Floods will hit insurance costs
Insurers estimate that the cost of the floods in June and July could exceed £3bn and might be as high as £5bn. And these costs do not, of course, include losses that were not insured - which sadly includes many caravans and caravan holiday homes.
In fact, research recently carried out by Towergate Bakers suggests that as many as 28% of touring caravans may be uninsured, a staggeringly high percentage.
The floods have also had a severe impact on the many caravan parks located along the banks of the Rivers Avon, Severn and Thames, including a small number of residential parks.
The extent of the damage varies considerably. Some caravans were flooded to a depth of several feet and, due to water contamination, it is highly likely that they will all have to be written off.
Others were more fortunate, suffering little damage in terms of water ingress due to the height at which they were positioned or because they were fitted with a flotation system. Even in these circumstances, extensive damage was caused to outbuildings and their contents, decking and verandahs and also motor vehicles.
Insurers were quick to respond, however. Within 24 hours loss adjustors appointed by Towergate Bakers, one of the leading providers of park and holiday home insurance, were visiting caravan and residential parks in Gloucestershire to carry out initial assessments and to reassure devastated policyholders.
Interim payments were quickly arranged for those in need of tem-porary alternative accommodation and decisions are being made as quickly as possible as to whether properties can be repaired or not.
"A key factor in the decision-making process is the question of contamination by untreated sewage," said Paul Baker, Sales Director of Towergate Bakers. "For this reason, our company has instigated forensic inspections of residential park homes to ensure the right decision is made.
"While many holiday caravans will be written off, some owners of residential park homes would prefer their homes to be refurbished if at all possible, though some will of course have to be replaced."
One question many people will ask is what impact the floods will have on the insurance market in the future? A number of leading insurers have already suggested that household rates are likely to increase, and this is likely to impact upon rates for holiday caravans and park homes too.
An average rise of 10% has been quoted by Norwich Union, but until the actual cost of the floods has been properly assessed it is probably too early to make any accurate predications. Others have predicted that rates for commercial property, motor trade and business interruption, which have been dispro-portionately affected by the flooding, could increase by 5-6%.
Perhaps of greater importance to the park and holiday home market is the future stance insurers will take in offering insurance on flood-affected parks, many of which are in flood plains and very likely to flood again.
Paul Baker said, "We will be carefully considering our position, but in the interim we will not be taking any new business on flood-affected parks. We will be offering insurance cover to existing policyholders, but it is likely that terms will be applied.
"For example, we will be insisting on the installation of flotation units on some parks, as these were par-ticularly effective in the recent floods and offer a very practical solution.
"On other parks a modest flood damage excess may be applied to reduce the impact of flood claims for outbuildings which are not protected by flotation units. A further option is to insist that caravans are raised above the recent flood levels, though this is not always a practical option, as there is a limit to how high a caravan can be sited!"
One consequence of the floods could be that more people do decide to take out insurance. With the impact of climate change, weather patterns are becoming more and more unpredictable and volatile.
While Gloucestershire and Yorkshire have been particularly badly hit this year, it is possible that other parts of the country will suffer similar damage in the future.
The arguments for not insuring are becoming very difficult to justify. For some, sadly, it is already too late.
For more information of Towergate Bakers services, tel: 0800 4961 516, or see the website: www.towergatebakers.co.uk.
This news piece was published in the October 2007 issue of Park & Holiday Homes magazine. To order our latest issue please click here.