When trailers or motor homes are being used recreationally to explore from place to place, the auto policy that covers those vehicles covers liability for injuries and property damage to others, either in an automobile accident or while parked, as long as the injury or damage arose from the ownership, maintenance, or use of the vehicle. The auto policy covering the trailer, however, only covers the trailer while it is hooked up to the insured automobile pulling it. By contrast, the motor home policy covers liability arising from injuries or damage, whether it is being driven or parked. Neither policy covers liability when the vehicles are parked for injuries or property damage occurring on the site on which the vehicle sits. So where does one find that coverage?
Your primary homeowners liability coverage does extend worldwide to your personal liability arising from those sites, if the site is rented on a daily or weekly basis. Examples include trailer parks and campgrounds. The homeowners liability coverage also extends to vacant sites that you own or rent long term. The policy defines "vacant" as free of structures, which means no sheds, docks, fences, outhouses, and trailers or motor homes semipermanently set on the site to serve as a residence.
Now the good news. For about $20 a year, you can get coverage for the site by adding an endorsement to your homeowners liability coverage. For about $10 a year more per million, you can extend your umbrella liability coverage as well. This is an inexpensive solution to a critical gap in coverage.
When Do You Extend Liability to an Owned Vacant Seasonal Lot?
I recommend that you extend coverage as soon as you buy the lot, even though it's vacant at the moment. Why? Because people have a way of doing things without notifying their insurance agent. They may add a dock or put up an outhouse. Or move a trailer onto the lot for the summer. If they do any of these things, add any structure whatsoever, they lose their homeowners liability coverage. Because the solution is so inexpensive in relation to the risk, I recommend adding it to the policy immediately upon purchase of the site. This follows a cardinal rule of risk management that I subscribe to: if coverage is uncertain and can be covered inexpensively by endorsement, always get the coverage. Or put another way, never rely on the generosity of an insurance company to pay a claim! Play it safe.
Illustrating the Problem
Paula and her husband have found a creative way of enjoying their motor home during this time of high gasoline prices. They have rented a trailer site on an annual basis on the banks of a beautiful southern Minnesota river. They park their motor home there year-round and use it much like you would use a cabin. One night, Paula and some of her neighbors are sitting around a campfire on their lot. The fire gets out of control, and one of the neighbors suffers third-degree burns over his chest and arms. He sues Paula and her husband for $1 million. They have no coverage: no defense coverage, no liability coverage. All they have for coverage is a standard unendorsed homeowners insurance policy.
The lawsuit settles for $500,000. The defense costs are $200,000. Paula and family are out of pocket $700,000, which could have been avoided with an inexpensive homeowners and umbrella endorsement for under $50 a year!
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