Defining Types of Property for Insurance
Written by Brian Stevens, NFP/Outdoor Insurance Group
Disclaimer: this is from an insurance perspective. It does not address legal or zoning issues. Consult your attorney as you begin or change your business to comply with state and local laws and ordinances.
Glamping businesses are some of the most dynamic within the hospitality industry. They are responding to a generational shift among Americans who want to experience the outdoors without having to own, store, and maintain a camper or fussy equipment. Since these businesses are so innovative, the varied ways they house their guests pose a challenge to traditional insurers who work within the RV/campground/hospitality industry. Still, their property coverage falls into three basic categories.
Real Property
These are structures on permanent foundations. Thinking of the Three Little Pigs, these are the ones the wolf has to try hardest to blow down, so they are typically the least expensive to insure.
It’s easy to spot a concrete block bathhouse on a poured foundation at a campground, but what about a yurt? What about an Airstream that has been taken off its wheels? Sometimes insurers can be flexible in their definition. Most will require the structure to be tied to a stone, block, or poured foundation and to be more or less permanent.
The bathroom below is an example of a creative structure. Once a trailer, it was anchored to a poured slab and the exposed metal was embellished with local trees cut to clear space for this glamping getaway. It’s a building.
Inland Marine (or Mobile Equipment)
Most sleeping structures that glamping businesses use fall into this category. In the image below, the immobile “wagons” are clearly not attached to the ground. The tepee is likewise set on leveled pea gravel. These are “equipment”.
Many glamping businesses erect sturdy safari tents on wooden platforms. Most insurers still consider these “mobile equipment”, just the same as a backhoe, golf cart, shipping container, or the grill and chairs in the picture. They are covered as things that live and work outside of the protection of a structure, so they are generally more expensive to cover than buildings and their contents. Like the pigs’ “house of wood”, they occupy the middle ground between the most and least vulnerable property.
Autos
If it has plates (or is subject to mandatory coverage), if it is designed for road use, it is most likely defined as an Auto. Autos usually require completely separate liability and property coverage and have the additional risk of operating alongside other autos. They are the “house of straw” most vulnerable to the breath of wolves.
Glamping businesses use old busses, vintage campers, repurposed grain bins, and anything else they can creatively redesign for human occupancy. When it comes to renting vehicles for lodging, even if they are used in place, they are still most often insured as Autos.
This is perhaps the trickiest category, as some autos are never used on-road and can be classified as mobile equipment under Inland Marine coverage. General Liability coverage applies. Pull the motor from that old school bus, and it is equipment. Remove the wheels and tie it down to a foundation, and now it may be a structure.
Planning Your Business’ Property Coverage
A rule of thumb for property insurance is ‘the more mobile, the higher the insurance rate’. The Three Little Pigs story is an easy way to remember this. Permanent structures and their contents pose a greater challenge to the wolf than mobile equipment or autos. An insurance agent who focuses on the outdoor industry will know the trends in the insurance marketplace and can help you plan for the costs of starting or growing your glamping business. Your agent can get you a specific quote within about two months of needing the coverage. Contact your agent early and call often as you plan, so you can avoid surprises like your current insurer declining to cover that new treehouse or your rate being twice as high for the new tents than it was for the cabin rentals.
Once a fishing guide, climbing instructor, teacher, and coach, Brian Stevens is an outdoor/hospitality insurance specialist with NFP/Outdoor Insurance Group in Louisville, CO. He works with businesses that work and play outdoors nationwide. For more information, contact him at 303-951-5053 or brian.stevens@nfp.com or visit https://oigcorp.com/.