How to Choose the Right Trailer Insurance Coverage

TRAILER INSURANCE

Whether you use a trailer for work, recreation, or occasional hauling, making sure it’s properly insured is key to protecting your investment. But not all trailer insurance is created equal — and choosing the wrong type or level of coverage can leave you underinsured (or overpaying).

This guide will walk you through how to choose the right trailer insurance coverage based on the trailer type, how it’s used, and the risks you need to protect against.

Why Trailer Insurance Is Important

Many trailer owners assume their trailer is automatically covered under their auto insurance policy — but that’s often only partially true.

  • Your auto policy may cover liability while towing, but usually not damage to the trailer itself.

  • If your trailer is stolen, damaged, or causes an accident, you could be left with expensive out-of-pocket costs without the right coverage.

  • Some states or lenders may require proof of insurance, especially for commercial or financed trailers.

Step 1: Know Your Trailer Type

Insurance needs vary based on the kind of trailer you own. Start by identifying which type applies to you:

  • Utility Trailer – Open trailers used for hauling tools, equipment, or debris.

  • Cargo Trailer – Enclosed trailers for transporting goods.

  • Travel Trailer / RV Trailer – Towable trailers used for camping or recreation.

  • Boat Trailer – Trailers used to haul boats or jet skis.

  • Horse or Livestock Trailer – Designed for transporting animals.

  • Commercial Trailer – Used for business or freight transport.

Different trailers come with different risks — and that affects your coverage needs and premium costs.

Step 2: Determine How the Trailer Will Be Used

How often and for what purpose you use your trailer has a big impact on what coverage you need:

  • Personal use (weekend hauling, camping trips) typically requires basic coverage.

  • Commercial use (daily hauling for work or business) may require more robust, business-specific insurance.

  • Seasonal or occasional use may qualify for part-time coverage or storage-only options.

Tip: Always tell your insurer exactly how you plan to use your trailer — misrepresenting its use can result in denied claims.

Step 3: Choose the Right Types of Coverage

Once you’ve defined your trailer type and use, consider the following coverage options:

1. Liability Coverage

Covers injuries or property damage to others caused by your trailer while it’s being towed. Often included in your auto insurance — but it won’t cover your trailer itself.

2. Comprehensive Coverage

Protects your trailer from non-collision-related incidents such as theft, vandalism, fire, or storm damage.

3. Collision Coverage

Pays for damage to your trailer from accidents or collisions — whether or not you’re at fault.

4. Contents or Cargo Coverage

Covers tools, equipment, or goods stored inside the trailer. Especially important for cargo, utility, and commercial trailers.

5. Roadside Assistance

Optional, but useful if your trailer gets a flat tire, or your towing vehicle breaks down while hauling.

6. Uninsured/Underinsured Motorist

Covers your trailer if it’s hit by a driver without adequate insurance.

Step 4: Know Your Trailer’s Value

To avoid being under- or overinsured, get a clear understanding of your trailer’s actual value:

  • Consider original purchase price, upgrades, and condition.

  • For custom trailers, list any added features or modifications.

  • Ask your insurer if they offer agreed value or actual cash value coverage, and understand the difference.

Actual cash value subtracts depreciation, while agreed value pays out a pre-determined amount regardless of depreciation.

Step 5: Compare Deductibles and Limits

The deductible is the amount you pay out of pocket before insurance kicks in. A higher deductible usually means a lower premium — but make sure you can afford to pay it in the event of a claim.

Also consider your policy limits, or the maximum amount your insurance will pay. Make sure it’s enough to fully cover your trailer and any contents.

Step 6: Consider Legal and Lender Requirements

  • Some states require liability coverage for trailers over a certain weight or use type.

  • If your trailer is financed or leased, the lender may require you to carry comprehensive and collision.

  • Commercial trailers often require proof of commercial insurance to comply with local or federal regulations.

Check with your state’s DMV or insurance department to confirm what’s legally required where you live.

Step 7: Ask About Discounts

Many insurers offer trailer insurance discounts if you:

  • Store your trailer in a secure location (e.g., locked garage)

  • Bundle your trailer policy with auto or home insurance

  • Install anti-theft devices

  • Have a clean driving record

Ask your provider what savings you may be eligible for.

Choosing the right trailer insurance means more than just picking the cheapest policy. It’s about ensuring you’re protected against realistic risks — whether you’re hauling gear for the weekend or towing valuable cargo across state lines.