My husband and I have owned a mobile home park for about 5 years. Now we are in escrow to buy a 2nd park yet have determined that it is in a “high probability zone” for tornadoes. Can insurance be purchased for tornadoes? If so, roughly, how much does it cost?
Yes. You can purchase both loss of income with extra expense insurance (pays you the income you would have earned during the period of restoration plus necessary additional operating expenses, such as tenant owned home debris removal) and extended loss of income insurance (pays you pre-calamity levels of income for another 6 to 12 months). The cost for this coverage varies by region, but throughout the high tornado zone areas, it averages about .3% of the limit purchased. For example, $100,000 of income would cost about $300/year to insure. This coverage should come as a package with a property park specialty insurance program like those we offer to qualifying park owners.
That said, being hit directly by a tornado is a very rare event, despite what the media might say. Over the 20 years I’ve run Mobile Insurance - we insure roughly 2,000 to 3,000 parks/year, I’ve seen tornado devasted parks only four times and Hurricane devasted parks about 5 times.
And if what I have heard is correct if your park is hit it’s like winning the lottery. Welfare and charity groups swoop down to help the home owners and as the park owner you end up with a park full of all new homes. Additionally you may still be able to collect lot rent (from those support groups) based on the tenants maintaining their rights to those lots until the homes are replaced.
We continue to collect rent when a home is destroyed by fire if the tenant wishes to maintain their right to bring in a replacement home.
Business is business. No reason you should be at a loss due to unforeseen circumstances.
Big “Thank You” to both Greg and Kurt. Sounds like it most likely will not happen, yet if it does (and adequate insurance is in place) then the investment will be fine after a period of adjustment.
I had a tornado hit my park this year, lost 3 homes, and thought finally my day to get a government handout has come.
FEMA took my application and said since my primarily dwelling wasn’t affected, as I don’t live in the park, that I didn’t qualify as a business owner. I could however apply for a loan from the SBA.
The Red Cross was much more helpful, they offered me a free subway sandwich, but no clean up of the 50 trailer loads of debris off my property. I still have a roof that blew into the trees of the adjacent property.
Hi Everyone,
The reason I’m bringing up this old conversation is because I’m seriously considering purchasing a park in Oklahoma City. So, I started watching the tornado u tubes and starting getting pretty nervous. I felt better after reading your conversation, however, I am wondering if after the fact, there any new thoughts or feelings about this subject. Please weigh in regardless of your point of view .
–Shelly