Property Insurance Considerations
The Sweet Spot for Property
To maximize the number of carriers willing to insure your buildings, consider the following:
- Wildfire Score: A risk meter score of 60 or less is ideal. Where can you find this information? You can’t directly, as far as I know, but you can get an idea if wildfire will be an issue based on the geography of the location, the proximity of a fire department, and other available firefighting tools on site.
- Total Insured Value (TIV): TIV includes the total dollar amounts of coverage for all buildings and business income. The higher this number goes, the fewer carriers will write the whole risk. Beyond $5-10 million+ in TIV would transition to different options for property coverage, though this varies by risk.
If your property exceeds these thresholds, options become more limited, and you will likely need to seek coverage from specialized carriers.
When a TIV exceeds a single carrier’s limit, multiple insurers may share the risk, and the minimum property premiums will be between $35K and $60K, depending on the risk and location. These carriers require quota share or layered coverage policies. This means that one insurer carrier will insure the first $2.5M, a second will cover the next $2.5M, and so on.
Building Updates & Coverage Considerations
Carriers are strict about building conditions and may not offer special form perils or replacement costs unless:
- The building is 25 years old or newer.
- Major system updates—including plumbing, heating, electrical, and roofing—have been completed within the last 25-35 years (varies by carrier). You can provide proof of this by submitting a risk assessment spreadsheet.
So, if you are buying a fixer-upper for the highest cash-on-cash return, it’s important to know that you won’t have this information and will need to try to get the coverages you can until you can update your agent on the renovations completed.
Stronger Applications Get Faster Responses
To improve your application for insurance and to expedite underwriting, you should consider the following:
- Provide a risk spreadsheet—specialized carriers use these for rating. This information can be a deal breaker for good or bad insurance. Have the old owner fill this out and estimate a year for each area.
- A pro forma with three-year projections is best.
- If you are in a high wildfire area, highlight wildfire mitigation efforts (fire breaks, defensible space, sprinkler systems, wildfire consulting, etc.).
- If you are in a high wind or hail zone, what type of roof do you have? What is the wind and hail rating of your roof? Has it been updated in the last 20 years?
- Provide recent photos of the property and pictures of the buildings to show good condition. If you are in a high fire brush zone, show that you have open space and a hard, fire-resistant landscape. Take a picture of the electrical panels, roof, plumbing in mechanical rooms, etc.
Liability Insurance Considerations
The Sweet Spot for Liability
These situations put your application at the top of the pile and will have access to the most carriers:
- Experience: At least three years of campground or hospitality ownership experience improves eligibility. Put together a strong resume detailing your background.
- Liability Waivers: Having a well-drafted liability waiver in place strengthens your application.
- Activities & Amenities: Some activities raise underwriting concerns and limit carrier options. Expect longer underwriting times if your campground offers the following:
- Water slides, inflatables, equine activities, zip lines, paintball, jumping pillows/pads, e-bikes, boat rentals, diving boards, etc. (These aren’t impossible to insure, but they can be hard to find an affordable carrier.)
- Risk Management: For new purchases, submitting strong risk management documentation can make a significant difference. Carriers want to see your safety procedures, maintenance policies, and risk mitigation plans.
- Other items you might consider:
- Provide proof of employee training manuals, safety training, security surveillance, and pictures of signage.
- Explain how long you keep your waiver forms (electronic or paper).
- Do you have a looping video about the dos and don’ts of these activities?
- Keep an injury report log.
Final Thoughts
A little preparation goes a long way in securing the right insurance for your campground investment. By staying within the “sweet spot” for carriers, organizing key documents, and addressing potential risk concerns upfront, you will improve your chances of getting the right coverage at a competitive price.
Have questions or need guidance? Don’t hesitate to reach out!
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