Insurance on tenant owned homes

I just received a worrisome email from MOBILE INSURANCE AGENCY saying that all TOHs need their own General Liability Insurance. And that I (the owner of the park) should have proof of it.

“This should be a requirement for all tenants & here is the reason. If a unit burns to the ground & there is a fatality & the tenant had no insurance, then the risk lands on you shoulders and the family will come after your insurance. Any claim that you turn in makes your Insurance go up the following year for a loss paid out & then after 3 claims, the carrier will non-renew you making it very difficult to find a market that will insure your park.”

Do you guys think it is even possible to get your tenants to have general liability insurance? Some tenants probably don’t even have bank accounts.

How many park owners have tenants with their own general liability insurance? How do you protect yourself against this risk?

I do not recall learning about this at the Mobile Home University Bootcamp.

There is nothing you can do to force your tenants to get GL insurance. We’ve promoted Kurt Kelley to them just to get their homes insured (let alone GL insurance) - and I don’t believe a single one of them actually got their homes insured. They’ll say they can’t afford it, even though it costs <$1/day.

I require all my residents to carry a minimum of 1mil liability insurance coverage. It is mandatory they provide proof of coverage annually. If they do not carry and provide proof they are subject to eviction. In addition if they have oil heating they are required to carry special coverage in the event of a spill.

Liability Insurance coverage is a very serious matter and I would think, particularly in the U.S. where every person believes law suits are like buying lottery tickets, it should be mandatory for ever home owner to have coverage.
As to whether your tenants can actually get insurance coverage or not this is their problem not yours. Your primary responsibility is to mitigate all risk possible in operating a business.

We have always required liability insurance in our rental contracts (whether for lot rentals only, or mobile home rentals), but have only recently begun enforcing it. Our insurance broker has worked with us to offer a “one size fits all” policy for both “rental insurance” (for mobile home renters, which includes $100k liability coverage), and “homeowner’s insurance” (for those who own their own trailers.) If someone doesn’t have proof of coverage now, we purchase it for them and bill them each month. So far, almost everyone likes the fact that we provide some sort of easy way for them to get coverage. It’s more work for us, and not a money maker, but it’s worth the hassle to make sure we are listed as “additional insured” on policies to protect us against potential law suits.

Ed

Ed $100k is no where enough liability coverage to protect you from law suites. That would barley cover the cost of a lawyer. You need a minimum of 1mil and the additional cost to residents would be minimal.

@Greg, @Jefferson, @Suburban,

Can you please help me with the wording that I can put in my rental lease agreement saying something to the effect of: All residents should carry $X amount of general liability insurance coverage. Proof of insurance has to be provided to management every year.

Here’s some more good information on tenants having insurance - both on their home and liability insurance:

  1. Few commercial park insurance companies require their client park owners to require their tenants to carry liability or home owners insurance. However, several recommend park owners do in order to create a buffer of liability between the park owner and tenant negligence that results in potential liability for the park owner. Our agents are trained to educate their park owning/managing clients about the benefits of tenant owned home insurance requirements;

  2. Tenants carrying home owners insurance on their own homes is a good idea for them, and the park owner. But it’s not required by most park insurance companies. When a tenant has home owners insurance, they usually get some liability coverage along with that to act as a buffer for park ownership. Also, if their home burns down/blows away… they’ll have funds to remove and replace it and you’re less likely to lose a tenant/more likely to get a nice new home in your park. This is a particularly impressive phenomon I’ve witnessed when a large storm damages all/most homes in a park and the surrounding region;

  3. The Tenant Must Carry Insurance requirement is easier /more practicle to enforce in areas like the Midwest (north of Kansas) and upper Mid-East and Western US, than it is in the South and Southest US. The reason is the former areas have mobile home owners insurance premiums that average $400/year or so and in the latter area they may average $1,000/year (even higher in Gulf and Atlantic Coastal areas) - as Jefferson mentioned on his Oklahoma parks, it’s too much of a financial hardship to enforce that for many tenants even though it’s likely a good idea;

  4. Having all your tenants carry homeowners insurance, including the liability addendum is a great idea, but can be a difficult thing from an administrative perspective to enforce. Tenants often let policies lapse due to failure to respond or pay on time;

  5. Dog bite liability is one of the biggest loss drivers of tenant caused liability problems for park owners, yet many/most mobile home owners insurance liability policies either limit coverage for dog bites (ex. $10,000 drop down liability limit as with American Modern Ins Co) or exclude it altogether. If they know a tenant has a viscious dog breed in the home (ex. pit bull, mastif, German Shepherd, Rottweiler, Akita, Chow…), they won’t include any liability insurance. Stand alone dog liaiblity insurance is possible, but too expensive in almost all cases ($600 plus / year for $100k limit);

  6. Most mobile home owners insurance policies limit coverage to $300,000 max. Thus, it’s hard to enforce a $1,000,000 limit level; and

  7. In some states, a master tenant liability possible is available as was mentioned above. The one we offer costs about $10/month per tenant for $100,000 in liability coverage.

I hope that helps,
Kurt Kelley

@KurtKelley, thank you very much Kurt, that is an awesome piece of information!

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