What Happens If a Caravan Park Closes Mid-Season? (Business Interruption Explained)

Introduction: the mid-season closure nightmare

If you run a caravan park, the “season” isn’t just a busy period — it’s when most of your annual revenue is made. A forced closure in July or August can wipe out weeks of pitch fees, holiday bookings, bar and shop takings, and add unexpected costs (security, clean-up, temporary facilities, refunds, and staff).

The good news: many caravan parks can insure against the financial hit. The not-so-good news: a lot of owners only discover the gaps when they try to claim.

This guide explains, in plain English, what typically happens if a caravan park closes mid-season, what Business Interruption (BI) insurance is designed to do, and how to set your cover up properly.

Why caravan parks are uniquely exposed

Caravan parks have a few risk features that make mid-season closures especially painful:

• Seasonal cashflow: a large chunk of annual income is concentrated into a short window.

• High refund pressure: guests expect quick refunds or rebooking options.

• Multiple income streams: pitches, touring, glamping, lodges, events, food and drink, shop sales, fishing, leisure facilities.

• Reputation sensitivity: poor communication during disruption can damage next season’s bookings.

• Complex site risks: fire, flood, storm, subsidence, fallen trees, sewage issues, contamination, power failure, and road access problems.

BI insurance is meant to protect the profit and ongoing costs when your trading is interrupted — but only when the interruption is caused by something your policy responds to.

What usually happens when a caravan park closes mid-season

Every incident is different, but closures tend to follow a similar pattern.

1) The incident triggers an immediate safety response

Common triggers include:

• Fire in a clubhouse, reception, shop, or plant room

• Flooding from rivers, surface water, or burst pipes

• Storm damage to roofs, trees, fences, and utility connections

• Landslip/subsidence affecting access roads or pitches

• Major sewage failure or contamination risk

• Serious injury incident requiring investigation

• Power failure affecting safety systems or water supply

Your first priority is safety: evacuate, isolate utilities, contact emergency services if needed, and secure the site.

2) The local authority, insurers, or contractors may require the park to close

Even if only part of the park is damaged, you may be forced to close:

• Full closure: no guests on site.

• Partial closure: certain pitches, facilities, or zones are out of use.

• Restricted trading: you can host guests, but key facilities (toilets, showers, clubhouse) are unusable.

Partial closures can still cause major losses if, for example, you can’t provide the facilities you advertised.

3) You face immediate financial decisions

Within days you’ll be dealing with:

• Refunds and chargebacks

• Rebooking and alternative accommodation costs

• Staff wages and rota changes

• Emergency contractor costs

• Temporary security and fencing

• PR and guest communications

This is where BI cover can make the difference between a painful month and a business-threatening year.

Business Interruption insurance: what it is (and what it isn’t)

Business Interruption (BI) insurance is designed to put your business back into the financial position it would have been in if the insured event had not happened.

It typically covers two broad areas:

• Loss of Gross Profit (or loss of revenue, depending on the wording)

• Increased Cost of Working (ICOW) — extra expenses you incur to reduce the loss

BI is usually purchased as part of a Commercial Combined or Property Owners policy, and it usually relies on a trigger such as property damage.

BI is not the same as “loss of bookings” cover

If you close because of something that isn’t insured (or isn’t a covered trigger), BI won’t respond.

Examples where BI may not respond without specific extensions:

• Closure due to poor weather without damage

• Closure due to staff shortages

• Closure due to a voluntary decision (e.g., refurbishment)

• Closure due to disease outbreaks unless you have a relevant extension

• Closure due to utility failure away from your premises unless you have a utilities extension

The most common BI trigger: insured damage to property

For many caravan parks, the core BI trigger is:

• Damage at the premises caused by an insured peril (fire, flood, storm, escape of water, impact, etc.)

If the clubhouse burns down and you must close the park or key facilities, BI can cover the resulting loss of gross profit and certain additional costs.

What counts as “property” on a caravan park?

