A recreational vehicle, such as a motor home, can be a significant investment. RV owners shop for their vehicles carefully before they plunk down tens of thousands of dollars. While finding the right RV and arranging financing are the first steps toward ownership, it is important to pay as much attention to the next step: securing the right insurance coverage for the new vehicle.
Some RV owners may be tempted to simply add coverage to their existing auto insurance policy. Many auto insurance companies will do this, but it might not make the most financial sense for the owner. For several reasons, a special RV insurance policy may better meet the owner’s needs. First, motor homes are larger and heavier than most passenger cars and trucks. In an accident, they are capable of causing injuries and damage much more severe than lighter vehicles. It might make sense for the owners to buy larger amounts of liability insurance for the RV than they have for a car. Liability insurance pays for the owner’s liability to others for injuries or damages. The amount of insurance covering a car may not be enough to properly cover an RV.
Also, insurance companies calculate auto insurance premiums based on several factors, including commuting distance. They assume that the car owner will use the vehicle frequently. These rates are inappropriate for RVs, which normally receive much less frequent use.
Standard auto insurance policies provide little or no coverage for personal belongings that suffer damage in a car accident. Often, homeowner's insurance will cover these items, but the policies may limit the amounts of coverage or may carry deductibles of $500 to $1,000 or more. Insurance companies that specialize in RV insurance design policies to cover the items that customarily travel in a motor home, like clothes, tools, electronics, dishes and sporting goods.
The RV insurance policy may also do a better job of protecting against damage to the vehicle itself. Comprehensive and collision coverages in auto insurance policies pay the cost of repairing or replacing the vehicle after deducting an amount for depreciation. This can leave the RV owner with a large out-of-pocket cost if he has a balance outstanding on his loan and his vehicle is a total loss. Also, the depreciated payment amount will probably be too little to purchase a comparable replacement vehicle. An RV policy provides Agreed Value Coverage, which means that the insurance company and the owner agree in advance on the RV’s value and the company does not deduct anything for depreciation. The company will need a copy of the RV’s bill of sale or a professional appraisal before it agrees to a value.
RV policies also often provide unlimited coverage for towing and roadside assistance, whereas auto policies may limit this coverage to a small amount. The RV policy may also provide Emergency Expense Coverage to pay for transportation and lodging if an accident disables the vehicle. RV policies may feature “disappearing deductibles,” where the deductibles decrease for every year that the owner is claim-free. Discounts often apply for safe driving, passing driving safety courses and vehicle safety features.
Current and prospective RV owners should seek out insurance agents who have expertise in insuring these vehicles. These agents will have good working relationships with the companies that provide the insurance and will be strong advocates at claim time. They will also be able to explain the different coverage and price options available and recommend financially solid companies. With the right insurance, RV owners can relax and enjoy a mobile lifestyle.