Owning a mobile home park can be a profitable and resilient investment, especially in times of economic uncertainty. However, just like any other real estate asset, mobile home parks can carry risks. One of the best ways to mitigate these risks is through a well-considered insurance strategy. In this article, we’ll explore key insurance considerations for mobile home park owners. From the types of coverage available to common pitfalls and best practices, this guide can help owners make informed, strategic decisions.

Why Insurance Considerations Matter in Mobile Home Park Ownership

Insurance can help manage risk. While mobile home parks often enjoy stable income and lower turnover than other asset classes, unexpected events can still occur. Storm damage, tenant accidents, liability claims, and vandalism can all threaten income and increase expenses.

Rather than viewing insurance as just another expense, mobile home park owners might consider it a vital tool for financial resilience. When structured properly, insurance may reduce exposure to costly setbacks and help ensure continuity.

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Insurance Considerations: Core Types

Mobile home park insurance isn’t one-size-fits-all. Owners should evaluate several coverage types to build a tailored strategy. Here are a few commonly used policies:

1. General Liability Insurance

This is often the foundation of a mobile home park insurance policy. General liability may offer protection if a tenant, visitor, or contractor is injured on the property. For example, a slip-and-fall injury on a poorly maintained sidewalk could result in a lawsuit. While outcomes can vary, general liability insurance may help cover legal fees, settlements, or judgments.

2. Commercial Property Insurance

This covers physical structures owned by the mobile home park operator. Examples might include clubhouses, laundry facilities, office buildings, storage units, and signage. It typically applies to damage caused by fire, storms, theft, or vandalism. However, coverage can vary by policy, so it’s worth checking whether key risks, like flood or earthquake, are included or excluded.

3. Loss of Income / Business Interruption Coverage

If a major incident temporarily displaces tenants or renders portions of the mobile home park unusable, business interruption insurance could help replace lost income. This coverage might be triggered by events like fires, hurricanes, or utility failures. Not all policies include it by default, so owners may want to confirm it’s part of their package.

4. Equipment Breakdown Insurance

Some mobile home parks operate water pumps, electrical transformers, or heating systems. If that equipment fails, it may not only result in repair costs, but it could disrupt services and lead to complaints or penalties. Equipment breakdown insurance could help cover repair or replacement costs in certain cases.

5. Workers’ Compensation Insurance

If the mobile home park has employees—for example, on-site managers, maintenance staff, or groundskeepers—owners may be required to carry workers’ compensation insurance. This coverage generally helps with medical costs and wage replacement if an employee is injured on the job.

Optional or Situational Coverages

Depending on the location, size, and operations of the mobile home park, additional insurance coverages may be worth exploring.

Flood and Earthquake Insurance

Standard commercial property insurance may exclude damage from floods and earthquakes. If the mobile home park is located in a high-risk area, separate policies may be necessary to cover those events.

Umbrella Liability Insurance

An umbrella policy provides additional liability coverage beyond the limits of standard policies. If a major claim exceeds existing limits, an umbrella policy could help cover the excess. For owners concerned about catastrophic lawsuits or rare high-severity incidents, this could be an extra layer of protection.

Cyber Insurance

Mobile home park owners who store tenant data digitally or use software for rent collection and communications may face cyber risks. While not common yet in the mobile home park space, cyber insurance is becoming more relevant as operators modernize their systems.

Factors That Can Affect Insurance Costs

Insurance premiums can vary widely between mobile home parks. A few key factors that often influence pricing include:

• Location and weather risks (e.g., hurricane zones or wildfire areas)
• Age and condition of infrastructure (roads, utilities, and buildings)
• Claim history
• Crime rates in the area
• Number of amenities (e.g., pools, playgrounds, or dog parks)
• Presence of employee housing or on-site staff

Mobile home park owners who invest in preventive maintenance, clear signage, good lighting, and resident safety may be able to reduce premiums over time, although outcomes will depend on many variables.

Common Pitfalls to Avoid

While most mobile home park owners understand the importance of insurance, there are a few missteps that could lead to inadequate coverage or denied claims:

Underinsuring Structures

Some owners choose coverage limits based on outdated property values. In the event of a loss, they may receive far less than expected. It’s worth reviewing replacement cost estimates annually to ensure coverage is aligned with current market conditions.

Overlooking Vacancy Clauses

Some policies reduce or eliminate coverage for vacant homes or buildings. If a mobile home park includes rentals that sit empty for long periods, this clause could result in denied claims unless the proper endorsements are in place.

Not Reading the Exclusions

Policies can be complex, with detailed exclusions and conditions. For instance, damage from sewer backups, mold, or pest infestations may not be covered. Reviewing exclusions with an insurance advisor can help owners avoid surprises later on.

Tips for Building a Strong Insurance Strategy

• Work with specialists. Insurance brokers who understand mobile home parks may help tailor coverage more effectively than general commercial agents.
• Bundle policies when possible. Combining liability, property, and other coverages under one provider could lead to lower premiums or fewer administrative headaches.
• Document everything. In the event of a claim, photos, receipts, and maintenance records can streamline the process.
• Review annually. As the mobile home park evolves—adding amenities, upgrading infrastructure, or changing ownership structure—it’s wise to revisit coverage needs.

Insurance Considerations: Final Thoughts

Mobile home park insurance plays an important role in risk management and long-term performance. While there’s no one-size-fits-all solution, a thoughtful approach can help mobile home park owners stay resilient in the face of uncertainty. By understanding key coverages, staying proactive, and working with knowledgeable professionals, owners may protect both their residents and their bottom line with these insurance considerations.

Are you looking for MORE information? Book a 1-on-1 consultation with Andrew Keel to discuss:

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• Due diligence questions
• How to raise capital from investors
• Mistakes to avoid, and more!

Disclaimer:

The information provided is for informational purposes only and is not investment advice or a guarantee of any kind. We do not guarantee profitability. Make investment decisions based on your research and consult registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations.