Who, What, Why: How do you insure a seaside pier?

image captionHastings Pier was almost completely destroyed

The 138-year-old Hastings Pier has become the latest to be hit by fire. With destruction all-too common, how do you go about insuring them?

Aside from promenades, buckets and spades and kiss-me-quick hats, few things can symbolise British seaside holidays as much as piers.

Developed by the Victorians, more than 100 of them stretched out to sea around the country at the beginning of the last century.

Today, just 58 survive.

And while those that remain open still draw in tourists with the magnetic pull of candy floss, penny arcades and wind-blown fish and chips, many are dilapidated shells.

Seemingly every summer carries the grim news of another setback - fire razing a pavilion or storms washing the remnants of a once-great dancehall into the sea.

So how do pier owners find insurance?

As a surveyor, Larry Stokes has inspected several piers and he now he assesses the case for insuring them as property underwriting manager for Zurich Insurance.

He says most of the insurance market is understandably wary about piers.

"You've got a limited number and it's a fairly good bet that one will suffer a loss each year," he says.

"They tend to be timber, so burn easily."

'Virtually uninsurable'

Deterioration over time, combined with weather exposure and light-weight construction can also mean a risk of being simply washed into the sea by storms.

The UK's 18 council-owned piers have a better chance of finding insurance, says Mr Stokes.

Not only are they likely to have been better preserved, they can be bundled together with public buildings like schools in the authority's property portfolio.

Larger councils, with a high excess of, say, £500,000, are able to more easily absorb a pier into the policy.

Alternatively, with badly-deteriorated structures, insurers may encourage the council to work on a "patch and mend" basis - covering only the cost of making them safe after damage.

"Rather than £20m, it might be a £1m [potential] loss," says Mr Stokes.

Those in private hands are a different matter with some, such as Brighton's badly-damaged West Pier, "virtually uninsurable".

Financially speaking, Mr Stokes says: "You have to ask what is the loss? If you're waiting to renovate it, it's probably a shell anyway and the buildings will need to be replaced."

Tight security

He says insurance costs can vary wildly, according to age, condition and construction.

"Security is very important. A lot of pier fires have been started by vandals, so stopping access is key."

With longer piers, pumps may have to be installed to allow the fire brigade to access water from the land end when the tide is out, while sprinkler systems can also help.

image captionMr Michael's insurance was not renewed after the Grand Pier burned down in 2008

Depending on the measures in place, Mr Stokes says the cost of insuring a pier for £10m could vary between £20,000 and £200,000 per year.

Kerry Michael knows all about the difficulties of insuring a decades-old structure.

He had spent 25 years in the insurance industry when, together with sister Michelle, he bought Weston-super-Mare's Grand Pier in 2008.

Within a few months, and after £12m of improvement work, its pavilion was destroyed by a massive fire.

Thanks to an inherited £200,000 per year insurance policy, the Michaels were able to recoup some of their investment.

However, the insurers offered no renewal.

"We were left scouring the market," says Mr Michael.

"We went to every firm that would talk to us to find insurance - on traditional markets, specialist Lloyd's markets and syndicates - and found no one insurer would take the whole risk."

Instead, they spread the risk through a number of insurers in an arrangement which sees one take on the first £15m, another the next £5m, and so on.

With the Michaels investing an additional £39m to install 14 fairground rides, a karting track, 30 food outlets and conference and wedding facilities, it has seen the value insured rise five-fold to £75m.

While staying tight-lipped about the total premium, Mr Michael says it went up "several times" from his previous policy cost.

The rebuilt Grand Pier is unique in featuring 21st Century standards of fire resistance, he says.

But still, he accepts, when something stretches a quarter of a mile out to sea, it will always be at the mercy of the elements.

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