RV Insurance 101 – The Basics of RV Insurance
Types and Levels of Coverage for Loss of or Damage to an RV Unit
Mar 27, 2009
RV insurance needs to provide specialized coverage to protect against two basic situations:
- It reimburses the owner in the event of loss or damage to a motor home, travel trailer, camper, fifth wheel, tent trailer, or hybrid.
- It provides financial liability protection in the event of a collision or RV crash that causes damage or injury to someone else's property or person.
Why specialized RV insurance? Because RV insurance combines features of automotive and house insurance, it is designed to meet the specific needs of RV owners. Most states and provinces require that any motor vehicle be properly registered and insured.
Types of RV Insurance Protection
Most RV insurance packages will provide one of two types of insurance coverage
- All Perils – the highest level of protection, an all perils policy protects against all risks except those specified in a list of exclusions (usually acts of war or acts of God such as tornadoes). The most expensive option with the highest premium.
- Named Perils – the basic protection level. The insured often gets to specify the perils, such as theft, collision, wind, hail. Each specified peril increases the amount added to the premium.
Damage may be covered beyond a deductible amount that must paid by the unit owner, the same as for auto or home insurance. The higher the deductible, the lower the premium rate.
Types of RV Insurance Loss Protection
This may vary widely between provinces and states, and the terms used may differ, but there are three basic types of replacement coverage for total loss.
- Replacement Cost (Total Loss Replacement, TLR) – up to a specified amount and for a specified time limit. A policy might be for a maximum of $175,000 for the first five years on a new unit. After that time, the unit will be moved to Actual Cash Value. TLR generally has a higher premium than the other coverage levels.
- Actual Cash Value (ACV) – this policy pays the depreciated "fair market" value of the unit in the event of a total loss. This policy is the most common; the amount is always less than the owner expects. This coverage usually has a lower premium than TLR.
- Purchase Price Guarantee (PPG) – A policy may offer a fixed amount, the price actually paid for the unit, to be repaid against a total loss. This will also be for a specified period such as five or ten years, after which the policy reverts to Actual Cash Value (ACV).
These are the largest and most significant protections offered by RV insurance. Depending on the type (All Risk or Specified Perils) and level of coverage (Replacement Cost or Actual Cash Value), a policy can provide basic to excellent protection, with the premium of course increasing with the level of protection.
However, a good RV insurance policy will provide other important coverage, such as emergency vacation expense, public liability, property damage, and loss or damage to the contents of the unit.
While it is possible to get an insurance quote online, it's well worth consulting an insurance broker or agent who is experienced in RV insurance.
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