Don’t Slip Up
Recent times have highlighted the need for robust insurance protection as climate change brings unprecedented challenges to the UK holiday park sector.
We have not yet witnessed a re-run of the disastrous 1987 storm but we are seeing a rise in the frequency of significant flooding and storms across the country. We have also seen the effects of earlier than anticipated and prolonged winter periods.
Holiday parks offer a unique blend of risks to the insurance market and choosing the right partner can be the difference between success and failure in the event of a catastrophe. Parks are, by their very nature, exposed to the elements, presenting challenges to the insurance market.
Lorica Insurance Brokers specialise in the leisure sector, providing individual solutions for the protection of property, income and legal liability to employees and visitors. Stefan Puttnam, executive director at Lorica explains: “When considering risks to a holiday park we tend to concentrate on the core facilities and what would happen were they to suffer loss but, just as important, is the interdependent relationship between this and the guest accommodation whether it be holiday homes, chalets, lodges or caravans. Losing one will impact on the viability of the other ultimately leading to lost revenue.”
He adds: “There are many complex and supposedly sophisticated ways to arrange cover but the simple fact is that nothing beats a straightforward conversation based around ‘what if’ scenarios. Every business is different, so when it comes to insurance, it’s not a case of one size fits all.”
MIND THE PITFALLS
Stefan urges holiday park owners to insist upon your insurance advisor not accepting any policy warranties or conditions precedent to liability within the contracts of the insurance they arrange for you. These restrictions are particularly dangerous as they will require you to do, or not to do certain things. Failure to comply can result in policy cancellation or refusal to pay a claim despite the fact that the breach may bear no relevance to the claim itself. They should be avoided at all costs.
Basic level cover falls under the banner of Increased Costs of Working, which merely provides protection for additional expenditure reasonably and necessarily incurred after a loss. However, park owners should be made aware that there will be no cover to meet lost revenues.
Stefan says: “Like anything, there needs to be a balance between peace of mind and the level of premium you are able to expend.
“My advice is to firstly explore your unique exposures before considering the costs. Rash decisions based merely on premium costs could cripple your business. Understand the exposure, establish the cover needed, define the mitigating factors and let your broker sell it to the insurance market rather than the other way around.”
Insurance policies generally contain an overarching requirement for holiday park owners to disclose all material facts to an insurer. Failure to do so can ultimately render the cover void. Whilst it is unlikely to be able to negotiate removal, it is possible to water down the requirement so that in the event of an innocent non-disclosure of a material fact, it will not render the cover void and insurers will meet the claim subject to park owners paying an additional premium.
When taking out insurance, Stefan advises holiday park owners to consider less obvious scenarios – “What would happen if your guests were unable to gain access to their brand new holiday home due to an incident outside the park? What would happen if there were an outbreak of a notifiable human disease?
Ultimately you know your business best, align this to the specialist support of an insurance broker who understands the holiday park sector to put you at the front of the queue to not only survive a catastrophe but thrive where others may not.”
Lorica Insurance Brokers
Tel. 0844 573 7691
Tel. +44 (0)1892 784059
Tel. +44 (0)1422 358525
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