Tornados, hurricanes, an earthquakes

Hello all,

For you mobile home park owners and operators, what happens if a tornado rips through my mobile home park? There’s a mixture of TOHs and POHs. Does insurance generally cover you us if a tornadoes rips through my MHP?

Great question and I’m not an insurance person but this is very important for people to understand and think about. I invest in parks in a coastal area where we get hit by hurricanes.

The first thing you absolutely need in place is business interruption/loss coverage. That can last a year, you can maybe extend out to 18 months or longer. So in a complete wipe out scenario…

If they are POH make sure that you have sufficient insurance and then in theory on those homes, you work to get those replaced.

Imagine they are all TOH. Ok great, year is up, you filed on the business income , you have an empty park…

When this happens, you have to rebuild the park. My thought is you will have a housing shortage. You will have FEMA coming in, you will have workers coming in… There will be excessive demand. This will give you a chance to get new customers in the park or ideally in a perfect world your tenants had insurance and they get new homes to bring in. But plan to hustle and bustle during that time. Also, after Hurricane Ike, FEMA was reaching out to most parks to find available lots to place homes. Im not sure if they ended up doing it , but if you search enough you will see parks that have filled up with FEMA houses etc. I have heard of them even paying for and developing out more pads/ spaces.

Make sure you have coverage for things like electrical poles, fence, signs, mailboxes. There will be either a provision or maybe a supplemental coverage for Demo / debris cleanup. This will cost a lot to clear out the debris of a park…

Here is a picture of a park in DFW after it was hit in a tornado for perspective of what you might expect to see… … This smaller park was a complete wipe out…

Also i will share, i am along a coastal county. I have seen the post wrath of Hurricane Ike, Hurricane Harvey. There are so many mobile homes that are 70s homes with no issues. That shouldn’t give you comfort but the practicality is , prepare for worst , hope for the best.

I have talked to an operator who dealt with a Hurricane hit on their park. The first thing was to call their bank , advise them , they worked out some deferred stuff or modification, it took them a couple years to get it back to occupancy. They worked through it. Make sure your business wont get crippled.

Know your insurance, do NOT assume anything. Talk with your agent, get feedback. This was actually one of the reasons i switched to Mobile insurance like 5 years ago. Showed them my existing coverage, they pointed out gaps etc. You want someone in the park business, who knows it, who understands it. . Think about saving few hundred on a premium to only find out your true exposure when you come to need it.

Review the coverage/revisit. If your income goes up , bump the coverage, same if you add homes etc. Mobile is good about this with their annual renewal recapping what you have and makes you think to actually check

Also , not relevant necessarily… but some parks allow RVs , some don’t. So if your park does… and your MH , you might be able to protect yourself in the interim with RV goers… More of a backstop in a catastrophe . I know that post Harvey , some cities were pretty much allowing you to stick a FEMA mobile home in front of a single family home.

Post disaster, bets go out the window…

Each disaster will have its specifics , different entities for support. different support programs. If you are an isolated hit in a whole town , or the whole town is suffering .

You can not bet against the weather… dont even think about it. Cover yourself and make the best if you go into this situation and hope that you dont have to go through this.

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Hey Jack, yah I have Mobile Insurance and my policy covers me for a year of income loss, wind/tornado coverage. I’m going to ask my agent what else that covers (ie electrical poles, mailboxes, signs, etc).

So is it better to have 100% POHs or 0% POHs when a disaster wipes the homes out? For example: some home owners will have insurance to get them a replacement home. So maybe it’s best to have 0% POHs when a disaster hits, right?

Also, can’t I go through 21st Mortgage’s CASH program to infill all the vacant lots?

I think the answer about ease of replacement would be POH because the level of control and you can insure what you own , but not what you do not know. The whole appeal of this business though is to just manage the community. Thats like saying, i dont want to pay income taxes when i make money, so therefore i will generate enough expenses and unnecessary expenses to avoid making money therefore avoiding taxes.

Understand the risk, have a plan to mitigate it, talk with your agent and see what they advise.

While in theory all homeowners should carry insurance , you would need to put a mechanism in place to enforce and manage this. This may vary a lot based on your market, clientele, and homes. So yes, this is probably a good practice but will vary I would think on your success of implementation . But maybe not , im here to learn as well so if you find this is a component that you have luck with report back.

Short answer: you have a nightmarish problem.
How can you prepare: here are some basics:
(1) Have an emergency plan that all residents know about: where to seek shelter, central list of phone and emergency contacts, phone calling tree.
(2) Consider requiring all residents to carry disaster insurance on their trailers.
(3) Audit your park for risks: trees that could fall on trailers, improper utility installations, etc.
(4) Have adequate casualty insurance
(5) Have income replacement insurance sufficient to allow you to recover operations
(6) Consider doing an emergency drill
(7) Have adequate medical supplies, flashlights, generators, gas, water, food rations so you could be “on your own” for a while –
Even with all that,

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