There are few things more handy that a utility trailer. You purchase an inexpensive one, attach it to the ball hitch on your personal vehicle and then you’re free to haul things to your home, away from your home, and around the country.
But where does insurance for that trailer come in? If it hits someone or something while you are towing it, where is the coverage? If the trailer itself is damaged, is there coverage for that?
You have questions, we have answers.
Liability May Be Automatic
The ISO Personal Auto Policy (PP 00 01) describes covered autos to include “any ‘trailer’ you own”. As long as your personal trailer is attached to your personal vehicle, liability insurance coverage is typically extended to the trailer attached to or being towed by the insured vehicle.
In fact, many of the exclusions applied to liability coverage for personal vehicles do not apply to trailers within the coverage form. Check your policy or speak with your broker to verify coverage, as some policies may exclude this coverage as a cost-saving measure.
Physical Damage To Trailers Isn’t Covered
While auto liability coverage does extend to an attached trailer, physical damage (also known as comprehensive and/or collision coverage) does not automatically extend to the trailer. In fact, the personal auto policy specifically excludes this coverage with the following wording:
We will not pay for: 7. Loss to: a. A “trailer”, camper body or motor home which is not shown in the Declarations; or b. Facilities or equipment used with such “trailer”, camper body or motor home.
In many cases this coverage may not be necessary. A utility trailer towed by a personal auto usually does not exceed the deductible for comprehensive and/or collision coverage on the auto policy. However, if a trailer, camper body or motor home exceeds the deductible amount, it should be added to the policy as a scheduled auto in order to be covered.
Motor Homes and RVs
Fifth wheels may be considered by some to be trailers. If they are being towed by a covered vehicle then liability coverage would apply. However, the size of these trailers and their amenities would exclude them from physical damage coverage unless they are listed as a scheduled auto on the policy.
Motor homes and RVs, by virtue of not being attached to a covered vehicle should be scheduled on the policy for both liability and physical damage. This may be added to the personal auto policy or a special motor home or RV policy, depending on how your insurance carrier prefers to handle these vehicles.
Newly purchased trailers, motor homes and RVs are not necessarily automatically included for coverage. Some policies may provide automatic coverage within the first 14 days after purchase, but it is best to contact your broker as soon as possible to determine whether a vehicle should be scheduled or qualifies for liability only.
What About Business Use?
If you are towing a trailer on the back of your personal vehicle for business use, you may be out of luck. The personal auto policy specifically excludes liability for personal autos being used for business purposes (unless that purpose is ranching or farming).
If you are using the vehicle for business, there is no coverage under the policy, so liability would also not extend to the trailer. If you are using the trailer for business purposes, it would stand to reason that the vehicle is also being used for business purposes, so coverage would also not apply.
Some hybrid business/personal policies may extend liability to the trailer for business purposes. Otherwise, a commercial auto policy should be purchased. Check with your broker to see which type of policy might be right for you.
Trailers and vehicles other than personal autos and personal trucks may even require special coverage. If you are unsure of your coverage, consult your policy or call your broker to be sure that you have the coverage that you need. Coverage is available for nearly every type of vehicle, whether on a personal auto or special coverage policy.