Exposed to disaster by the end of the year

One problem is solved, another looms. 

I'm talking about a drastic and unwelcome change in my holiday arrangements.

I've just renewed my annual caravan insurance. But this year is different. The caravan will be fifteen years old in mid-December, and since the policy runs from February to February, the degree of cover will drop part-way through the year. In fact it will go off a cliff edge.

I should explain that I insure with the Caravan and Motorhome Club, and for years past I've had their Supercover policy. There are many benefits with Supercover, but the chief one, the one that makes it so attractive despite the cost, is that if anything drastic happens to my caravan, to write it off, the policy will meet the cost of a brand-new replacement caravan on a like-for-like basis. The sum insured is £20,500, this being the cost of the nearest current replacement for my Elddis Avanté 362 2-berth caravan, with all the basic equipment to get it legally on the road. 

Wow! £20,500 for a new small caravan that can squeeze in two people, but is really only suitable for one. It would of course be a comfortable hotel room on wheels, as my own continues to be. But even so...I mean, you can buy a pretty good two or three year old car for £20,500!

It just shows how new-caravan prices have risen. I paid £10,890 for my caravan back in December 2006. If it were a simple matter of uplifting the original price by the usual CPI measurement of inflation, that 2006 price would now (in 2021) be £14,500. But caravanning has become significantly more popular, and this has allowed manufacturers and dealers to charge more, way ahead of inflation. 

So you can see why, to protect my holiday asset, and - if calamity strikes - to have a brand-new replacement, I am happy to pay for Supercover. I'd definitely want that like-for-like replacement!

Well, it's done. I'm covered. But clearly, if Supercover will no longer apply from mid-December, I am overpaying for the final two months of the policy, when only Standard Cover can apply. 

Standard Cover offers a lot less. The insurer is far less exposed to a big payout, because if something dreadful happens to my caravan, I get only the current market value. What might that be? A quick look on the Internet turned up same-year examples of my caravan on various dealers' forecourts, priced around £6,000. And they looked rather less battle-scarred than mine. Still, based on this information, I reckoned that the theoretical open market value for my caravan in a private sale might be £4,000. That seemed a bit high, but it wouldn't be impossible to achieve, if the second-hand market for caravans gets even stronger than it is now. 

So I phoned the Club, and spoke to a nice man about my insurance policy. What were my options, given that Supercover could be in force only for the first ten months? This what I learned.

First off, I couldn't have a ten-month Supercover policy to mid-December, then a two-month Standard Cover policy to February, and then annually thereafter as usual. All policies had to be for twelve months.

I could switch to Standard Cover now, instead of Supercover, and then renew as usual every February. What would that cost, I asked, using a market value of £4,000? Dramatically less: only £87. Hmm! It was tempting to switch, and save myself a whopping £325 in the coming year! But if the government eased lockdown restrictions by the end of March, I would promptly commence a full programme of caravan holidays, Scotland included, aiming for 90 nights away up to November, with a lot of journeying. Towing-time is risky, and it would be madness not to be as well-insured as I could be. It made thumping good sense to keep Supercover for as long as possible.

But wasting money on those final two months...how could I avoid that?

The answer was to pay the full £412 premium up front for a year's Supercover. Then, in December, cancel that policy, and take out a new Standard Cover policy, running from December 2021 to December 2022, and to every December thereafter. I would get a refund of two months' Supercover premiums - it looked like £70 - to set against the Standard Cover policy premium of (by then) £95 or so. That seemed to be the best plan. I duly paid the £412, and got my Supercover. And created a reminder in my To Do app to contact the Club in early December. 

So it's sorted. I have a plan to follow. And I will be paying markedly less for my caravan insurance by the end of the year.

Now the downside. What happens if disaster befalls my caravan anytime from next December? Supposing some juggernaut clips my caravan on a motorway, and tears a jagged hole in its side? I've actually seen that happen to another car-and-caravan combo. Not a pretty sight. Possessions and other debris all over the road. A holiday stopped in its tracks. Immediate costs and trouble. 

Well, apart from the incident causing me all kinds of instant grief, I'd be deprived of my holiday asset. Having paid to have the remains taken to a dealer for appraisal by an insurance assessor, I would in due course get a bank credit for the market value. 

Let's say it is in fact £4,000. What should I do with that?

I could say to myself, 'Lucy, your caravanning days are over. Use comfortable country hotels and top-notch B&Bs henceforth!' I could. But when you consider the nightly expense of a room anywhere pleasant, it's obvious that I would enjoy far fewer nights away each year. And extended tours to remote parts of the country would become prohibitively expensive. 

Against that, I could save some money by using a smaller car, not needing a big, powerful car for towing any more. But you know what? I'm not ready to abandon caravanning, and the freedoms of caravanning. A time for snug country hotels will eventually come, but not yet. 

So I'd use that £4,000 as a deposit on another caravan, and see what I could do to juggle the finance on the balance. But a £20,000 replacement caravan would be unaffordable. It would almost certainly have to be a used one. (And I hope, a 'pre-loved' one) 

And if I couldn't find what I wanted at a price I could afford, what then? Resign myself to just three weeks' worth of expensive hotels each year?  

Of course, it may turn out that my caravan continues to lead a charmed life, and survives to a ripe old age, never coming to grief. So that having reduced insurance cover never matters one bit. 

Wish me luck!