New for Old insurance – Get It Right
For many people owning a caravan is a passport to a restful escape from the pressures of everyday life, connecting with nature and fresh air. So they are keen to protect this asset by getting it insured properly. Caravans are luxury items; purchasing a new one can easily set you back at least £50,000. For a majority of people the only way to get proper protection is in New for Old insurance.
As your caravan gets older it’s market value depreciates. If you take out insurance on an ‘Indemnity’ basis then you will be asked for it’s current market value; this becomes the sum insured. This figure dictates the premium you pay, along with any cover you may want for the Contents. If disaster strikes and the caravan is damaged beyond repair insurers will offer you either a caravan of similar age and specification or a cash settlement based on the market value of the previous one.
The popularity of New for Old cover lies in the fact that in the above circumstances the insurer could offer you a brand new caravan of similar specification to the old one. This is subject to the adequacy of the sum insured though and could be a cause for concern if you have got it wrong. Before arranging a policy check with you park owner, or a dealer, what the cost of a new model of similar specification is, if you were buying one on that day.
You cannot have a claim settled on a new for old basis if the sum insured does not represent the cost of a new replacement. Not only that, but if it’s a static you are likely to have to make the purchase through the site owners which increases the price, and add the cost of clearing the debris of the old one and siting the new one; this could easily be £6000 or more.
New for Old insurance quite literally does what it says on the policy, but cannot be purchased on the cheap. Make sure that you have done your homework; it could save you thousands and let you dream of your next holiday in a shiny new caravan !
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As always, stay safe and happy caravanning!
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