What is RV insurance?
RV insurance is a necessity for most RVers whether they are full-time travelers or part-time RVers. If you have a class A, B or C motorhome then you are required in all 50 states to have insurance on your RV as it is considered a motor vehicle and falls under the same requirements as your car or truck would for use on public roadways.
RV insurance works much the same way as standard vehicle insurance, but at times it can be confusing when trying to decide what will work best for you and your RV. In this guide I will show you some examples of what you may need for a motorhome or a towable RV and the policies that may fit your needs given various circumstances such as the age of your RV, its market value and contents of your RV.
Let’s begin with motorhomes and the basic coverage you will need.
Usually, basic coverage for any vehicle to legally operate on a public roadway consists of these four components:
- Comprehensive coverage
- Collision coverage
- Uninsured or underinsured coverage
- Liability coverage
Comprehensive coverage applies for claims involving damage done to your vehicle where some aspects of that damage may be out of your control. For example, hitting a deer while driving down the road that causes severe damage worth several thousand dollars’ worth of damage to your RV is covered under this coverage. Comprehensive will also cover glass breakage due to a projected missile like a rock or gravel.
Also, under this coverage, damages done by weather will be covered. Rain, flooding, wind, hail and most other natural disasters will fall under a comprehensive plan. However, it should be noted that if a storm is a designated “named storm” by the National Weather Service and where an insured party was given a reasonable amount of warning of an impending weather disaster and failed to evacuate their RV or boat that their claim for comprehensive coverage will in all likelihood not be covered by their policy.
Comprehensive will also cover such things as a fire, theft and vandalism. In the case of theft, part-time RV owners may have this coverage as part of their homeowners’ policy and it’s a good idea to see an insurance agent and determine where a homeowner or renter policy may apply to coverage on your RV.
Collision coverage is for the most part just as it sounds. This part of your basic plan will cover any collision regardless of fault where your RV collided with a fixed object such as a fence or bridge as well as another vehicle.
Uninsured and underinsured coverage
Uninsured and underinsured coverage will ensure that your carrier will cover the damages done in an accident when the other party involved has inadequate coverage or no insurance at all. These used to be optional in most parts of the country but are now included in almost all basic coverage plans because socioeconomics have made them necessary due to a large portion of drivers that choose to ignore mandates regarding vehicle insurance because they cannot afford a policy that covers them or their vehicle.
Liability coverage is probably the most difficult to understand in terms of RV coverage. Insurance agents tend to throw out terms such as “25/50/10” and while you are excited to begin your journey in your new home, you need to understand what some of these figures or terms mean.
A “25/50/10” which is also referred to as a split limit policy means that your carrier has agreed to pay a claim of up to $25,000 for bodily image per person involved in an accident with your RV, an aggregate bodily injury for all persons involved of $50,000 and $10,000 for property damage claims.
Another option for liability coverage is the combine single limit policy. This policy assigns a single monetary value to your policy and those funds can be distributed as needed. For example, you are involved in an accident where the bodily injury costs amount to $5,000, but the property damages are over $60,000. As opposed to the split limit policy, this coverage allows you to pay for damages or injury costs without a limit to each specific category if those costs fall within your policies maximum coverage.
Keep in mind however, that your states minimum coverage requirement will probably be woefully inadequate, and it would be in your best interest to purchase coverage that will exceed the minimum requirements. Often with higher coverage policies comes the opportunity to purchase umbrella coverage and I recommend this coverage if you meet the requirements for it.
Umbrella coverage will put a limit on the monetary amount of damages you may incur as the result of an accident and ultimately protects your assets such as your permanent home or lifetime savings. For example, you are driving on an interstate highway and you suddenly lose control of your motorhome due to black ice and the tractor-trailer next to you loses control because you slid into them while driving under an overpass. The semi flips over and severs a support structure for the bridge or overpass and now this structure needs to be repaired before it is deemed safe to travel on or under again. The cost of these repairs are 3.4 million dollars. An umbrella policy will protect your retirement savings and your estate from being attached for these types of catastrophic expenses. Of course, these policies will be more expensive, but I highly recommend speaking with an insurance agent that is experienced in these types of policies.
What other coverages I should consider for my RV?
Another important aspect to consider when getting the proper insurance coverage for your RV, is whether you have the coverage to replace your rig should anything catastrophic occur. If you are a full-time RVer, you absolutely need this coverage to ensure you have a home should an accident occur. Another thing to consider is that if you are financing your RV, your lender will likely require you to carry a policy that guarantees that the amount owed to them will be covered by your insurance carrier. This is a standard practice for all in insurance carriers regardless of whether you are financing a motorhome or 5th wheel trailer worth nearly $100,000 or a car worth $12,000.
When considering a replacement policy for your RV, you need to understand the policies that most carriers offer. Generally, a replacement or full coverage policy will break down into three different categories:
- Market value
- Agreed value
- Total loss replacement value
Market value coverage of your RV is when your insurance company will pay what your RV is worth according the NADA (National Automobile Dealers Association) or Kelly Blue Book rates for your model at the time of the accident.
