RV Insurance: Are You Making These 3 Coverage Mistakes?

Try to picture the average person who owns a 2012 Honda Accord.

Having trouble? Of course you are—that could be virtually anybody.

Now, try the same exercise with the average RV owner. The picture should be a whole lot clearer.

“An RV owner generally has a really strong education and occupation, and they’ve got the discretionary income that’s necessary to afford a potentially extremely expensive RV,” points out Brook McGuire, strategy lead for specialty products at Safeco. “I know an RVer probably makes $60-70,000 a year and they probably own a home.”

And that makes RVers “a great demographic for an agent to look to build a preferred book of business,” McGuire says. “You can really start fine-tuning your personal lines risk selection by looking at RV customers.”

Rounding out a homeowners and auto coverage package with specialty lines tends to result in “big improvements in retention, loss ratio and average revenue per policy,” McGuire says. “RVers are already a very preferred demographic, but the specialty customer in general will perform better for the agency as well.”

Convinced you need to up your RV insurance sales game? Good idea—just make sure you avoid these three common RV coverage mistakes:

1) Endorsing the RV on another personal lines policy. Particularly when it comes to travel trailers, “one of the most significant gaps we’re seeing in the marketplace is agents simply endorsing it onto the auto,” says Erik Schmidt, senior RV product specialist at Foremost.

“The biggest benefit to doing that is it’s cheaper to endorse your trailer onto your auto policy relative to buying a separate travel trailer policy,” explains Ariel Menkin, RV product manager, Progressive. “But what a lot of people don’t realize is that it’s also significantly different coverage.”

For example, maybe someone sustains an injury inside the RV when the insured parks for use as a temporary house during vacation. “There’s usually no liability coverage for that kind of stuff under the auto policy,” Menkin points out. “In many cases, the endorsement is in effect only when the trailer is attached to the auto. If you’re on vacation and you take just the car to go grocery shopping, leaving the trailer behind, or even it’s just parked in a storage facility, the trailer may not be insured during that time.”

And “without specific RV coverage for contents or personal liability, many consumers have to look to their homeowners policy for coverage,” McGuire adds. “If you have to file a claim against your homeowners policy for personal contents or liability, it can be a very expensive five-year impact to your home insurance premium”—not to mention the potential coverage restrictions.

In the event of an RV claim, McGuire points out, a typical homeowners policy should cover at least 10% of personal effects. But “do you want to have a $1,000 or $2,500 deductible from your homeowners policy when you could have a $250 deductible on a standalone RV policy?”

2) Forgetting to ask how your client uses the RV. Whether the unit is a motor home or a travel trailer, “make sure you fully understand how your client uses it,” Menkin cautions. For example, “if they use it primarily for tailgating, they may not need as much emergency expense coverage. If they use it to travel hundreds of miles between different states, emergency expense might be more necessary.”

Or maybe your client is an avid cyclist, hunter or kayaker—“whatever it may be, they probably have different types of things they put inside the RV,” Menkin explains. “That means they might need different levels of coverage for personal effects. For one person, $3,000 could be sufficient, but another person may need $10,000.”

3) Ignoring emerging trends. Through that type of an investigation, you may also discover your client has plans to rent out their vehicle through an Airbnb-type platform. “It’s becoming increasingly common for people to put their RV up for rent when they’re not using it, and it makes sense—if you’re using your RV only part-time, it can be very expensive,” McGuire says. “But I don’t know of any carrier right now that’s fully responded to the RV sharing economy.”

“Most personal lines policies do not cover that type of use,” Menkin agrees. “Almost every carrier I’ve seen treats that as a commercial risk. Make sure you don’t put your customer in a bad position.”

The tiny home movement is another area where securing coverage for your RV client may not be an easy or straightforward process. With the exception of DIY projects, Steven Preston, national lead for RV product at Foremost, says his company will cover tiny homes that are built on wheels and sized below 400 square feet as part of its RV product—but only under special conditions.

Foremost has relationships with certifiers like Bildsworth and the National Organization of Alternative Housing, both of which perform inspections on tiny homes during the building process to make sure they meet important safety standards. The insurer also works with the Recreation Vehicle Industry Association (RVIA), which certifies and monitors manufacturers to make sure they build to RVIA-adopted standards.

“That’s a prerequisite for us to cover a tiny home,” Preston explains. “If you have a certification from one of those three and you pass through the rest of our underwriting criteria, we will write a tiny home with you.”

But most carriers are still wary of tiny homes. Menkin says Progressive insures some tiny homes and that the carrier is “keeping a close eye” on the trend. Safeco, meanwhile, is holding off on tackling this emerging market until underwriters have a better understanding of “what the real need is,” McGuire says.

“According to HGTV, everyone’s going to be living in a treehouse in the next 10 years,” McGuire jokes. “But what’s the real need, and what product line best addresses that? Should it go on a mobile home policy because it would be largely stationary? Or should it go on an RV policy because it potentially is easily moveable?”

Local zoning laws are another issue, adds McGuire—in her own city, for example, surrounding counties “won’t let you put a mobile home on a piece of property that you own unless it’s zoned that way or it’s grandfathered in,” she points out. “How would other homeowners feel about having a tiny home on a property in their neighborhood? Does it impact property values? How do you tax the thing? We have a lot of questions right now.”

Jacquelyn Connelly is IA senior editor.