Manufactured homes, also known as mobile homes, are dwellings built in pieces then assembled in another location. Unlike motor homes, mobile homes do not have an engine and cannot be driven. They also do not sit on a foundation, which differentiates them from traditional homes and is the reason mobile homes have their own specific insurance policy. Below we'll will explain what mobile home insurance covers and how to shop for the best policy to suit your needs.
Everyone who owns a mobile home needs to consider purchasing an insurance policy to cover it, especially if they cannot afford to replace it out-of-pocket. Although mobile homes generally depreciate in value (unlike a standard home which appreciates), it is still important to protect that purchase. While manufactured homes are less expensive than other homes, they are sizeable purchases.
The average sales price for manufactured homes in 2013 was $64,000, according to the Manufactured Housing Institute, and most people who purchase them simply cannot afford the financial risk they incur without insuring it. More than 84% of those who purchased a mobile home in 2012 were below the median household income in the U.S. of $53,046. The out-of-pocket cost to replace the manufactured home would likely have a serious impact on their lifestyle.
Remember that like homeowners insurance, mobile home insurance also covers personal belongings, liability and additional living expenses in the event the mobile more becomes uninhabitable. These are coverages we also recommend everyone consider having and are included in both types of policies.
Both mobile home and homeowners insurance cover the structure itself, personal belongings, liability and additional living expenses. However, there are some differences between the coverages. The most significant is the type of coverage for the structure.
Coverage: For example, almost every homeowners insurance policy covers the replacement cost value of a home, which is the cost to build that same house in place of the existing one. Remember, this is the cost of materials and labor - not the market value of the property which includes the value of the land. The mobile home insurance market is a little different. Mobile home policies typically provide a standard cash value coverage, but offer replacement cost coverage as a purchasable option. We strongly recommend that mobile home owners consider the replacement cost value coverage option, since the increased cost is minimal relative to the benefit.
Due to the higher risks of perils, some companies sell manufactured home insurance in some states but will not offer replacement cost value coverage in them. For example, Assurant does not offer replacement cost coverage in Alabama, Maryland, Minnesota, South Carolina and Virginia. Mobile homes that are rented or occupied seasonally are also frequently ineligible for replacement cost coverage.
Mobile home insurance also covers personal property and attached structures the same way homeowners insurance does. Both types generally cover personal property claims up to 50% of the replacement cost value of the structure and unattached structures up to 10%. For example, say your mobile home policy has replacement cost coverage for the home up to $70,000. That same policy would cover up to $35,000 in personal property if the terms of the policy stated it covered 50%. Some insurance companies require that a mobile home be tied down to ground anchors in order for coverage.
Perils: A benefit unique to manufactured home insurance policies is that many cover perils that are almost always excluded from standard homeowners insurance. For example, Assurant, a specialty property insurer that provides mobile home policies to other carriers such as Progressive and GEICO, covers earthquakes, floods and damage due to hurricanes. Earthquakes and floods typically require their own policies and, while homeowners insurance will cover wind damage, some policies will require additional coverage for hurricanes or have a separate deductible.
Deductibles: It’s great that mobile home policies can include coverages for perils such as earthquakes and hurricanes, but keep in mind those coverages will almost certainly have their own deductibles. For example, a $64,000 mobile home in California covered by Assurant has a deductible of $500 for wind, hail and floods but a $9,600 deductible for earthquake claims. That might seem like a staggeringly high deductible but that amount is consistent with standalone earthquake insurance policies. The $9,600 deductible represents 15% of the replacement cost value of the example mobile home and other earthquake deductibles are as high as 20%.
Selecting an insurance policy for a mobile home is similar to choosing a homeowners insurance policy. The most important part is shopping around by collecting and comparing quotes from different insurers. We recommend gathering at least three quotes to compare - unfortunately, mobile home quotes are not as accessible as others online.
For example, two of the largest insurers, Progressive and GEICO, offer mobile home insurance through Assurant, which can deliver quotes online. However, other companies with large market shares require shoppers to provide information and then prompt them to contact the company. No matter the means, once you’ve collected at least three quotes you can begin deciding which policy might be the best for you if affordability is a priority.
|Major Home Insurance Companies||Getting A Mobile Home Insurance Quote|
|American Family Mutual||Agent|
We obtained several quotes for a sample mobile home unit to see how much coverage could cost. We found that the average cost of mobile home insurance was between $250 and $500 per year, but they can be more and less expensive depending on the mobile home, location and other factors. The quotes you receive might differ from one another but do not simply choose the least expensive policy - it might not the best fit for your needs. There are a number of other things to consider when choosing a manufactured home policy including the deductibles, ability to pay your premium in installments, the claims process and agent interaction.
The premium is typically paid annually for each coverage period. However, if you cannot reasonably afford an annual premium, and need to initiate your coverage, some companies allow policyholders to pay installments. It will cost you slightly more in the long run but there is no sense in paying a $500 premium if it will leave you financially vulnerable otherwise. For example, if you pay your annual premium and get manufactured home coverage, it’s useless if you can’t afford your deductible (at least $500 depending on the claim).
The deductible belonging to each policy is something you need to compare, in addition to the annual premium. Since some mobile home insurance companies include coverage for perils such as earthquakes and floods, small differences in deductibles could be big savings down the road. Consider this: If you have a $64,000 mobile home and a policy that covers earthquake damage your deductible is likely going to be between 10% and 20% of replacement cost value. That means at 10% your deductible might only be $6,400 while at 20% it would be $12,800.
Mobile homes rose in popularity in the U.S. during the Great Depression, when many sought affordable housing. Over the decades that followed, a high number of mobile home-related injuries and deaths occurred due to poor mobile home construction and defects. This prompted passage of the Federal Manufactured Housing Act by Congress in 1974, which established construction and safety regulations.
As of the Federal Manufactured Housing Act of 1974, all manufactured homes were known as such, though they are very commonly still referred to as mobile homes.