Limiting risk of loss is NOT just about buying insurance, it is ALSO about the practices you take in the use of your RV and how you maintain it. We want to give you some information to help you understand how we limited limited potential for damage with our pilot RV, so we can increase collective intelligence, facilitate productive conversations with advisors, and improve market options. If you would like to add to this body of wisdom, please do!
No one affiliated with RVMatchMaker.ORG can provide legal advice, and will not. Furthermore, we recommend that all parties consult with their own attorney for legal advice tailored to their particular needs in their state. Please see the disclaimer and general release before using any information on this site, especially this page. (LINK HERE)
That said, please consider these ideas for managing your situation:
- Summary of Risk Exposure
- Personal Versus Commercial RV Insurance
- Insurance and Liability White Paper
The goal of insurance is to limit financial damages in the case of an adverse event. We cannot and do not recommend one strategy for any risk, but we can give you ideas to consider how to manage your own risk.
RV owners have 4 basic areas of risk which requires different strategies to mitigate risk.
- Collision with other objects – The best strategy to mitigate this risk is to NOT allow the borrower to drive the RV. Put a propane extend-a-stay on the RV so propane can be replaced as needed. If tank dumping is required, have a regular pumping service contract. Collision is where the real actuarial risk is. Not driving fixes that problem. Providing a storage and use agreement as discussed below, is a solution that might work for you.
- Comprehensive damage – Loss typically occurs while parked and covers issues like vandalism, fire and storm damage. Let your insurance carrier know you are allowing your RV to be used for a frontline worker, but that they aren’t allowed to drive it. If you can’t find a carrier who will allow you to offer your RV to a named insured on a non-commercial basis (and not drive the RV), then try Century 21 (A Farmer’s Insurance subsidiary). They worked with us under these terms for our pilot RV and we are very grateful for that. (We do not offer insurance or have any official affiliations with a provider.)
- General liability (such as slip and fall) – COVID-19 contamination – Have a policy of how you will clean an RV before delivering and how you want your RV handled before it is returned. Visit this link on Tips for Cleaning the RV (Before Delivery and Returning to Owner) for details on how you might be able to mitigate this risk.
- Property damage due to wear and tear or irresponsible care of your RV – Things break. Sometimes by accident. Sometimes by stupidity or ignorance. In any case, it would be proper etiquette of the person borrowing your RV to take care of anything damaged while under their care. Take a video of your RV at delivery, discuss basic care, and suggest how to get help to fix stuff when needed. Visit this link on Suggestions for RV Care and Maintenance for details on how you might be able to mitigate this risk.
An RV owner needs to consider how they will cover costs if there is damage to the RV. This is especially true if the RV is financed. Can an RV owner afford the burden of a total loss, or is an insurance policy needed to mitigate risk of total loss?
If you drive an RV on the road, you will be required to carry the same state-mandated liability insurance that you would need to carry on a regular automobile. The financial requirements vary by state. In addition, some states also require uninsured and under-insured motorists coverage.
If you use an RV, you want to be able to cover the replacement value of the RV if an adverse event occurs.
Before presenting a white paper for discussion on the potential issues and solutions, a reader must understand the major differences between personal and commercial insurance policies.
These are VERY different kinds of insurance. RV owners MUST understand the dramatic differences in cost and coverage.
This insurance is nearly identical to an auto policy with some exceptions.
RV insurance covers many of the similar risks that auto insurance does, including collision, comprehensive, and liability coverage.
The amount of RV insurance you need will depend on several factors, such as:
- The requirements of the state in which you reside
- If you own or financed the RV
- The class of motor home you own (A, B, or C. Not trailers or 5th wheels)
- Where you will be traveling and whether you will cross state and country borders
- Whether you are using it part time or full time (delineation is usually 6 months or less)
- Whether you have custom features on your motorhome, which can result in higher repair costs
- It will also depend upon the assets you want to protect in the event of a liability claim or lawsuit
Depending on the insurance company you choose, your additional coverage options may include:
- Gap coverage
- Uninsured and under-insured motorists coverage
- Vacation coverage
- Personal content coverage (awning coverage treatment varies)
- Towing and roadside coverage
- Full-timer coverage, if your RV is your full time residence for more than 6 months
- General liability for “slip and falls,” pet bites, or accidental death from situations that did not occur while driving
Cost for annual insurance premiums vary significantly between $1,000-$5,000 a year depending on what state you are in. Michigan and Louisiana are some of the most expensive places to insure and the among the cheapest are states are Oregon and North Carolina. Most states seem to be in the $1,000-2000 range.
This is a policy designed specifically for individuals borrowing or renting an RV from an individual RV owner or a business with a fleet of RVs. This policy type has severe coverage limitations relative to “Traditional Auto/RV Insurance.”
