The Perils and Pitfalls of Insuring a Trailer

Odds are pretty good, especially living here in Minnesota that you personally, your company, or an organization you work with, owns something that you tow behind a vehicle. Whether it’s a small utility trailer, an enclosed toy hauler, an ice fishing castle, or a huge 5th wheel RV, there is a customizable trailer policy available to reflect exactly the coverage you need whether your trailer is worth $800 or $80,000.

Unfortunately, there are many assumptions and myths about insurance coverage for towable vehicles, and frequently this leads to situations where people find that their coverage is not what they had hoped when a claim happens. So, if you own a towable vehicle of any kind, you should sit down with your insurance agent to discuss what you want from the insurance on your trailer to make sure that what you have meets those expectations.

The greatest threat to trailers of all kinds here in Minnesota is theft. It’s an easy and lucrative way to make good money, with very little risk. Many trailers here in Minnesota are licensed by the state with a lifetime license, which is a sticker that is put on the tongue of the trailer and is transferred from owner to owner as the trailer is bought and sold. These trailers are extremely easy to steal and re-sell, because there is no regular process where they are checked for licensing, and law enforcement rarely runs a trailer license when they pull someone over. Even those trailers of sufficient size that are licensed with a small plate and tabs are still easy to steal and re-sell out of state but just removing the plate. Trailers are generally not listed on stolen car databases or tracked with a VIN on a nationwide level like autos are. This means that stolen trailers are not likely to be returned and so replacement is almost always the route that one must follow if a trailer is stolen, provided that the insurance coverage in place provides enough of a benefit that you can afford to buy a replacement trailer.

Theft is closely followed, though, by collision. There are no state requirements for someone to tow a trailer here in Minnesota…..anyone can tow just about anything with no training on what to do, and what to avoid, which leads to a variety of damages to towable vehicles as well as the people and property around them. For examples of how this can go bad, one just needs to set up a chair on the side of any major highway leading up north on any given weekend between May 1st and November 20th. While very entertaining, there are some very real insurance concerns pertaining to liability and damage.

To keep this short, these are the most frequent myths and misunderstandings about trailer insurance and how to beat each one:

1) Your personal trailer is only minimally covered by your homeowner and auto insurance. Your auto policy, unless it’s specifically endorsed, only covers the trailer when it’s hooked up and then with certain limits. Your homeowners policy only covers trailers up to a certain dollar amount, usually around $1500….which means that if you have a $1K deductible, you could be only receiving $500 in payment to replace or repair your trailer Insure your trailer on its own policy…..the cost is minimal.

2) Your company trailer is covered by your Business Owners Policy or by your commercial auto policy only if you specifically list it as a vehicle, otherwise there is no coverage at all. Both the Business owner policy and commercial auto policies have options to insure the trailer fully, the one that is the best fit just requires a conversation with your agent about what the trailer is, what you need for coverage, and your cost goals.

3) The trailer that your church, Lions club, or Boy Scout Troop owns has to be specifically listed by the organization that owns it, and there are specific requirements for coverage regarding where it is stored and how it is secured. Many non-profits lose their trailers every year and all the equipment in side each year here in Minnesota only to find out that the sponsoring church didn’t carry the trailer on its insurance.

4) Personal trailers covered by an endorsement on your auto policy frequently do not include more than basic coverage. Add-on’s like awnings, satellite TV dishes, the personal property inside the trailer, emergency expenses or towing and roadside assistance are NOT covered by your auto policy. Personal property can be covered by your homeowners but you would only be paid for the lost property minus your homeowners deductible. A policy specifically for the trailer will cover all of that plus quite a few other extras and specific needs that are unique to trailers, with deductibles that are much less than your homeowners.

5) Deductibles can frequently be set up separate for the trailer, regardless of whether the trailer is on its own policy, or if it is listed as an endorsement on an auto policy or business policy. This can help to manage the cost of the coverage as well as tailor your out of pocket costs to the cost of repairing or replacing the trailer, which is frequently much lower than repairs to an auto.

6) Liability limits are just as important for trailers as they are for your home, autos, business, or organization. Typically, they should be matched to the limits you have set for your auto or business. If you have a business or personal umbrella, you should list the trailer on the umbrella policy. Unfortunately, every year there are several serious injuries and fatalities here in Minnesota due to a problem with a trailer. Without the liability limits to protect you, the courts can and will go after your assets and income to pay the victim.

Talk to your agent today and get a policy for your trailer that matches the coverage you need, you’ll be glad you did!

 

This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on this topic and more and how Aaron can help protect you or your business, email him at anicklay@farmersagent.com or call (952) 229-5155.

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