reinstatement cost

IS YOUR HOLIDAY PARK INSURANCE KEEPING PACE WITH YOUR BUSINESS?

Posted on August 3, 2026

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.

NOT A PENNY MORE…

Posted on February 15, 2023

NOT A PENNY MORE

Balance your insurance policy sums...

THE GAP BETWEEN PROPERTY rebuild costs and the amount buildings are currently insured for in the UK is widening.

It’s unlikely that reviewing the sums-insured on your insurance policy was top of the list for new year’s resolutions, but perhaps it should be!

It is likely that if you haven’t reviewed your sums insured for a while, you may find that you are under insured, in fact data shows that up to 83% of properties are underinsured and on average they’re only insured for 66% of what they should be!

A greater proportion of properties are now underinsured and the gap between property rebuild costs and the amount buildings are currently insured for in the UK is widening.

INSURANCE GAP
Latest research shows 83% of properties were found to be underinsured, up from 80% in 2021. On average, these buildings were insured for just 66% of what they should have been. The percentage last year was 68%, which shows how the buildings under-insurance gap is widening in the UK. This gap is biggest among buildings insured for up to £500,000, which are on average only covered for 51% of their rebuild cost.

Buildings insured for more than £2 million are closer to what they should be, but still only covered on average for 70% of reliable rebuild cost. But what is the effect of underinsurance? Well in the unfortunate event where you have an incident on your park where you need to make a claim, if you are found to be underinsured then your claim settlement may be reduced proportionally in line with the level of underinsurance.

This can happen if the reinstatement cost of the property is not adequately valued at the time the insurance policy is taken out, or if the reinstatement cost of the property increases over time and the policy is not updated to reflect this change. Common increases can include refurbishment of premises, additional buildings and increasing cost of materials to reinstate buildings.

Insurance policies are often index-linked which means the insurer will increase sums insured at renewal by a set percentage to take into account inflationary pressures, however if the initial sum insured is incorrect then all this does is prevent an underinsurance issue from getting worse.

LATEST RESEARCH shows 83% of properties were found to be underinsured.

RE-INSTATEMENT SUMS
The other point to bear in mind is that your insurance policy will contain a ‘buildings definition’ and any reinstatement building sum insured needs to take into account that definition. A standard building definition will take into account roads and paths and underground infrastructure and if this isn’t reflected in your building sum insured or catered for separately, as it is under the Park Protect Insurance policy, then you may find that you are underinsured in the event of an insured loss.

The onus is on the policyholder to ensure that these sums are correct, so how can you avoid this potentially costly issue? A professional valuation can help ensure that your holiday park is adequately insured. It is important to have an accurate valuation of your property and assets in order to determine the appropriate amount of insurance cover. The value of your property and assets may change over time, so it is important to review your insurance cover regularly to ensure that it remains adequate. Conversely, research shows overinsurance can also be an issue.

Research shows that 13% of buildings assessed were covered for too much this year, on average by 132%. So having a professional valuation could actually save you money. A specialist insurance broker can help you assess your insurance needs and find a policy that meets your specific requirements. They can also help you understand the terms and conditions of your policy and ensure that you are adequately covered. Park Protect provides tailor-made insurance for the specific needs of your business. Get in touch to find out more.

pib Group
Tel. 01422 358 525
www.pib-insurance.com/parkprotect