6 Mistakes to Avoid When Buying Caravan & Trailer Manufacturer’s Insurance

The recreational vehicle industry has expanded in recent years, with many Australians exploring Australia during their holidays rather than heading overseas. The industry is thriving with an increased demand for caravans, trailers and related products. According to the Caravan Industry Association of Australia’s 2022 figures, the percentage of locally produced units in 2022 rose by +17.1 % from the previous year, and the percentage of exports by +229.93 %! With this increase in demand, some of Australia’s over 190 local caravan and motorhome manufacturers have expanded operations – renting or buying new manufacturing spaces, bringing in new products, offering new services, and working with the latest technology.

In an industry that’s growing, and with technology being introduced that changes manufacturing processes, it’s more important than ever for caravan and trailer manufacturers to be adequately insured. There’s an inherent risk in manufacturing and repairing these vehicles, which those working in the industry are well aware of. Getting the right kinds of insurance to cover your business is important but not always straightforward.

Top 6 insurance mistakes for caravan & trailer manufacturers

It’s possible to make the mistake of being underinsured, and inadequate insurance can leave your business and you, as an individual, exposed to legal claims and significant costs. Claims-related losses and reputational damage could harm your business, so if you want to continue as a bold business operator, you need to be covered for the risks.

So let’s look at some of the common mistakes manufacturers in this industry make when buying trailer and caravan insurance. This list is not exhaustive, so the best way to understand the full scope of risks is to speak with an expert at Steadfast Eastern Insurance Brokers.

Here are 6 mistakes to avoid when seeking trailer/caravan insurance for your manufacturing business.

1) Opting for a generic Business Insurance

There are so many unique tasks involved in manufacturing caravans and trailers, and every business is unique. You must understand the risks you face in your business and buy insurance policies that cover those risks. Though a standard business insurance package may include items of cover you need, purchasing generic business insurance could expose you.

It’s likely, not clear what all the risks you face are, as often we aren’t aware of our liability across all facets of operating our business. This is why working with an insurance broker with a strong understanding of the caravan and trailer manufacturing industry is so important. They will be able to let you know what the risks are for your business, advise you of measures you can take to reduce some of those risks, and hopefully keep your premiums as low as possible.

2) Missing key types of cover

It’s not uncommon for businesses to obtain insurance that doesn’t cover them for the full scope of risks they face. This is fine if nothing goes wrong, but when a mishap occurs at their business premises or while their products are on the road or at an expo, they are left exposed.

Given that the point of insurance is to cover you when things go wrong, be sure you are covered on all fronts. The best way to ensure this is to work with an insurance broker with an expert understanding of your industry.

For more information on the types of cover you almost certainly need, see the bottom of this article.

3) Opting for an insufficient level of cover

The insurance you obtain needs to be at a level that’s sufficient to cover you for the potential costs and consequences of a risk playing out. So, it’s important to discuss the likely risks with a broker and take the time to understand how much you need to invest in insurance to ensure you can continue to operate your business if something goes wrong. An experienced broker should be able to help you hit the sweet spot between being under and over-insured.

As part of this evaluation, you need to be clear on the monetary value of your products, materials and equipment and maintain good records of expenses to ensure your insurance will cover the total amount of a potential loss. If you don’t keep a detailed count of stock and equipment or undervalue your equipment and materials, you may find you can’t recoup what you need in a claims payout.

4) Not being transparent about how you operate

The caravan and trailer manufacturing industry includes a range of operators. Your business may manufacture new products, renovate existing vehicles and trailers, or manufacture products designed specifically for caravans and trailers. The premises you work out of may vastly differ from the next caravan/trailer manufacturer. You may work out of a factory with many staff, or in contrast, solo, out of a small garage.

No matter the size and scope of your business, it’s essential to be transparent with your insurer about how you operate. Your insurance broker or provider is not there to judge particular aspects of your operation but to understand your business. When they know exactly how your business works, what tasks you undertake, and what safety measures you have in place, they can provide accurate insight into how you can improve your business and ensure you are consummately insured.

