Owning a home represents a major financial milestone for many Americans. However, the dream of homeownership can feel increasingly out of reach. According to Bankrate’s Home Affordability Report, a significant 78% of Americans still view owning a home as part of the American Dream. This is a higher percentage than those who share the same sentiment about achieving a successful career or the ability to retire. The survey also revealed that over half (56%) of non-homeowners cite insufficient income as the primary barrier to homeownership.
As a result, #Vanlife has emerged as both an adventurous alternative and a financial strategy. The appeal of this lifestyle is growing. Between 2020 and 2022, the number of individuals embracing the van life philosophy increased from 1.9 million to 3.1 million. But converting a van isn’t cheap. Depending on the extent of the conversion, there can be significant insurance implications. Bankrate’s team of insurance experts, including licensed agents, is here to help you understand everything you need to know about insuring a converted van.
What is #vanlife?
Van life involves converting a Class B van, such as a Mercedes Sprinter or Ford Transit, into a comfortable living space. Typically, van lifers equip their vans with living areas, sleeping quarters, a kitchen, and plumbing systems. Some owners choose to have this conversion completed professionally while others opt for a DIY approach.
Van Insurance: What Mistakes to Avoid
Don’t simply add your VIN to your existing auto policy
“The number one mistake people make is just taking the van and adding it to their auto policy,” explains Mike M., an insurance agency owner specializing in van conversion policies. “If [the van] is converted and you just insure it as a regular vehicle, not only are you guaranteed to pay more, but you’re guaranteed to have less coverage because of the conversion.”
It’s critical to understand that when you purchase a van with the intent to convert it into a mobile living space, the insurance requirements will change, especially after the conversion is completed. The vehicle’s value is a key factor to consider. The addition of features like a sink, small kitchen, or sleeping area usually raises the van’s overall value. In car insurance, the insurer and the insured must agree on the vehicle’s value. This is important because, in the event of an accident leading to a total loss, you should be able to recover the van’s actual worth, including all the upgrades resulting from the conversion.
Example
Suppose you buy a new Ford Transit for $55,000 and add it to your insurance policy at full coverage. Then, you spend $100,000 converting it into a livable van, but you don’t notify your insurance provider. If you are involved in an accident a few weeks later that totals your van, your insurer might only pay you the actual cash value (ACV) of the van itself (less your deductible). The insurance company might not take into account all the money you invested in the conversion. The payout might look like this:
-
$55,000 (vehicle value)
-
-$5,500 (depreciation)
-
-$1,000 (policy deductible)
-
= $48,500
Don’t assume your current insurer understands van conversions
Another frequent oversight, according to Mike M., is assuming that your current car insurance company knows how to properly insure a converted van. “Almost none of them do,” he stated. Van conversions have been around since the 1970s but have gained increased popularity in recent years, and many believe the COVID-19 pandemic helped to fuel this trend. When travel options were limited, many people chose the nomadic life offered by living in a van. Furthermore, van living enjoys a glamorous reputation on platforms like Instagram, which makes it an attractive option for those active on social media. While the concept of living in a van is not new, elaborate van conversions are, at least to many insurance companies.
Haddassa Falby, an insurance agent with Coverage (which is also owned by Bankrate’s parent company, Red Ventures), says, “It’s the same as when rideshare, Uber, Lyft, all of that was coming around, insurance companies didn’t know how to deal with it.” The insurance industry typically has a slower response time. While some specialty insurers, such as Roamly and Good Sam, have started to fill gaps in the market, the major, well-known insurers are still catching up. “Number one challenge is, what company will do it? Number two is, how do I do it correctly?” says Mike M.
Hire Professionals When Possible
Converting a van essentially involves adding plumbing, a cooking space, and a living area. While this can be done yourself, it’s generally more beneficial to hire a professional for insurance purposes. One significant factor is the van’s value. Dave Walsh, the owner of Van Life Customs, a van conversion shop based in Colorado, has seen that most people are surprised at the complexities of the insurance process. “Where it gets tricky is that insurance companies don’t really know how to value these things,” Walsh says.
