Insuring TOH MHP's is a different animal to consider, definitely not a typical risk

I have been in the insurance bus for 20+yrs, primarily serving the mfg and construction sectors. I recently listened to Dave’s story about one of his parks getting hit by a tornado. Besides the compassion I felt for Dave and his community losing everything, I was surprised to hear his insurance policy was completely inadequate in helping him with the event. Of course, being my profession, I started to think about the issues that caused the shortfall.

Dave’s policy fell short in the lost rental income section of his property policy. What most purchasers don’t realize is there are numerous extra endorsements sitting on an insurance company’s shelf to address unique coverage needs when recognized. His policy could have provided coverage at a reasonable cost if it was properly endorsed. Since property insurance policies are typically written on standardized industry forms, virtually every insurance property policy written in the country will fall short when considering a catastrophe in a TOH MHP. The policy must be specifically endorsed to correct the shortfall.

Each region of our country has its own unique issues where natural catastrophes are concerned:
• The NW deals with mud slides due to its often-saturated soils combined with significant soil slopes.
• The west coast is generally a massive earthquake waiting to happen and the whole inland west coast is highly prone to wildfires.
• The central part of our country has tornadoes and hail.
• The East Coast has hurricanes and flooding
• The South has flooding, wildfire and hurricanes.
• The North has collapse issues related to snow and hailstorms.
The point being every region in the country is prone to a community wide catastrophic event. Unfortunately, flood and earthquake require specialty policies in addition to a basic property policy and mudslide requires a different policy from either flood or earthquake. Again, the focus here is a catastrophic event where the park and community is significantly damaged and the community infrastructure will take months to recover.

Regardless, whether coverage comes from a specialty policy or a basic property policy the primary concern should be lost income. In my experience this is usually where the greatest need is regardless of industry and is a commonly overlooked coverage item by insurance agents. When a regional catastrophe occurs, there are always loans and grants available to replace the structures, but seldom is anything available to address the lost income to endure the event. In Dave’s story he said he lost half his park; I believe 60 lots. So, using $300/lot/mo that could mean $216,000 of lost revenue for the year. This presumes it will take 12 months to get replacement homes purchased and sold to new tenants. If the whole park was lost, that would be $432,000 of lost income. That is some serious pain that some owners may not be able to survive.

Once one understands how the lost income section of a property policy works, then it makes more sense why Dave didn’t have coverage on his policy. You see, a property policy assumes that the insured owns the property causing the lost income. So, when owned property is damaged, the property damage then triggers coverage from the lost income portion of the policy. the policy will reimburse you for lost income while the productive use of the structure is unavailable. Generally speaking, the reimbursement will continue until the property is restored plus another 30 days or so.

So, why are TOH MHP’s unique? Who owns the damaged property? Exactly, the tenants!

Therefore, the park property policy must be endorsed to trigger lost income coverage in the event a tenant’s home is damaged. Without this endorsement, the lost income section will never be triggered. In addition, the policy needs be be endorsed to extend reimbursement for an additional 6 to 18 months after the property is restored instead of the standard 30 days. This will give the park owner time to replace the lost tenant who is permanently displaced.

How do you get the policy endorsed correctly? You ask for lost rental income and extra expense coverage associated with your dependent properties. I highlighted the word rental on purpose because the lost income section differentiates between lost production revenue (manufacturing or services) and and lost rental income. By default the policy assumes production revenue is what is being lost, so you also must specifically ask for rental income.

The additional cost for lost rental income coverage on dependent properties will likely be about 1/4- 1/2% of your gross income. If you also need to buy specialty policies, those may add another 1/4 - 1/2%. I will leave it to you if that coverage is worth the cost.

Your agent may not be aware of the unique nuances of this coverage section, because TOH MHP’s don’t fit into normal or typical when considering coverage exposures. So, your agent may have to do some investigation, but it can be done. Also, note this is a very high level discussion of how coverage is triggered in a property policy. The actual details of how your policy coverage is triggered should be explained by your agent.


Good stuff, thanks for sharing. I have someone that is buying right now and looking for a policy quote. Can you please reach out to me when you get a minute? Thanks!

