Are Your Recreational Vehicles Putting Your Assets at Risk?
MARCH 1, 2022
If you own a recreational vehicle, you know the time, energy and money that’s required for proper maintenance. While they’re fun, recreational vehicles can be dangerous and pose a host of risks.
Homeowners policies may not respond in the event of a loss. Fortunately, inexpensive risk management strategies are available to protect your assets and maximize wealth protection.
What Is Recreation Insurance?
Recreation insurance is a standalone, customizable policy that provides comprehensive coverage for theft, fire, flood, natural disasters, and other causes of loss on recreational vehicles such as a boat, motorcycle, ATV or motor home. The liability portion provides bodily injury liability and property damage liability. Underinsured/uninsured coverage is available in the event of a loss involving a party that does not carry insurance or adequate coverage to cover the loss.
Why You Need Recreation Coverage
When accidents happen, recreation insurance may help pay for damage to vehicles, medical bills, physical/property damage and bodily injury. Further, depending on your location, the insurance may be mandated by law.
Types of Recreation Policies
Collector Auto: Unlike a standard auto policy, the collector auto policy affords agreed value. Agreed value guarantees you will receive the full insured amount of the vehicle (with no depreciation, and including sales taxes), in the event of a covered total loss. Further, collector car policies are usually 34% less expensive than a standard auto policy.
Boat: A homeowners policy provides limited coverage (usually $2,000) for boats. These limits may be insufficient to repair your vessel. Further, local laws may require you to carry liability coverage. Boat policies provide agreed value (no depreciation at time of loss) or actual cash value (the cash value of the boat at time of loss).
Jet Ski: Jet ski insurance provides comprehensive coverage in the event your jet ski is damaged by theft, fire, accidents and sometimes natural disasters. Liability coverage is available to protect your assets in the event your jet ski causes damage to property or injury to people.
Plane — Fractional Owners: Individuals who own fractional shares of a plane often rely on insurance provided by fractional companies. Many fractional owners are unaware they can be liable for damages to aircraft even if they are not using it at the time of the accident. Insurance for a single 1/8th share may not be sufficient to cover this exposure.
Fractional owners are also responsible for repairs, services or maintenance performed on the aircraft while they own a share. This liability exposure continues after the share is sold. The owner could be liable if a future loss occurs as a result of repairs, service or maintenance performed on the aircraft while they were an owner. Carrying supplemental coverage, including products liability for the sale of the aircraft, will provide coverage to the owner for these exposures.
Motorcycle: Motorcycle insurance offers financial security in the event of a loss, theft or damage to your motorcycle. Motorcycle coverage is customizable. Aside from the standard comprehensive, liability and medical payments, the policy may include:
- Loss or damage to your gear, including upgrades
- Mechanical breakdown coverage for specific components
- Rental reimbursement for expenses incurred for renting a substitute motorcycle when your current one is not operable for over 24 hours due to a covered loss
- Roadside assistance, which includes trip interruption reimbursement, 24-hour emergency towing and road service, replacement of battery or blown-out tires, and more
ATV: Each state in the U.S. has its own definition of all-terrain vehicle (ATV), but the definitions are similar: a motorized vehicle with two or more wheels meant for off-roading. ATVs are not licensed or intended for use on highways or roads. Many state-owned parks allow off roading only if riders have ATV liability insurance.
Homeowners insurance will not cover your ATV if it is damaged in an accident. Homeowners property coverage does not extend to vehicles. Your homeowner’s liability insurance may cover an ATV accident if a party is injured or if property damaged occurred. Homeowners policies have limitations and may restrict coverage to riders depending on age and relation.
RV: RV insurance may cover your personal items, emergency expenses and replacement cost. If the RV is being towed by a truck you own, the liability from the vehicle extends to your RV. For physical damage coverage, RV policies are available. There are multiple “classes” of coverage available depending on the length and luxury of your RV.
If the RV is treated as a home, a full-timer RV insurance policy offers liability coverage similar to a homeowner policy, and is designed to cover losses associated with parking an RV and using it as your main residence. Medical expense coverage is also available.
If you use your RV for travel on road trips, then part-time RV or campsite insurance may be adequate. This insurance offers similar benefits as a full-timer policy and includes medical expense coverage.