crisis is especially important. The Compass Major Incident Hotline sets the benchmark for crisis response. Compass Insurance’s 24/7/365 disaster line is available to all of its park business customers and those that operate Compass’ Appointed Representative (AR) and Introducer Appointed Representative (IAR) schemes. Parks with private owners may also wish to consider working with an insurance provider to introduce or sell holiday caravan cover to their customers via an IAR or AR Scheme, advise Compass. Finally, it is important for park owners and managers to note that a condition of their park’s commercial insurance policy is likely to be that they must keep buildings and facilities in a ‘good state of repair’. If a claim is made and the loss adjuster believes that the affected building/facility and so on, has not been maintained adequately, this may lead to non-payment. It could even lead to an investigation by the Health and Safety Executive. To avoid any slip-ups, operators are advised, in every instance, to consult with a specialist insurance supplier.
Tel. 0344 274 0277
Caravan Guard/ Leisuredays
Tel. 01422 396 693
Park Protect/Wilby Insurance
Tel. 01422 358 325