Brian McDonald, CCIM, MS-RE

Regional Director – Rocky Mountains & Great Plains

Yale Realty and Capital Advisors

Direct: 720-636-6551

Thanks for sharing! I remember hearing that story too and being terrified of it happening. Also, can you post your contact info here? I have a park that is under contract that I’d love to get a quote from you on.

Thanks! :v:

Unless the park is in a very high demand area with high home prices (~$300k+ median home prices), odds are filling a large number of vacant lots could take several years.

If a tornado comes through, and knocks out 75 homes in a 150 space park, having loss of income for a few months while cleanup is done is helpful, but does not seem to be a game changer. It will likely take years to restore the park to original occupancy and income levels.

At the end of the day, a park seems to be in very deep trouble if a disaster destroys a large number of TOHs, and only slightly less bad if loss of income insurance is purchased. This is a risky business!

I’d love to hear any differing opinions.


I agree, rental income protection for a few months hardly seems worth the cost in the event of a major catastrophe. Replacement of the homes will take far longer than any rental income insurance would cover. The rental income policy would only be a band aid with the end result being bankruptcy regardless.

Im in a coastal area and this is a risk for me. Get one year of business income coverage. If its available, extend out to 18 months ( maximum) . In a stronger market.

There are lots of older homes in the parks around here , that means they have withstood several hurricanes ( no guarantee of anything ) but something i have just observed.

I know if we get a catastrophe, it will be a matter of cleaning up and filling up. What i have seen after Hurricane Harvey and Hurricane Ike, lots of people coming into work, housing shortages can be created. Temporary demand to fill housing but our market is on an upward trajectory and way you look at it , greater houston area.

I think thats the two sides of the sword, coastal , often great markets, not so much big winds and waves…

Weak market, in this scenario. Not sure what id do…

Also last go around, had FEMA calling parks looking for available lots to place houses , some parks have been filled that way.

So accurately knowing what your risk is and what you do when this happens.

I talked to an operator who had a direct hit, worked through it. Day 1 called his bank , they gave him some grace. on a few months of deferred payments, insurance kicked in, they managed as best they could . Wasn’t completely made whole but diligence in his case did not cripple them.

In response to Noel_S, I absolutely agree and that was the point of the post. Business income loss should be the focus and more importantly, ask the question, “how long is my post-recovery benefit?” I would think It needs to be at least 12 mo’s and preferably 18. Marvel is correct, 18 mo’s is as long as you will find in the small business commercial business insurance sector. Dave’s coverage inadequacy on the tornado event specifically happened because the agent didn’t ask and get the question above answered.

Again, the same question needs to be asked of the specialty policies, earthquake, flood, or Difference In Conditions.

As I mentioned earlier, my industry background is in the manufacturing and construction sectors. Since I am about to invest in this sector as a principal, I have been looking at insurance solutions for my investment. I am finding some interesting observations. It appears the arbitrary star system may have an impact on the insurance forms available. If you have a 3* park or above, you will have several great insurance product options from which to select. From a national insurance company perspective, probably the two best insurance products I have found are from Philadelphia and Nationwide. Their policy forms are very good. However, more than likely, you will be better off pursuing local insurance companies serving the regional needs. For example, two of my best insurance companies for this sector are local regional insurance companies with head quarters in or near Portland, OR . Their primary territory is the PNW. The primary reason for this is this industry is a small business product. Small regional insurance companies tend to serve that sector better.

If your park is in the 2* and below sector, but is clean with the common areas updated and the tenant homes do not have debris and clutter and are well maintained. You should push back and ask for an inspection before accepting a decline. It is likely you will be successful. In other words, approach the inspection as you would having an appraiser stop by to do a refinance loan.

However, if the park is definitely 2* or less, the insurance journey becomes more adventurous from a lost revenue perspective, because you will fall into the surplus lines type of insurance companies. The insurance forms associated with these companies can be very bad, to decent. You need to be thorough and ask a lot of questions. The general question needs to be, “How does this product differ from a preferred or admitted insurance product?”