Trailer – Coverage for Named Items in Policies
In plain language: In the insurance context, a trailer is a mobile unit without a motor that you attach to a car or other vehicle to transport things. It can be used to haul animals, goods, equipment, and more.
Technical definition: A trailer is a non-self-propelled vehicle designed for carrying property or persons and being drawn by a motor vehicle. In insurance terms, a trailer can refer to a range of conveyances, including flatbeds, box trailers, van trailers, and others. The specific coverage for a trailer depends on the policy wording, whether it’s covered under auto, inland marine, or a separate trailer policy.
Ever had a client who borrowed a friend’s horse trailer for a weekend rodeo, then had it vandalized in a parking lot and assumed their auto policy would cover the loss? All too often, clients under- or over-insure trailers, leading to gaps and painful denied claims.
TL;DR
- A trailer is a non-self-propelled vehicle pulled by another vehicle.
- The importance of correctly writing trailer coverage is often overlooked
- Misunderstanding about the type of coverage required for different trailers.
- Have a documented procedure for interviewing clients about trailer usage.
What Is Trailer in Insurance?
In the insurance industry, a trailer’s definition spans a broad spectrum of non-self-propelled vehicles designed for towing by a motor vehicle. This includes cargo trailers for the transport of goods, horse trailers for livestock, teardrop trailers for camping, and flat deck trailers for hauling bulky items. The way a trailer is insured depends on its use, size, and the materials it’s constructed from – from a simple utility trailer to a semi-trailer truck that’s part of an 18-wheeler.
A trailer might be covered under a personal auto policy, commercial auto, inland marine, or a specific trailer coverage policy. Understanding where to write the coverage can be a common pain point. For instance, if a company uses trailers for business and insures them under a commercial auto policy, any tools or equipment in the trailer may be better covered under an inland marine form.
Key Related Terms to Know
- Semi-Trailer Truck – a large vehicle with a trailer and no front axle that is towed by a tractor unit.
- Gooseneck Trailer – a type of hitch-based trailer that’s recognized by its long neck that arches over the bed of the towing vehicle.
- Motorcycle Trailer – a smaller trailer designed specifically to transport motorcycles.
- Flatbed Trailer – a versatile trailer type without enclosure or sides, used for hauling heavy or awkward loads.
- Cargo Trailer – an enclosed trailer designed to protect goods during transportation on roadways.
- Towing Vehicle – the vehicle that provides the power to haul a trailer or unpowered vehicle.
- Moblie home – a prefabricated structure used as a permanent living accommodation.
Common Questions About Trailer
How can I insure my business trailer?
The process depends on the type of trailer and its use. Smaller trailers can typically be added to the business auto policy. Larger trailers or those carrying expensive equipment might need a separate policy or coverage under an inland marine form.
Are contents inside my trailer covered?
Contents coverage varies based on trailer types and policy conditions. For instance, personal effects in a travel trailer may be covered, but tools in a cargo trailer may not unless they’re insured under a separate inland marine coverage.
Is the hitch part of the trailer coverage?
Coverage for trailer hitches, like a gooseneck trailer, can depend on the policy. Hitches can often be included in the value of the trailer, but check the policy to be sure.
How do I value my trailer for insurance purposes?
A trailer’s insurance value can be actual cash (depreciated) value or the cost of a new comparable trailer (replacement cost). Regularly updating these amounts can help keep coverage accurate.
Trailer vs. 5th Wheel Trailer
Understanding the difference between a regular trailer and a 5th wheel trailer helps ensure accurate coverage.
Comparison Area | Trailer | 5th Wheel Trailer
|
Primary use case | General use for transportation of goods, livestocks or passengers | Recreational use or transportation of heavy loads |
Coverage / concept type | May be covered under auto or separate trailer policy | Covered under auto or RV policy |
Typical exclusions | Often excludes permanent fixtures and custom units | Often excludes business use |
Who is most affected by errors | Personal and commercial lines clients | Personal lines, particularly RV owners |
Common mistakes | Incorrect valuation, assumption of content coverage | Not recognizing need for RV policy |
Real Claim Examples Involving Trailer
Scenario 1: A landscaping company had multiple utility trailers to carry their equipment and materials. One day, a piece of equipment fell off a poorly secured trailer, resulting in significant third-party property damage. The claim was smoothly handled because they had a commercial package policy that extended liability coverage to their trailers.
Scenario 2: A client took her horse to a show in her horse trailer. On the way home, she got into an accident, and the damage to the trailer was severe. Thankfully, she had added the trailer value to her auto policy, and the insurer paid for the repairs, less the policy’s deductible.
Scenario 3: A small construction company used a trailer to carry tools and materials to job sites. Unfortunately, the trailer was burglarized overnight, and several thousand dollars worth of equipment was stolen. Because their trailer was covered for content under their business property policy, they were able to recover their loss.
Limitations and Common Mistakes
- Trailer coverage isn’t automatically included in an auto policy.
- Personal auto policies may set a limit on trailer coverage.
- Not all get-up-and-go trailers are insurable under a personal auto policy.
- Content inside the trailer may not be covered under auto policy.
How to Explain Trailer to Clients
Personal Lines Client: “Think of your trailer like a wagon attached to your car. It can carry equipment like boats or horses. Your car insurance might cover it for some things when you’re hauling it, but not always. Best check with me to make sure what’s covered and what’s not.”
Small Business owner: “Your company’s trailers carry vital equipment. My job is to ensure we cover them correctly, so if something happens – on the job or while you’re traveling to the job – your company isn’t left carrying the bill.”
CFO or Risk Manager: “Trailer exposures can bring unexpected risks. Let’s make sure we correctly evaluated how your company uses trailers, what they carry, and how they’re valued. It’s all to ensure we don’t have any insurance gaps that could affect your bottom line.”