5) Failing to act on advice from an insurer

When you receive an insurance appraisal, the insurer may observe risks they think will impact your premiums. If they suggest you make changes to remedy any exposures, acting as soon as possible is wise. Why? Firstly, your premiums may cost you less if you fix problematic issues. Secondly, if you don’t remedy something your insurer advised you to remedy, insurance claims you make related to that risk may be rejected.

6) Failing to inform your insurer about changes to your business

All businesses go through changes. You may expand, move or change premises, add new services, significantly increase your stock levels, or begin to work with new (and potentially more hazardous) materials. Your insurance provider needs to be advised of these sorts of changes as soon as possible, as your existing policy may no longer cover you sufficiently. An important part of this is keeping detailed records of your stock and products, equipment costs, etc.

What types of insurance are relevant to caravan/trailer manufacturers

Whilst we mentioned that every manufacturer would need a unique insurance package, there are certain types of trailer & caravan insurance that are relevant across the board for manufacturers. These are as follows.

Product liability insurance

Product liability insurance can protect you if something goes wrong with products you supply, sell or deliver or with services you provide, such as repairs to caravans/trailers.

If your product or service results in damage to a third party’s property, injury or death of a third party, or to the nervous shock of a third party (including emotional distress or a recognised psychiatric illness), you may face claims.

An example might be if you incorrectly fitted a motorhome with a gas heating system, resulting in an explosion. Damage to the motorhome and/or injury to that customer could result in you being liable to pay damages.

Professional indemnity insurance

If you provide professional advice to a customer that is found to be negligent, that customer may take out a claim against you. Professional indemnity insurance can help cover legal costs accrued when you are coming up against such claims. The advice that might apply to the caravan and trailer manufacturing industry is if you have provided incorrect information concerning what the caravan or trailer (or associated product) is designed to do.

Public liability insurance

Public liability insurance covers you for third-party death or injury if you and/or your business is found to be negligent, for property damage and consequential loss, amongst other things.

Examples may be if you provide negligent advice, for example, claiming a solar power system you install will guarantee power, and the system fails—resulting in loss of produce for your customer. It also covers you against claims for property damage if an action taken by your business led to a fire that has damaged someone else’s property and/or the injury or death of a third party.

Depending on your policy, Public Liability Insurance can also cover you against claims for consequential loss where your negligence has led to another business losing revenue (for example, you serviced a food trailer, and your faulty work led to a fire which caused the business to lose expected revenue, as they could not operate.

Technology and cybercrime insurance

Caravan and trailer manufacturers often rely on using digital technology for product design, maintaining accounts and holding customer information. Technology insurance can cover you if there is theft, destruction or damage to your digital equipment. Cyber liability insurance will protect your business against the damage caused by cybercrime, which can be crippling to your operations.

Property Insurance

Property Insurance covers the physical structures and/or business property, such as your manufacturing equipment, stock, factory, and office premises. If your property is damaged, property insurance can cover the costs for repair or replacement. It can also cover relocation costs and help make up for lost income if you need to close due to a covered event.

Business Interruption Insurance

This insurance covers you for loss of business due to an unexpected covered event. For example, if your premises suffers water damage or is damaged in a fire, this insurance can cover loss of profits and costs arising from getting your business back online.

Other types of insurance

Depending on how you manufacture, you may require other types of insurance, such as:

• Motor Insurance
• Travel Insurance
• Plumber’s Liability Insurance
• Management Liability Insurance
• Worker’s Compensation Insurance (if you hire employees).

In conclusion…

Being appropriately insured is vital for your caravan or trailer manufacturing business. There are many risks, especially as manufacturing these vehicles involves the use of potentially hazardous and/or flammable materials. Other exposures may also be relevant to your particular business, so it’s a good idea to speak with an experienced insurance broker to ensure you’re covered on all fronts.

Steadfast Eastern Insurance Brokers have brokers with an exceptional understanding of the caravan and trailer manufacturing industry. They can comprehensively appraise what kind of insurance you need and match you with the best providers at competitive rates. Contact Steadfast Eastern Insurance Brokers today.