Buying A Static Caravan – An Insurance Perspective

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New owners should approach the purchase of a static caravan in much the same way as they would a house and there are some important insurance considerations to remember.

Even amidst this economic downturn many people will take the plunge this year and buy a static caravan sited in the UK. Caravanwise the caravan insurance intermediary are warning potential new owners to make sure that they do their homework before committing to such a major purchase. Flooding is in the news at all times of the year and insurers are becoming ever more careful about where they will insure static caravans.

Philip Holden, Managing Director of Caravanwise says "We do many quotations for static caravans every day but increasingly we are having to turn people away because the caravan is sited in a high flood risk area. Other insurance providers are in the same position and after the disastrous floods we have had in the last two years we are expecting this to become a massive problem this year. We are trying to encourage potential new owners to do their own checks before they commit to buying a caravan that they are going to find difficult to insure.

March is the time of year that people start to search for a caravan to buy so it is timely to point buyers in the dirrection of some of the free resources available to them to help in their buying decision."

A caravan buyer really should approach the purchase of a static caravan in much the same way as they would a house. Many people do not use the services of a solicitor, but, if they don’t, they really need to do the same checks that a conveyancing solicitor would do, if they were buying a house. In particular they need to read the contract carefully, make sure that they understand it and be aware of the implications of what they are getting into.

There are many free resources online to help buyers prepare. The Office of Fair Trading has a free guide called “Guidance on unfair terms in holiday caravan agreements” which is well worth a read.

A few questions a buyer should consider are:

1. What security of tenure do you have?
2. How long can you stay in your caravan each year and is there a closed season?
3. What happens if you want to sell your caravan. Some sites insist that they handle the sale and charge a commission, some insist that you sell the caravan back to them but at what price?
4. If you have to, or want to, change your caravan on the same site what are the implications? Some owners insist that you buy the new caravan through them or pay a resiting charge.
5. When your caravan gets older what happens? Some site owners have a maximum age of caravan at which time you are forced to change it or leave. There may be costs and other implications in both situation.

This is not an exhaustive list and buyers must check other issues on the contract thoroughly.

If buying “second hand” from someone who already has a caravan sited this has other implications. They need to be certain that the caravan owner is the actual owner and that they are allowed to transfer the lease. The buyer will also need to carefully check all of the contract terms and make sure that they fully understand them. You will need to have the condition of the caravan checked and establish a fair price for the site and the caravan on it.

There are a few issues from a caravan insurance point of view. Most sites insist on £2 million third party (public) liability insurance and they will want to see proof of this each year. Some sites insist that the caravan owner buys insurance through them or charge a fee for the process of checking that they have liability insurance. This fee must be a reasonable amount. In addition to liability insurance a static caravan owner will want to be covered if the caravan is damaged through accident, fire or storm. If the contract insists that a badly damaged caravan is replaced with a new one, and/or there is a resiting charge, then they need to cover the caravan on a new for old basis and include an amount for site clearance and resiting.

Many people are surprised at the value a site owner puts on the lease of a plot. In some cases a caravan which is available new and un-sited from a dealer for say £25,000 is offered on a site for double this or in some cases as much as four times. On top of that the caravan owner has to pay an annual charge and the contract may limit what they can do with their caravan. In terms of insurance value a new owner needs to use the un-sited value plus resiting costs and fees, not the price of the sited caravan with a lease charge. The static caravan owner needs to check with their own static caravan insurer what basis they require your valuation.

Flooding has been very much in the news in recent years and caravan sites have been at least as badly hit as homes. What appears in the summer to be a beautiful river side spot can in the winter be a very scary place. There are some basic checks that can be done to reduce the risk of buying a caravan on a flood risk site. Enquiries to the site owner and other caravan owners on the site should be made to establish if the site has ever flooded or suffered from storm damage the new owner should write down what they say as their insurer will probably want to know. In England and Wales you can use the Environment Agency’s Flood Map. The link to the flood map changes from time to time so the user will need to go to the home page and find their own way. The system works by entering a postcode. Check that the postcode provided by the site is for the site itself and not for the office address. In Scotland SEPA have a similar flood map and again it requires an accurate post code. It is also useful to visit Multimap or Google maps and use the OS maps and the aerial photographs to check the site against a possible flood risk area shown on the Flood Map. Usually a user can zoom in on the site and then overlay the map. Then go back to the Flood Map and do a comparison.

By doing their homework, and in particular reading the contract carefully, considering the implications of that contract and buying some good static caravan insurance then the potential pitfalls in buying a static caravan can be reduced. If a prospective new static caravan owner is in any doubt about their ability to do this for then they should ask their solicitor if they can help.

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Philip Holden
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