How Much Should I Insure My Static Caravan For?

Choosing the correct insured value is an important part of arranging static caravan insurance. The amount should reflect the basis on which the policy would settle a claim and the costs you may face if your caravan were seriously damaged or destroyed.

It may not be enough to use the price you originally paid for the caravan. Depending on the policy, you may also need to consider its current market value or new replacement cost, along with decking, fixtures, contents, removal and re-siting expenses.

This guide explains what to include and how to avoid common valuation mistakes.

What is the insured value of a static caravan?

The insured value, sometimes called the sum insured, is the amount you declare when arranging cover for your static caravan.

It may determine the maximum amount available following a covered claim, subject to the policy’s terms, limits, excesses and basis of settlement.

The figure you provide should therefore be based on more than a rough estimate. It should reflect:

·      whether the policy provides new-for-old or market-value cover

·      the caravan itself

·      associated structures and fixed additions

·      removal, disposal and site-clearance costs

·      transport and re-siting costs, where applicable

·      the value of insured contents

Not every policy covers all these items in the same way. Check the policy wording to see what needs to be included within the insured value and what is subject to a separate limit.

Should I use the market value or replacement cost?

The correct valuation method usually depends on whether you select market-value or new-for-old cover.

Market-value cover

Market value is broadly the amount your caravan was worth immediately before the loss.

This may be based on factors such as:

·      the manufacturer and model

·      the year of manufacture

·      its specification

·      its age and condition

·      comparable second-hand caravans

·      declared upgrades and additions

The amount originally paid for the caravan may not represent its present market value because static caravans can depreciate over time.

Where a policy settles claims on a market-value basis, entering the cost of a brand-new caravan may not change how the insurer calculates a claim. Always confirm the settlement basis rather than relying only on the sum insured.

New-for-old cover

New-for-old cover is intended to provide the cost of replacing a caravan with a new equivalent following an accepted total-loss claim, subject to the policy wording and eligibility criteria.

The insured value may therefore need to reflect the current cost of:

·      a new caravan of an equivalent type and specification

·      delivery to the site

·      removal and disposal of the damaged caravan

·      positioning and commissioning the replacement

·      reconnection to services

·      associated insured structures or fixtures

New-for-old cover maybe subject to caravan age, condition and maintenance requirements. The availability and limits vary between insurers.

For a more detailed comparison, read our guide to new-for-old versus market-value cover for older static caravans.

Do not automatically use the caravan’s purchase price

The purchase price can be a useful starting point, but it may not be the correct insured value.

For example, the amount paid may have included:

·      site fees

·      sales commission

·      finance charges

·      service packages

·      furniture

·      decking

·      administrative costs

·      other benefits that are not insured as part of the caravan

Alternatively, the price may exclude substantial costs that would arise when replacing a destroyed caravan, such as removal, transport and re-siting.

Ask the caravan park or dealer for an itemised breakdown where possible. This can help distinguish the caravan’s value from site-related charges and optional extras.

What should I include in the insured value?

The exact calculation will depend on the policy, but the following items should be considered.

1. The caravan

Start with either:

·      the caravan’s current market value; or

·      the cost of a new equivalent replacement

Use the figure appropriate to the selected basis of settlement.

Record the caravan’s:

·      make

·      model

·      year

·      size

·      number of bedrooms

·      specification

·      condition

·      permanent upgrades

Photographs, purchase documents and dealer valuations may help support the figure.

2. Decking and verandas

Decking, verandas, steps, balustrades and skirting can add substantially to the overall value.

Do not assume these are automatically included within the caravan’s standard cover. Some insurers may require them to be declared, include them within the main sum insured or apply a separate limit.

Consider:

·      the materials used

·      the size of the structure

·      accessibility features

·      gates and balustrades

·      labour and installation costs

·      the cost of removing damaged structures

Retain invoices and photographs following installation or improvements.

3. Sheds and outbuildings

Your pitch may include a shed, storage unit or other outbuilding.

