Donna Bourdeau (Donna Genie) advises prospective buyers of campgrounds and RV parks to include insurance early in their due-diligence process. She warns that relying on the previous owner’s insurance premium is often misleading because policies are not regularly reviewed; newly underwritten policies can be significantly higher. Her recommendation: contact an industry-specific insurance provider early, provide a complete list of fixed assets (buildings, sheds, equipment), and allow underwriters a couple of weeks to assess and quote a premium so buyers understand costs and coverage before closing.
Chapters
If you're looking at buying a campground or an RV park right now, there are a couple things you need to be prepared for that may surprise you. When you are looking at the due diligence, you may be looking at the previous owner's insurance costs and using that as a reference point for how much your insurance would be. Chances are that insurance number is way off. What happens is many insurance policies are not reviewed on an ongoing basis. So when you attempt to get new insurance on a park that you've just purchased, that insurance premium may be a lot higher than you thought. So what I want you to do to head this off and to make sure that you get the best deal is to contact an insurance provider early on in the due diligence, provide them with the list of the fixed assets, the buildings, the sheds, the equipment, all of what the park has, and let them do their due diligence. Now, I work with several of the experts from industry specific insurance companies in the campground world and they've all told me you need a couple of weeks at least to assess and let the underwriters determine how much that premium will be. So when you sign that non disclosure, one of the first things you ought to be doing is talking with an insurance provider. They'll help you. And trust me, it always seems like they're diving in really deep and kind of getting nitpicky. But who are you going to call when you have that first problem where you need an insurance agent's help? You want to make sure that you're properly covered and that nothing is left to chance. So talk with an industry provider early on in your due diligence to make sure that you understand the cost of insurance and what the benefits are of that premium. I'm Donna Bourdeau with campgroundaccounting.com.