This depends on your policy schedule and definitions, but commonly includes:

• Reception, offices, clubhouse, bars/restaurants

• Toilets, shower blocks, laundrette

• Shops, arcades, play areas, leisure buildings

• Maintenance sheds and plant rooms

• Fixed electrical installations, water systems, drainage

• Site roads, lighting, signage, fencing and gates (sometimes)

• Lodges, glamping pods, chalets (if insured as buildings)

Caravans owned by guests are usually not your property (though you may have liability exposures). Hire fleet caravans or lodges you own can be insured under your own policy if declared.

What BI typically covers for caravan parks

Coverage depends on wording, but these are the usual components.

1) Loss of gross profit (or loss of income)

This is the core of BI.

In simple terms, it aims to cover:

• The profit you would have made during the closure period

• Plus certain ongoing fixed costs (rent, finance, some wages, business rates, etc.)

For caravan parks, the “gross profit” calculation can be tricky because income streams vary. A good broker will help you align the policy basis with how your accounts are structured.

2) Increased Cost of Working (ICOW)

This covers extra costs you incur to keep trading or reduce the loss.

Examples for caravan parks:

• Hiring temporary toilet/shower facilities

• Renting generators or temporary power solutions

• Paying for alternative reception facilities

• Extra marketing spend to fill remaining season availability

• Additional cleaning, security, or staffing costs directly linked to continuing operations

Important: ICOW is usually limited to the amount it saves. In other words, insurers typically pay the extra cost only if it reduces the overall claim.

3) Additional Increased Cost of Working (AICOW)

Some policies offer broader cover where the “savings” test is relaxed. This can be valuable if you need to spend money to protect reputation or guest experience, even if it doesn’t neatly reduce the BI calculation.

4) Bookings and advanced payments

If you’ve taken deposits or full payments, the BI claim may consider:

• Lost income from cancelled bookings

• Adjustments for refunds vs rebookings

• Timing differences (e.g., income would have been earned later)

This is one reason good record-keeping matters (more on that below).

Indemnity period: the number that can make or break your claim

The indemnity period is the maximum time the insurer will pay for BI losses after an insured event.

For caravan parks, this is often where underinsurance happens.

Why 12 months may not be enough

If you lose a key facility mid-season, you might not just lose the weeks you’re closed. You may lose:

• The remainder of the season

• Off-season income (storage, maintenance contracts, winter lets)

• Next season’s early bookings if reputation takes a hit

Repairs can also take longer than expected due to:

• Planning permission

• Contractor availability

• Specialist materials

• Utility provider delays

Many parks consider 18 or 24 months more realistic, depending on the site and facilities.

The “sum insured” problem: getting gross profit right

BI cover is usually set on a sum insured basis (unless you have a declaration-linked option).

If your gross profit sum insured is too low, claims can be reduced by average (the underinsurance penalty).

A simple example

If your policy should have insured £500,000 gross profit but you only insured £250,000, you’re 50% underinsured.

If you then suffer a £100,000 BI loss, the insurer may only pay around £50,000 (before excess), because you only insured half of what you should have.

For seasonal businesses, it’s easy to underestimate because you think in “quiet months” rather than “peak season exposure”.

Partial closure: can you claim if only part of the park is affected?

Often, yes — if the interruption reduces turnover and the policy responds.

Examples:

• A storm damages one toilet block and you must close half the touring pitches.

• A fire destroys the clubhouse and you can host guests but lose bar/restaurant income.

• Flooding makes the entrance road unsafe, limiting arrivals.

The claim is typically based on the reduction in turnover and the resulting impact on gross profit.

Common exclusions and limitations to watch for

This is where many “I thought I was covered” moments happen.

1) Flood and storm definitions

Flood cover can be restricted or subject to higher excesses. Storm definitions can vary, and some policies exclude certain types of damage (e.g., to fences, gates, or certain outdoor structures).

2) Wear and tear / maintenance issues

If the underlying cause is gradual deterioration (e.g., long-term drainage failure), insurers may decline the claim.

3) Uninsured property damage

If the damaged item isn’t insured under the property section (or is excluded), the BI trigger may fail.

