When Is RV Insurance Required?
Owning an RV can be a lot of fun and provide a novel way to travel across the country, but it also requires a large investment and should be treated as such. Many RVs can easily cost as much as a house to purchase, and even modest RVs can be an expensive purchase.
In addition to budgeting for maintenance and financing costs, when planning to purchase a new set of house-toting wheels, it’s important to know whether or not RV insurance will be required for your recreational vehicle and budget those costs as well.
Many factors come into play, and laws can vary by state, making the process rather confusing at times. The following guidelines can make the process of determining whether or not you are legally obligated to have insurance a little bit more clear.
Remember, though, that just because you’re not legally obligated to have RV insurance doesn’t mean that you shouldn’t purchase it anyway. It makes financial sense to protect all of your investments, including those on wheels, whether through insurance coverage or another financial contingency plan. Just as you would before deciding to forego car insurance coverage, always talk to your insurance agent or other qualified professional before deciding whether or not skipping RV insurance makes sense for you.
When RV Insurance Is Generally Required
At a minimum, the same amount of liability coverage required for a car is required for an RV in all states. Special cases are addressed in the next section, but you will definitely need a separate RV insurance policy if:
- Your RV is a motorhome (Class A or B)
- You do not own your RV outright (i.e., you took out a loan to finance the purchase)
- Your RV is a rental vehicle
The law requires motorhomes to have liability insurance while being driven on the road in most states. Full coverage can be optional based on whether you have the vehicle financed, but just because full coverage is optional does not mean you should necessarily opt-out.
Determine the value of your RV versus the likelihood of a loss to decide if your savings account can bear the cost of self-insuring your motor home’s physical damage risk. If you live in your vehicle full time, it's especially important to consider additional insurance coverage.
Financed RVs are generally required by the financial lien-holder to carry full coverage because lenders want reimbursement on their loan in case of a loss. If you do not purchase full coverage, your lender could take out an insurance policy on the vehicle and send you the bill. Lender-purchased insurance typically comes with much higher premiums and no liability, so taking responsibility for your own insurance is a smart financial decision.
Rental RVs are your responsibility while in your possession, so it's important to make sure you have insurance coverage on the RV. Check with your auto insurance carrier to see if coverage extends to a rental RV. If not, the RV rental dealers usually either automatically include insurance in the price of the rental or have short-term policies available for purchase. Also, check with your credit card company: some have special provisions that cover RVs rented with your card, much as they typically cover car rental insurance if you book the vehicle using your card.
Times When Insurance Is Optional
- Your RV is only towable, but not drivable (class C)
- You own your RV outright with no financing and live in a state where RV insurance or liability insurance is not required by law
Towable RVs include fifth wheels, pop-ups, and travel trailers. Liability insurance is generally extended from your car insurance policy to your RV when you are towing it. For instance, if your camper somehow comes unhitched from your truck and damages someone else’s property, your auto insurance liability coverage will cover the costs. Because liability is covered under your car insurance, the state does not require insurance on towable RVs.
Loan-Free RV means you own the camper outright without any financing. RV insurance is only optional when your RV has no loan on it and is towable only. Insurance is not optional for motorhomes unless you live in a state that doesn’t require RV insurance. If you're driving your RV on the road, you'll be required to carry the same state-mandated liability insurance you'd need to carry on a regular automobile. These requirements vary by state, but almost every state requires some type of liability coverage for damage you might cause to other vehicles.
If you purchase a new travel trailer outright with cash, insurance is optional because again, there's no finance company involved. However, you would probably still want to carry full coverage on it. A total loss, such as fire or theft, would be devastating to most people without insurance to cover the investment-loss costs of your RV. Determine the value of your RV versus the likelihood of a loss to before you decide to self-insure your travel trailer’s physical damage risk and see if it’s really worth it.
Whether RV insurance is optional or required, be aware of the pitfalls of going without RV insurance. Lots of RV owners leave their RVs parked out in the open yard, leaving them susceptible to storm damage, vandalism, and possible theft. If your RV holds a great deal of value, make sure to purchase full coverage RV insurance to protect against a potential loss.