We have all park-owned homes insured except the few that are too old for the insurance company’s underwriting. (This is only three homes, and are lonnie-type.) All of our homes are on lease and options, including the above homes, and we require these people to pay for the insurance as well as all other things - stickers, etc.
Our contract clearly says they must pay for insurance, and we encourage them to take their contract to an insurance agent and get their own insurance naming us as loss payee. So far we have had ZERO people do this. We build in an insurance premium monthly, and tell them upon contract signing how much they pay US per month to have insurance that strictly covers our interests. It is clearly in the documents that their payment is $25-$35 more (depending on the home) monthly. (This document is in Ernest Tew’s Investors Toolbox.)
As much as we like to say we are a homeowner’s community, realistically we have renters. Although we know that some percentage (to be determined) of our buyers will actually fulfill their contracts, many will not. We just had a young lady move out of the home she bought almost two years ago - when Jim first got to Arrow Woods. She had paid almost 1/4 of the home off, including a $1,000 non-refundable option deposit. He now has to do everything in that home that a landlord has to do when re-renting. The same damages are there that Ryan described in his rental home he got back. (The carpet in the bedrooms is disgustingly dirty.)
So, in Alabama our tenants can get their own insurance that will cover us. In Florida that is not the case. When we started in this business they could. Immediately after the hurricanes came through the insurance companies stopped allowing this - we had to carry every policy. Our Florida experience told us that we would NEVER not have insurance - we lost too many mobile homes. Our insurance policies paid off nicely so we were definitely whole. Not only that, we gave our tenant/buyers all additional monies we received above what we were actually owed for the homes. After all, they were the people paying for the policies, and this helped them get a new start after their homes were ruined.
Bottom line: if I was lending a significant amount of money I would expect my money to be protected.