I often hear people refer to their RVs as an “investment” and I cringe when I hear this every time someone says that to me. An RV is not an investment and their value can decrease quite quickly and you purchase one. For example, you may spend $75,000 for a new motorhome or 5th wheel and within two years the value of your RV may have dropped to $50,000 and that is what the insurance company will pay you for this coverage.
If you are making payments on your RV and you have inadequate coverage you may find that even with this type of coverage you will be what is known as upside down when it comes to replacing your rig. Essentially, this means that you will owe your bank or finance company money over and above what your insurance company will pay out for your loss so again, you may want to speak with your insurance carrier to determine a plan that will cover you should this occur.
Agreed value coverage is what I have for my RV and boat. I find this works best for me since my RV is an older model that has little to no market value in terms of NADA requirements. I purchased my trailer as a restoration project and have since put several thousand dollars into new appliances, new air conditioning and furnace. I added a complete solar power system with lithium batteries as well as a complete restoration of my electrical system. I also did a lot of cosmetic, structural, mechanical and some plumbing upgrades.
In short, I added to the value of the RV and I met with my insurance agent and we came to a mutually agreed upon value for my RV should I have a catastrophic accident or something that is over and above the payout of my basic comprehensive coverage. I highly recommend this coverage for those folks that like to restore vintage RVs as the collector value of fully restored Airstreams and other models from the 1950s to the 1970s can be quite valuable.
Total loss replacement value
Total loss and replacement coverages are when your carrier agrees to pay you for the total loss of your RV and replace it with a newer model of the same price range and amenities from the same manufacturer or if the latter is unavailable then a comparable model from another manufacturer will be substituted. This type of policy does require an addition premium and can be quite costly.
In addition to added costs, this type of coverage has time constraints and will eventually not apply for your rig based upon its age. For example, most carriers will only allow this type of coverage to be fully effective as far as replacement costs only if your rig is under four-to-five years old. In the sixth year of this coverage the carrier will only cover the purchase price of your RV meaning they will only reimburse you for the money you spent when you originally purchased your RV.
Under these plans, most of these coverages become obsolete after 10 years so again, it is important that you consult a licensed and well established insurance representative to better advise you as to your insurance needs based upon your personal assets, employment status and even your health care needs based upon whether you are a full-time RVer or a part-timer.
Are the insurance costs different based upon full-time RVing and part-time RVing?
Absolutely. It’s important that you are upfront with your insurance carrier and they know exactly what you are doing with your RV. Naturally, if you are just using your motorhome or camper for an occasional weekend throughout the summer then your rate is much more likely to be substantially lower than if you are using it as a full-time residence. Being full-time in your RV means more miles on the road and added exposure to possible mishaps.
On the other hand, if you are transiting your RV or motorhome between a pair or set of seasonal locations based upon weather or favorite locations then you may qualify for a discounted rate. For example, I have met many fellow RVers over the years that stay for six months in Florida during the winter season and then they move their rig up north during the summer months. And while they live in their RV full-time, they are only exposing it to travel a couple of times a year for a limited time period and this makes it a lessor risk than those that are constantly moving their RV around the country.
Years ago, I had a nice RV that I left in the same campground in Michigan year-round. I had to pay the campground an annual fee of $1,600 and for that I could stay all summer and leave my camper there in the winter without worry that it would be vandalized or broken into. Because of that agreement my insurance carrier dropped my policy charges down to $156 annually. That’s three dollars a week and it covered all my basic coverages. They knew I wouldn’t be moving it and it made it much more attractive to them to cover it based upon standard comprehensive coverage alone.
Another thing to consider is the amount of health care insurance you have.
If you are insuring your motorhome and you are purchasing a full coverage policy, then it’s likely that your carrier is going to want to know whether you have health insurance and they are going to want to know the parameters of that coverage. If you have no health insurance or are under insured, they will likely increase your policy rates based upon their company picking up the charges should you be seriously injured in an incident they agreed to cover.
The same can be said for wage or employment reimbursement. If you have a health insurance plan that covers this loss due to an unavoidable accident with your RV, then you have that covered. However, if your health insurance policy doesn’t cover this or you don’t have health insurance, then it would be in your best interest to include this coverage on your vehicle or RV insurance plan.
What about contents of my RV?
This is another issue that many full-time RVers face when trying to insure their rig. Some full-timers that continue to maintain a home can usually use their homeowners policy to cover some of these items such as expensive jewelry, collectables or fine art, but if you are a full-time RVer that travels with these types of insurable items without a permanent homeowner policy then you should consider looking into renters coverage or even renting a safety deposit box or unit to cover these potential losses.
What coverage should I consider and who would you choose as carrier?
In a future column I will share some of my recommendations as to an insurance carrier that may work for you, but for now I think it’s more important for you to understand what you are insuring and its overall worth. Once you have determined those parameters, then you can determine an accurate insurable value for your rig, contents, employable value and the numerous other items I touched on here.
Until then…thanks for following along and I hope to see you out on the road. Safe travels.