Check whether the policy covers these items and whether they need to be included in the insured value. Cover may depend on the type of structure, how it is secured and what isstored inside it.

The building and its contents may be subject to different limits.

4. Fixed fixtures and fittings

Consider additions that are permanently attached to or installed within the caravan, including:

·      fitted furniture

·      integrated appliances

·      air-conditioning units

·      boilers and heating systems

·      satellite equipment

·      accessibility adaptations

·      upgraded kitchens or bathrooms

·      permanently installed electrical equipment

Check whether these are treated as part of the caravan, as contents or under a separate section of the policy.

5. Removal and disposal costs

A total loss may involve more than replacing the caravan.

The damaged structure may need to be:

·      made safe

·      disconnected from services

·      dismantled

·      transported away

·      disposed of appropriately

There may also be costs for clearing debris and preparing the pitch for a replacement.

Confirm whether the policy covers these expenses and whether they must be allowed for within your insured value.

6. Delivery and re-siting costs

Replacing astatic caravan may involve:

·      transportation to the holiday park

·      specialist lifting or crane work

·      positioning on the pitch

·      levelling and anchoring

·      reconnecting electricity, gas, water and drainage

·      testing and commissioning

·      reinstating steps, skirting or decking

These costs can vary considerably according to the caravan, site and access arrangements.

Ask the park operator or caravan supplier what replacement and re-siting charges could apply. Do not assume the price displayed for a new caravan includes every site-related expense.

7. Contents

The value of the caravan and the value of its contents are often treated separately.

Contents may include belongings such as:

·      freestanding furniture

·      televisions

·      kitchen appliances

·      cookware

·      bedding and curtains

·      clothing

·      ornaments

·      entertainment equipment

·      garden furniture

Work through the caravan room by room and estimate what it would cost to replace the items.

Check the policy for:

·      the overall contents limit

·      single-item limits

·      theft conditions

·      restrictions on valuables

·      outdoor-item limits

·      cover for belongings kept in sheds

·      exclusions applying while the caravan is unoccupied

·      whether replacement is on a new or depreciated basis

Do not include the same item in both the caravan value and contents value.

What may not need to be included?

Certain ownership costs may not form part of the insurable value of the caravan.

Depending on the policy and arrangement, these could include:

·      annual pitch fees

·      future site fees

·      finance interest

·      membership charges

·      utility bills

·      park entertainment passes

·      sales commission

·      general maintenance costs

·      the value of the land or pitch

However, policies and site arrangements differ. Check with the insurer, broker, park operator or caravan supplier before excluding an amount from your calculation.

A simple valuation example

Consider a caravan owner selecting new-for-old cover.

Their estimated costs are:

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• New equivalent caravan - £65,000
• Delivery and positioning - £4,000

• Removal and disposal - £3,000
• Reconnection and commissioning - £2,000
• Decking and steps - £8,000
• Shed or storage structure - £1,500
• Indicative caravan and structures total - £83,500

This is an illustration only. Actual costs, covered items and policy limits will vary. The customer would need to confirm whether each cost is insured and whether it belongs within the main sum insured or under a separate section.

What is underinsurance?

Underinsurance occurs when the amount declared is not sufficient to reflect the value or replacement cost of the insured property.

Depending on the policy wording, underinsurance may mean:

·      the maximum claim payment is insufficient to replace the caravan

·      some associated costs must be paid by the owner

·      a claim payment is reduced

·      an average or proportional settlement condition is applied

The consequences depend on the insurer and policy. Read the wording carefully and ask for clarification if the effect of underinsurance is unclear.

Can I insure the caravan for more than it is worth?

Providing an unnecessarily high figure does not normally mean an insurer will pay more than the valid value of a covered loss.

For example, a market-value policy will generally remain subject to its market-value settlement terms even if a higher sum insured has been entered.

Overstating the value may also result in paying for a higher level of cover without receiving a corresponding benefit. The declared amount should be accurate and supported by reasonable evidence.

How can I estimate the correct figure?

Use the following process.