If a professional conversion company handles the work, you can provide your insurance company with an invoice that verifies the money you spent converting the van. A full van conversion can cost between $90,000 and $180,000 on average, based on your customization requests. While properly valuing your van can still be tricky, providing a few documents from the conversion company is likely an easier process compared to providing an extensive list of receipts for all the items used in a DIY conversion. Not only can it be more tough to persuade your insurance provider of the van’s worth in a self-conversion process, but your coverage could be denied as well. “If something goes wrong, and you did it yourself, the insurance company could very well say, ‘You know what, we’re not really covering that because it’s your error,’” Falby said. Getting a quote from a professional conversion company might result in some sticker shock, but it could eliminate insurance headaches down the road.
How to Properly Insure a Van You Live In
The steps you take to insure your converted van will likely differ based on the extent of the conversion. However, the following steps can guide you in the right direction when securing a policy.
Retitle your converted van
You may have an easier time getting an RV (Recreational Vehicle) policy for a converted van than you would with an ultra-customized car insurance policy. The retitling process differs by state laws, so check your state’s Department of Motor Vehicles or its equivalent. For vans like the Mercedes Sprinter and Ford Transit, see instructions on titling them as Class B recreational vehicles.
Find an RV insurance provider
Not every car insurance company has the experience to insure a converted van because of all the added value from the conversion. While the companies below aren’t guaranteed to insure your van, they tend to specialize and have experience in writing policies for converted vans. Consider getting a quote from some of the following car insurance companies:
- Roamly
- Good Sam
- Progressive
- National General
- Foremost
Adhere to your state’s minimum car insurance laws
Even if you reside in your van full-time, you’ll still need a physical address to register your vehicle and for insurance purposes. Ensure your insurance coverage satisfies your state’s basic car insurance regulations.
Insurance Coverage for Converted Vans
One reason that insurance for a converted van is complex is because different parts of your policy are active when you’re driving the vehicle versus when you’re parked. To fully insure your converted van, consider it like adding both home insurance and car insurance coverage. When you’re shopping for van conversion insurance, familiarize yourself with the different types of coverage below:
When Parked:
- Vacation liability: If you live in your van less than six months of the year, a vacation liability endorsement can help guard against potential lawsuits. This functions like the liability component of a home insurance policy: if your vehicle is parked, someone injures themselves, and you’re sued, this coverage helps with legal costs.
- Full-timer liability: Similar to vacation liability, however, this covers van lifers who live in their vehicles for more than six months annually.
- Medical payments: This is sometimes called guest medical coverage. Picture this situation: a guest slips and falls but does not sue you. Your medical payments coverage can help cover the costs of their medical expenses.
- Personal effects: Provides financial protection for your belongings, like clothing, laptops, and other essential items.
- Scheduled personal property: A personal effects endorsement may not provide complete coverage for high-value items. A scheduled personal property endorsement can help ensure you’re covered for your expensive belongings.
- Customized parts and equipment: This provides coverage for unusual parts added to your van conversion.
- Loss assessment: If your van is parked in an RV community with shared structures, this can help cover fees from the RV association for common losses, such as storm damage to a shared shower area.
- Adjacent structures: Similar to other structures (Coverage B) in a home insurance policy, adjacent structures can help cover things like a deck or awning.
- Rodent and pest protection: This coverage is available if your van sustains damage from pests such as mice.
- Emergency expenses: These can help pay for hotel and restaurant bills if your van is rendered unlivable due to a covered loss, similar to additional living expenses (Coverage E) in a home insurance policy.
- Agreed value: If your van sustains a total loss, your insurance provider will pay out a predetermined amount for the vehicle’s assessed value.
When Driving:
- Bodily injury liability: Should you be at fault for an accident, this coverage will pay for the other driver’s medical expenses and other associated bills, up to your policy limits.
- Property damage liability: This helps to pay for the repairs to the other driver’s vehicle if you were at fault for an accident, up to policy limits.
- Comprehensive coverage: Also known as “other-than-collision coverage,” this can assist in helping cover your vehicle if it’s stolen, damaged by weather, or if you strike an animal.
- Collision coverage: This type of coverage can help pay for repairs to your van if you were at fault for an accident.
- Roadside assistance: Roadside assistance can prove useful if you, for example, get a flat tire, need a tow, or run out of gas.
