Mobile Home Insurance: Do You Need It?

Insurance for mobile and manufactured homes covers the home, your personal belongings, and liability claims, much like a standard homeowners insurance policy. While you are not required by law to insure these homes, mortgage companies and mobile home communities may. Here's a quick rundown of mobile home insurance: what it is, what it covers, and whether you should get one.

What Is a Mobile Home?

In the United States, more than 17.5 million people live in mobile homes, also known as manufactured homes. According to the 2017 American Housing Survey (the most recent available), manufactured housing accounts for about 3% of all housing in cities and 15% in rural areas.

In general, manufactured homes have two distinguishing features:

1. They are manufactured in factories rather than on-site.
2. Instead of a slab, crawlspace, or basement, they are supported by a movable chassis.

Manufactured homes are available in three different sizes: single wide, double wide, and triple wide:

Manufactured homes are energy efficient because they are built in a controlled factory environment. They are easily customizable, with features ranging from vaulted ceilings and sheetrock walls to arched doorways and solid wood cabinetry.

Because of the numerous options available, the process of purchasing a mobile home can become complicated. Mobile home dealers can assist you in navigating the various manufacturers, styles, and sizes in order to find a mobile home that meets your needs and expectations.

What's the Difference Between a Mobile Home and a Manufactured Home?

While the terms mobile and manufactured are frequently used interchangeably, there is a significant difference. According to the United States Department of Housing and Urban Development (HUD), a factory-built home built before June 15, 1976, is referred to as a mobile home; anything built after that date is referred to as a manufactured home. Despite this, the insurance industry still refers to the product as "mobile home insurance."

Federal construction regulations have required minimum construction and safety standards for mobile and manufactured homes since 1976.

Do You Need Insurance for a Mobile or Manufactured Home?

Unless your mortgage company or mobile home community requires coverage, you have the option of insuring or not insuring your manufactured home. According to Homes Direct, a manufactured and modular home dealer, the average cost of a new manufactured home is around $83,000. Given the cost, it is strongly advised that you obtain an adequate policy to protect your home and belongings.

What Does Mobile Home Insurance Cover?

The coverage provided by mobile and manufactured home insurance is similar to that provided by traditional homeowners insurance. And, as with standard homeowners policies, you can personalize your policy by adjusting the coverage limits and adding endorsements, which are another term for amendments or policy changes.

According to the Insurance Information Institute (III), manufactured home policies typically include basic coverage for:

Physical damage

This covers damage to your home, belongings, and other structures (such as an attached deck or an outbuilding) caused by events such as fire, hail, wind, theft, vandalism, and falling objects. According to the III, "The amount and degree of coverage vary from policy to policy, so make sure to carefully compare policies. It's also worth noting that, like standard homeowners insurance, flooding isn't covered. If you live in a flood zone, you can purchase flood insurance separately." The same can be said about earthquakes and wildfires. Consider adding coverage for these natural disasters if you live in a high-risk area.

Personal liability

Liability coverage protects you if a member of your household is found liable for damage to someone else's property or if someone is injured in your home (it does not cover injury or illness for anyone living in the home). Medical expenses, lost wages, and pain and suffering may all be grounds for a claim. According to the III, the amount of insurance required to protect your assets may be greater than what is included in a standard manufactured home policy. If this is the case, you should consider purchasing additional liability insurance.

Named peril policies are another option for coverage. These policies are relatively inexpensive, but they only cover specific causes of loss as specified in the policy. That is, if your home is damaged due to a cause not covered by the policy, you will be responsible for repairing the damage and replacing your personal belongings. Even if you save money on premiums, the additional risks may outweigh the savings.

How Much Does Mobile Home Insurance Cost?

The cost of manufactured home insurance, like that of regular homeowners insurance, is determined by a variety of factors, including:

• The home's value
• The size of the home (its square footage)
• The year it was constructed
• The worth of your personal possessions, including collectibles
• The physical address of the home (location-based factors such as severe weather, flood and wildfire risk, crime rates, and your town's response to these hazards all affect the cost)
• The building materials
• Repair and renovation history
• Existing claims on your home insurance policy
• Whether you rent or own the lot where the home is located
• The presence of safety devices such as smoke detectors, fire extinguishers, and sprinklers in the home.
• Security features of the home, such as deadbolts, burglar alarms, security gates, and fireproof safes

In addition to the features of your home, the cost will be determined by the coverage limits and deductibles you select. Generally, you'll pay a higher rate for more comprehensive coverage with lower deductibles and a lower rate for more basic coverage with higher deductibles. According to TrustedChoice.com, a group of independent insurance agents, the average cost of insuring a manufactured home is between $300 and $1,000.

When shopping for manufactured home insurance, try to find the best combination of coverage and deductibles that fits your budget and meets your insurance needs.

The Bottom Line

While manufactured homes can be pricey (an oceanside double-wide in California recently sold for around $2 million), they generally provide a more affordable path to homeownership than traditional homes.

Regardless of the lower costs, it's a good idea to protect your investment with a comprehensive insurance policy. After all, the premiums you will pay are likely to be a fraction of the costs you would incur if you attempted to repair or replace your home on your own. Rates vary from company to company, so get at least three quotes to make sure you get the coverage you want at a price you can afford.