Step 1: Confirm the settlement basis

Establish whether the policy provides:

·      market-value cover

·      new-for-old cover

·      another defined settlement basis

Do this before calculating the amount.

Step 2: Obtain an up-to-date caravan value

For market value, consider obtaining information from:

·      an experienced caravan dealer

·      the park operator

·      comparable advertised models

·      an independent valuation service, where appropriate

For new-for-old cover, obtain the current price of a new equivalent caravan rather than relying on the historic purchase price.

Step 3: Ask the park about additional costs

Request estimates for:

·      removal

·      disposal

·      transport

·      positioning

·      reconnection

·      commissioning

·      replacing associated structures

Park-specific costs may materially affect the total.

Step 4: List permanent additions

Record decking, sheds, accessibility alterations, heating upgrades and other improvements.

Check whether each item is covered automatically, must be declared or has its own limit.

Step 5: Calculate the contents value separately

Workroom by room and use realistic replacement prices.

Do not rely on a single rough estimate for everything inside the caravan.

Step 6: Check the policy wording

Confirm:

·      what the main sum insured covers

·      which items have separate limits

·      whether removal and re-siting costs are included

·      how a total-loss claim is calculated

·      whether underinsurance conditions apply

Step 7: Retain evidence

Keep:

·      purchase receipts

·      photographs

·      model and serial information

·      valuation documents

·      invoices for additions

·      correspondence with the park

·      replacement-cost quotations

Store copies somewhere other than inside the caravan.

How often should I review the insured value?

Review the value when:

·      renewing the policy

·      adding or replacing decking

·      installing a shed or outbuilding

·      upgrading the interior

·      making accessibility adaptations

·      changing from market-value to new-for-old cover

·      moving to another park or pitch

·      changing how the caravan is used

·      experiencing a material increase in replacement or transport costs

An annual review is sensible even when no obvious changes have been made. Prices for caravans, materials, labour, transport and re-siting can change over time.

Common valuation mistakes

Using the original purchase price indefinitely

The historic purchase price may no longer reflect either the caravan’s market value or the cost of a new equivalent.

Forgetting removal and re-siting

A replacement caravan may need to be transported, positioned, connected and commissioned.

Leaving out decking and outbuildings

These can represent a substantial proportion of the total replacement cost.

Confusing contents with fixtures

Check how the policy categorises fitted equipment, furniture and appliances.

Assuming a high sum insured changes the settlement basis

Entering a high figure does not necessarily convert a market-value policy into new-for-old cover.

Failing to update the value

Improvements, additions and changing replacement costs can make an old figure inaccurate.

Including fees that are not insured

Site fees, finance costs and other ownership expenses may not form part of an insured loss.

Questions to ask before buying a policy

Ask the insurer or broker:

1.     Is the caravan covered on a market-value or new-for-old basis?

2.     Does the insured value need to include removal and disposal costs?

3.     Are delivery, positioning and re-siting costs covered?

4.     Do I need to declare decking, verandas and sheds separately?

5.     Are fixed appliances part of the caravan or contents?

6.     What is the contents limit?

7.     Are there single-item or valuables limits?

8.     What happens if the declared value is too low?

9.     Are there age or condition restrictions for new-for-old cover?

10. What evidence may be required following a claim?

So,how much should I insure my static caravan for?

The correct amount depends on the policy’s settlement basis and the costs it is designed to cover.

For market-value insurance, start with the caravan’s realistic value immediately before a potential loss. For new-for-old insurance, consider the current cost of a new equivalent model.

Depending on the policy, you may also need to include decking, fixtures, removal, disposal, delivery, re-siting and reconnection expenses. Contents should normally be calculated separately.

Do not rely solely on the original purchase price. Check the policy wording and obtain up-to-date figures from the park, caravan supplier or an appropriate valuation specialist.

Compare static caravan insurance

Once you have estimated your caravan and contents values, you can compare static caravan insurance options through InsureMy.

The cover, settlement basis, limits and eligibility criteria vary between insurers. Review the policy information carefully and make sure the details you provide accurately reflect your caravan and how it is used.

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