Unlike homes constructed on a foundation, mobile homes are built in a factory, transported to a site, and anchored to the ground for stability. These differences expose mobile home owners to specific problems that need to be addressed with specialized mobile home insurance.
Mobile, Manufactured, or Modular
Homeowners often mistakenly refer to mobile, manufactured, and modular homes interchangeably. However, insurers view them as separate entities and may or may not insure each type of dwelling.
Mobile homes and manufactured homes are pre-built, movable dwellings built on a chassis. Those built before 1976 are mobile homes, while later models are manufactured homes. The primary difference for insurance companies is that the HUD code governs manufactured homes to ensure that they are of higher quality. Since they are built to less exacting standards, some insurers do not offer coverage on mobile homes.
When it comes to modular homes, insurance companies simply issue standard homeowners insurance policies, since they are built on a foundation like site-built homes.
Insurance requirements vary by state, but it is required if you finance your home so the debtor can recoup their loan if there is ever a catastrophic loss. If you own your home outright, insurance coverage might be optional but you will probably still want to self-insure in order to protect your investment.
Actual Cash Value
When you buy a policy that pays actual cash value, the insurance company pays what your home is worth, less depreciation. For instance, if you bought your manufactured home for $50,000 five years ago but it’s depreciated by $3,000 each year, the insurance company would pay $35,000 to replace your home if it was a total loss.
Replacement cost coverage pays the value of a new, similar home, even if it costs more. Limitations exist and you would still need to pay your deductible. Premiums are higher for this coverage, too.
Standard Policy Coverage
Typical mobile and manufactured home policies cover most costs associated with sudden events and accidental physical losses, unless they’re specifically excluded in the policy.
Most policies protect you if an event, such as a fire, lightning strike, explosion, or falling object, damages your home. They usually cover acts of vandalism and robbery, as well as damage from ice, snow, and wild animals (see Has Your Home Been Robbed or Vandalized? Here's What to Do First to learn the first steps to take in these events). Some insurers may also require additional policies for wind, hail, or wildfire damage if the mobile home is located in an area that is at high risk for these perils.
Insurers draw distinctions between water damage caused by a ruptured pipe and water damage caused by rising floodwaters and overflowing storm drains. They will cover sudden damage from a burst pipe, but you must buy flood insurance to protect against weather-related flooding (learn more in 5 Water Damage Home Insurance Scenarios: Are You Covered?).
The other structures on your property might be covered as well, including stand-alone garages, storage sheds, or gazebos.
This coverage protects the belongings you keep on your property, such as furniture, clothing, television sets, and household goods.
Liability insurance can protect you if you’re found legally responsible for an accident that causes injury or property damage to a person who doesn’t live in your home. It may cover expenses for medical bills, property damage, lawyer’s fees, and lost wages.
Insurance companies offer many additional options you may want to consider. The following are some of the most common:
Scheduled Personal Property
High-value items such as jewelry, antiques, coin collections, furs, music equipment, and extensive electronics could easily surpass the limits of a standard policy if they are lost, damaged, or stolen. Optional coverage outlines these items specifically and increases your protection (to find out more about these limits to your coverage and how to make up for them, see An Intro to Insurance Sublimits).
This option pays for alternative accommodation and meals if you are unable to live in your home after a loss.
This coverage can ease the burden of restoring your identity if you are ever the victim of identity theft (learn more in Identity Theft Insurance: Is It Worth the Price?).
Many mobile home owners operate hobby farms, ranches, or other small businesses from their home. Additional coverage can protect against liability if someone injures themselves while on your property (find out what are the 4 Essential Types of Liability Insurance Every Business Should Have).
Many insurers offer an endorsement to automatically raise dwelling policy limits at renewal to keep them in line with inflation.
Fire Department Damage
This coverage helps repay the homeowner for the fees charged by a fire department after fighting a fire at the insured dwelling.
Trip collision protects the home while it is being moved from the factory to the homeowner’s location.
Some counties require this insurance. It protects the homeowner from the risk of land movement or collapse due to the presence of underground mines.
Many other options exist, including coverage for appliances, garden equipment, and tools. Mobile home owners should seriously consider earthquake and flood insurance, since neither of these are included in a standard policy. A personal umbrella policy is often a good choice for additional asset and liability coverage as well.
Expect to Pay More
Insurance on a mobile or manufactured home is generally more expensive than a standard homeowner’s policy. This is because insurance companies rely on statistical data for premiums and the data indicates that they’re a higher risk.
Fires cause greater damage in mobile and manufactured homes than they do in traditional homes because the fire spreads more quickly. They’re also lighter than a framed home and more susceptible to wind damage. And since they’re not insulated as well, pipes are more likely to burst and cause water damage. Mobile and manufactured homeowners also file claims for theft more frequently.
Insurers consider your geographic location, the age of your home, and whether you live in the home year-round when they determine your premiums. Your cost also depends on the coverage and deductible you choose and whether you include additional options (find out How Home Insurance Premiums Are Calculated).
Homeowners may qualify for discounts to reduce their premiums. Some insurance companies offer a discount if you’re the original titleholder of your mobile or manufactured home. You may also lower your premiums if your bundle your policy with your auto and recreational vehicle policies. Insurers also often offer discounts if you install a home security system or if you’re over 55 and retired.
Rely on the expertise of a qualified agent or broker. They can help you determine which policy and coverage meets your needs within your budget.