By Kevin Minnear, Head of Underwriting, Compass Insurance...
The caravan and holiday park sector is facing a rapidly shifting risk landscape. Renewing insurance on the same basis as previous years is no longer viable. In today’s market, it is a recipe for significant financial shortfall.
THE CLAIMS LANDSCAPE
Successful claims are increasingly dependent on meticulous documentation, not simply the occurrence of an insured event. Insurers now expect up-to-date maintenance logs, drainage records, and professional arboricultural surveys.
Parks that can demonstrate scheduled maintenance programmes tend to achieve better outcomes; those relying on informal checks may face difficult liability disputes. The most common reason for a reduced or unsuccessful claim is underinsurance, triggering the average clause, which can see your payout reduced or, in serious cases, withheld entirely.
AVOIDING THE UNDERINSURANCE TRAP
If your policy figures are a few years old, you are almost certainly underinsured. New assets to declare and accurately value include EV charging infrastructure, outdoor experience areas such as fire pits and pizza ovens, and underground services including pipes, cables, and fibre-optic Wi-Fi.
The Royal Institution of Chartered Surveyors (RICS) estimates rebuild costs rise by 3% to 7% annually, making a review at every renewal essential. Emerging risks to address include coastal erosion and flash flooding, cyber threats from digital bookings and automated gate access (which may not trigger cover if your policy requires physical damage), and fluctuating seasonal stock levels, which should be insured at their peak, not their lowest.
MATCHING COVER TO MODERN OPERATIONS
With dog-friendly holidays now mainstream, animal incidents have become an increased liability risk. Clear rules, designated exercise areas, and documented incident records are essential.
Parks should also clarify where their liability ends and a private unit owner’s begins, and consider requiring private owners to provide annual proof of insurance.
THE DANGERS OF RENEWAL INERTIA
A recent report by the Association of British Insurers (ABI) report found that almost half of SME decision-makers had not reviewed their cover in the previous 12 months. Key areas to address:
• Indemnity periods. A standard 12-month business interruption period is rarely sufficient for holiday parks. Extending to 24, 36, or 48 months is worth exploring and often more affordable than expected.
• Rebuild vs market value. Your insurer needs reinstatement cost, including architects’ fees, site clearance, and compliance with current regulations, not market value.
• Policy conditions. Missing a stipulated alarm type or electrical inspection (EICR) could void your cover entirely.
Commission a professional reinstatement cost assessment, stress-test your business interruption cover, and audit your site with fresh eyes. The insurance market is not punishing holiday parks; it is demanding greater clarity and higher standards of risk management.
Compass Insurance
0344 274 0276
compassparks.co.uk
Opinions expressed in this article are that of Compass, based on our expert view of the market dynamics, unless specific additional source(s) is/are listed.