What is CRITICAL to note about coverage is that a leading RV rental company will not insure RVs over 15 years old. This isn’t unusual for these policy types. There are other differences, but this issue alone is a deal breaker for a lot of RV owners.
Here’s some of our other observations about this option:
- RV rental insurance for crowdsourced RVs has been an option in the U.S. since about 2014, but didn’t really gain much traction until 2017 in most states. There is not a lot of case law testing the contractual obligations and limits of crowdsourced RV rentals and there is significant increasing market demand nationwide.
- RV rental insurance for crowdsourced RVs are non-admitted carriers, also known as an “excess and surplus lines policy.” This means if the company fails, no state guarantee fund is available to RV owners and they will have no financial recourse.
- It would be prudent if there were many companies and methods for insuring these RVs. Chances are the risk may be no greater than any other user type, but the point here is a need for diversification of insurance options so that many companies share the rental risk.
Crowd sourced RV insurance policies are far more expensive than traditional auto/RV insurance. This research is based on information published by one of many companies that have entered this market niche. The cost for insurance is nearly 10-12X the cost of traditional insurance. (Links Coverage, Cost, Why liability only, Terms, Deductible amounts and coverage offerings) These findings are comparable to other RV rental businesses that have been evaluated previously.
This is information we learned after the 2015 Valley Fire in California regarding insurance and liability for borrowed RVs in California. DISCLAIMER, this information offered here is based on California insurance law only. Different insurers and states will have different policies. This is NOT guaranteed to be accurate for ANY situation, so all RV owners should consult their insurance agent and/or legal counsel.
ADDITIONAL DISCLAIMER, the information presented has NOT been updated since 2015. It applies to driveable motorhomes, not trailers, which fall under whatever policy covers the tow vehicle, as long as they are connected. In other words, if your hitch fails and the towed object runs away, your liability situation changes back to the runaway asset owner.
Here’s a summary of the issues we found for California:
- Issue – Liability insurance (that covers damage to others) goes with the vehicle first, not the driver. So, if someone borrows RV owner RV and has an accident, the RV owner’s liability insurance may have to cover the damages up to a state limit of $30,000, and then the borrower’s insurance would kick in, but if I was negligent in lending it or the driver was using it on the RV owner’s behalf, the liability cap would NOT apply. This can be a concern to motorhome owners, but again does not apply to trailers.
If you are lending an RV, some ways to approach this are:
- Verify Borrower Driving History – All owners should obtain the full name, date of birth, and drivers license number from the borrower. With that information, your insurance agent can check that person’s driving record. If it is poor, you may not want them driving your coach no matter what the insurance coverage is. Making sure only good drivers drive your vehicle helps mitigate some probability of a potential insurance claim.
- Permitted Use – If the owner gives someone permission to drive the vehicle occasionally, it is a “permitted use” allowed under most California policies. Ask your agent if this applies to you. For example, the RV owner’s agent says if someone crashes the RV owner’s RV during permitted use, the RV owner’s insurance premiums will not go up since the accident points will go on the driver’s record, not the owner’s record. Other insurers’ policies may differ.
- Adding a Driver – An owner can add a driver to their policy if the borrower will be driving the rig often. The driver’s record may affect the owner’s insurance premium.
- Borrower Insurance – Owner can ask the borrower to separately insure the vehicle as “non-owned.” While owner’s liability insurance will still be considered primary under California law, the borrower’s insurance would activate to cover any liability beyond the owner’s insurance limit.
- Liability Limits – All owners of any vehicle should consider this as a reminder to make sure you have adequate liability coverage for all your vehicles. If lending an RV, this can be met by a combination of the owner’s policy and a non-owned user’s policy. Or, the owner can increase their own coverage, which is highly recommended if an owner has significant net worth, but no umbrella policy.
To assist you with documenting the use and return of this valuable asset, we prepared a sample “RV/Trailer Storage and Use Agreement”. It is a downloadable Word template that can be edited to suit your particular needs.
Under such an agreement, the recipient agrees to store the asset and take care of it, while the owner agrees to allow the recipient to use it while being stored. No money is exchanged, but there is “consideration” provided from each side to the other, making the contract legally valid – but disclaiming any landlord-tenant relationship. You probably want to avoid creating any kind of lease or any contract that creates a “tenancy” under California law. CA tenancy law is very complex and not landlord friendly, so an RV owner does not want to be unwittingly subjected to it.
We recommend that you consult with an independent attorney before finalizing and executing the sample agreement here or any other agreement, as we do not provide any legal advice.
Bottom line: Proceed with caution, read your policies, ask questions, and diversify risk management for all RVs across as many insurers as possible.
While the above information is believed to be correct, it is not guaranteed to be accurate and your insurance situation may be unique. Please DO NOT rely on it and consult with your insurance agent and/or legal counsel.