4) Disease and denial of access

Some BI extensions cover:

• Notifiable disease at the premises

• Denial of access by a public authority

• Prevention of access due to an incident nearby

But the scope is often narrow, with sub-limits and strict wording. Don’t assume it’s included.

5) Utilities failure

If your power or water fails due to an issue away from your premises, you may need a specific public utilities extension.

6) Cyber incidents

If your booking system or payment processing goes down due to a cyber incident, that’s usually a cyber claim, not a property/BI claim — unless you have specific cover.

What to do immediately after a mid-season closure (to protect your claim)

If you suspect you’ll be claiming, the first 72 hours matter.

1) Notify your insurer/broker early

Report the incident as soon as possible, even if you don’t yet know the full cost.

2) Document everything

Keep a simple incident folder (digital is fine):

• Photos and videos of damage

• Contractor reports and quotes

• Local authority notices

• Guest communications and cancellation logs

• Daily occupancy reports and booking summaries

3) Track lost income and extra costs separately

Create a spreadsheet that captures:

• Cancelled bookings (date, value, refund, rebooked yes/no)

• Lost ancillary sales estimates (shop, bar, activities)

• Extra costs (hire, security, temporary facilities)

4) Mitigate the loss where reasonable

Insurers expect you to take reasonable steps to reduce the loss — for example, reopening unaffected areas, using temporary facilities, or moving guests to alternative accommodation where practical.

5) Don’t agree liability or make admissions

If the closure involves injury or property damage to third parties, avoid admitting fault. Let your insurer handle liability.

How BI claims are calculated (in plain English)

BI calculations can feel intimidating, but the logic is straightforward.

Insurers generally look at:

• What your turnover would have been during the interruption (based on prior years, bookings, trends)

• What your actual turnover was

• The difference, adjusted for any savings (e.g., reduced variable costs)

Then they apply:

• The gross profit rate

• Any policy limits/sub-limits

• The indemnity period

• Any underinsurance (average)

• The BI excess (often time-based, e.g., 48 hours)

For caravan parks, it helps to have clean figures for:

• Pitch income vs accommodation income

• Seasonal patterns (month-by-month)

• Event income and ancillary revenue

Choosing the right BI cover for a caravan park: a practical checklist

If you’re reviewing your insurance, here are the questions worth asking.

• Is BI included, and what triggers it? (property damage only, or wider?)

• What indemnity period do we have? (12, 18, 24 months?)

• Is the gross profit sum insured accurate? (and updated annually?)

• Do we have cover for increased cost of working? (and is it sufficient?)

• Do we have denial/prevention of access extensions?

• Do we have utilities failure cover?

• Are flood and storm covered appropriately for our location?

• Are our key buildings correctly insured and described?

• Do we have cyber cover for booking/payment outages?

Quick scenario examples

Scenario A: Fire in the clubhouse in August

• Park closes for 3 weeks while the area is made safe.

• Bar and restaurant remain closed for 10 weeks.

Potential BI claim:

• Lost pitch income during full closure

• Reduced pitch income during restricted trading

• Lost bar/restaurant profit

• Costs of temporary reception and extra marketing

Scenario B: Flooding blocks the entrance road

• No property damage on site, but access is unsafe.

Whether BI pays depends on:

• Denial/prevention of access wording

• Whether the trigger requires property damage

• Whether a public authority order is required

Scenario C: Power failure from an off-site substation

• Park must close because water pumps and safety systems fail.

Whether BI pays depends on:

• Utilities extension

• Waiting period and sub-limit

Final thoughts: BI is about survival, not just reimbursement

A mid-season closure can be a “one incident” event that changes the future of a caravan park — especially if cashflow is tight.

The right Business Interruption cover won’t stop the incident, but it can:

• Keep wages and overheads paid

• Protect your profit for the season

• Fund practical steps to reopen faster

• Help you avoid taking on expensive short-term debt

Call to action

If you run a caravan park and want to sanity-check your Business Interruption cover — indemnity period, sums insured, and the extensions that matter — we can review your current policy and highlight any gaps.

Call Insure24 on 0330 127 2333 or request a quote via our website.