Underinsurance & Replacement Costs
Protecting Your Leisure and Park Home Properly
When it comes to insuring your leisure or park home, it’s not just about having a policy in place – it’s about having the right policy with the correct levels of cover. Unfortunately, underinsurance for park homes and leisure properties is a widespread issue that leaves many owners vulnerable to significant financial losses when they need to make a claim.
In this blog, we’ll explain what underinsurance really means, how it affects leisure home insurance, and why understanding the true replacement cost of park homes is essential if you want to stay properly protected.
What is Underinsurance in Park and Leisure Homes?
Underinsurance occurs when the amount your property is insured for is less than the cost it would take to replace or rebuild it. In the case of park home insurance or leisure lodge insurance, this can happen in several ways:
- The rebuild cost of park homes has increased due to inflation or supply chain issues.
- The policyholder has not updated the value in line with market changes.
- Contents cover has not been reviewed or properly calculated.
If your leisure or park home is underinsured, your insurer may apply the “average clause” in the event of a claim. This means they will reduce the payout in proportion to the level of underinsurance. In some cases, claims can even be denied entirely if the cover was seriously misrepresented.
Why Is Underinsurance Common in Park Homes?
- Misunderstanding Replacement Costs
Many owners believe the market value of their home is the same as its rebuild or replacement cost. However, the replacement cost of park homes can include delivery, siting, installation, groundworks, connection to utilities, and more – not just the cost of the unit itself.
- Static and Leisure Homes Often Increase in Value
Static home insurance can be tricky because these properties may go up in price, particularly if they are in high-demand holiday parks or if specification standards change.
- Failure to Adjust for Inflation
Material costs and labour rates have increased significantly in recent years. If your park home insurance cover hasn’t been updated recently, it could be falling well short of what’s needed to cover a total loss.
- Renovations and Upgrades
Upgrades to decking, kitchens, or bespoke furnishings can significantly increase the value of your home. If these improvements are not declared to your insurer, you run the risk of being underinsured.
Real Consequences of Being Underinsured
Underestimating the rebuild cost of park homes can lead to painful consequences. Let’s say your leisure home is worth £150,000, but you only insured it for £100,000. That’s a third short of the real replacement cost. In the event of a claim – even for partial damage – your payout could be reduced proportionately.
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How to Determine the Right Replacement Cost
To make sure you have adequate leisure home insurance, it’s vital to know the true cost to replace your property. Here are some tips:
Request a Manufacturer’s Quote
- For newer units, ask the manufacturer or dealer for a current price including delivery and installation.
Include All Additional Structures
- Don’t forget to include things like decking, skirting, outbuildings, and fencing in your park home insurance valuation.
Consider Site-Specific Costs
- Many parks require specific siting and service connection arrangements. Be sure your replacement cost includes these.
Review Annually
- Every year at renewal, reassess the value of your home and contents. This is especially important during times of inflation or rising construction costs.
What Should Park Home Insurance Cover Include?
A good specialist park home insurance policy can offer:
- Full replacement of the home, including siting and delivery
- Accidental damage cover
- Storm, flood, and fire protection
- Contents insurance
- Alternative accommodation if your home becomes uninhabitable
- Theft and vandalism cover
Check your policy documents carefully or speak to one of our team to ensure you’re not leaving anything out.
How We Can Help
At Brown & Brown, we understand that leisure and park homes are not like traditional properties. That’s why we work with to provide tailored solutions that reflect the true replacement cost of park homes and offer meaningful protection.
We help you review your current cover, and ensure all structures and improvements are included. Whether you own a holiday lodge, a residential park home, or a static caravan, we can recommend the right specialist park home insurance solution for your needs.
Our team takes the time to understand your property, usage, and location. We’ll guide you in updating your where needed, so you’re not left underinsured when it matters most.
Don’t Let Underinsurance Catch You Out
Underinsurance is a serious issue that can cost you thousands at the worst possible time. Ensuring your leisure home insurance reflects the full replacement value – including delivery, installation, and all structures – is essential for financial protection.
Take the time to assess your current policy, update your figures, and speak to our team today about the unique risks and requirements of underinsured leisure homes.