Modular vs. Manufactured Home Insurance

If you own a home, a good insurance policy can provide peace of mind while also assisting you in avoiding devastating financial losses if something goes wrong. Home insurance protects your home, your belongings, and your liability claims, but the policy you require is determined by the type of home you own. Here's what you need to know if you own a modular or manufactured home.

What Is a Modular Home?

Modular homes are constructed in indoor facilities off-site. Each house is built in sections (called modules) that are transported to the construction site and assembled, usually with the assistance of a crane. A modular home, unlike a manufactured home, cannot be moved once it has been assembled. The home, like a site-built (or stick-built) home, is built on a permanent foundation, such as a slab, crawlspace, or basement.

Modular homes can be single-story or multi-story, and their design, features, and construction can be virtually identical to traditional, site-built homes. In fact, modular homes are built to the same building codes as traditional homes.

What Is a Manufactured Home?

Manufactured homes have two distinguishing features: they are built in factories rather than on-site, and they sit on a movable chassis rather than a slab, crawlspace, or basement.

Even though manufactured homes can be moved after the initial installation, the majority of them remain in place due to the high cost of transportation. Manufactured homes are always one story, but they are available in a variety of sizes, including single wide, double wide, and triple wide.

What Is a Mobile Home?

While the terms "manufactured home" and "mobile home" are frequently used interchangeably, they are not synonymous. Both were manufactured in factories and are supported by a movable chassis. The distinction is based on when the house was built.

According to the U.S. Department of Housing and Urban Development (HUD), a mobile home is one built before June 15, 1976, and a manufactured home is one built after that date.

Modular Home Insurance

To protect your modular home investment, you can purchase a standard homeowners insurance policy. Many insurance companies, including State Farm and Farmers, do not even inquire whether the house you're insuring is site-built or modular. Because there are no unique insurance risks for modular homes, the coverages are the same as for traditional homes, and include:

  • Dwelling Coverage—This covers the cost of repairing or rebuilding your home if it is damaged by a covered peril, such as a fire or a windstorm. The physical structure of your home; any attached structures, such as a garage or deck; and any built-in appliances, such as a furnace or water heater, are all covered.
  • Personal Property Coverage—This coverage assists in the repair or replacement of personal property damaged by a covered peril. It usually covers damage and theft, regardless of whether the property is in your home or elsewhere. For example, if you take your laptop on vacation and it is stolen, insurance will cover the cost of replacement (depending on the policy, of course).
  • Liability Protection—This helps pay for medical and legal costs if a household member is found liable for damage to someone else’s property or if a non-household member is injured at your home.  Two of the most common incidents that result in liability claims are falls and dog bites.

HO-3 Insurance Policies

An HO-3, or special form policy, is the most common type of homeowners insurance. These policies cover the home (including modular homes) and personal property against all risks. An HO-3 policy, by default, covers your home for its replacement cost and your personal property for its actual cash value.

HO-3 policies cover losses from any cause that is not expressly excluded in the policy. While that may appear to be all-inclusive, many risks are commonly excluded, including:

  • Animals belonging to the insured
  • Birds, rodents, vermin, and insects
  • Pollutant discharge, dispersal, and seepage
  • Earth tremors (defined as shifting, expanding, rising, contracting, and sinking of the earth)
  • Government action
  • Intentional loss (e.g., arson)
  • Mechanical failure
  • Mold, fungus, or wet rot (unless water accidentally discharges or overflows)
  • Neglect
  • Nuclear hazard
  • Ordinance or legislation (meaning the cost to rebuild a home that has been destroyed, plus the cost to upgrade it to meet current building codes after a covered loss)
  • Power failure
  • The foundation, walls, or other structural elements of a home settle, shrink, bulge, or expand.
  • Smog, rust, and corrosion damage
  • Smoke from agricultural and industrial operations
  • Theft while the house is being built
  • Vandalism or malicious mischief if the home is vacant for more than 60 days
  • War
  • Water damage caused by flooding, sewer backups, or ground seepage
  • Wear and tear

In general, you can tailor your home insurance policy to ensure that you have the coverage you require. You can, for example, add an endorsement to cover an excluded peril, or you can increase your coverage limits if you have, say, a valuable collection of Star Wars memorabilia (say an Obi-Wan Kenobi with a double-telescoping lightsaber and a vinyl-cape Jawa).

Mobile Home Insurance

An HO-7 or a mobile home form policy is typically used to cover mobile and manufactured homes. HO-7s are nearly identical to HO-3s (standard homeowners insurance policies), and they, too, provide dwelling coverage, personal property coverage, and liability coverage.

Even though the two policies are similar, a mobile home or manufactured home cannot be insured with a standard homeowners insurance policy. You must purchase a policy designed specifically for a mobile or manufactured home.

In general, mobile home insurance is more expensive than standard homeowners insurance. This is because mobile and manufactured homes are less resistant to incidents such as floods and fires, are more vulnerable to wind damage, and are more vulnerable to theft and vandalism.

How Much Does Home Insurance Cost?

Whether you own a modular or manufactured home, your insurance costs will be determined by several factors, including:

  • The age, size, and value of the house
  • The value of your personal belongings
  • The physical address of the home (costs are affected by location-based factors such as the risk of severe weather, floods, and wildfires, as well as local crime rates).
  • The materials used in construction
  • Repair and renovation history
  • Existing claims on your home insurance policy
  • Smoke detectors, fire extinguishers, and sprinklers are examples of home safety devices.
  • The security features of the home, such as deadbolts, alarm systems, security gates, and fireproof safes
  • Whether you own or rent the land on which the home is situated (if it is a manufactured home).

The cost will also be determined by the coverage limits and deductibles that you select. Most of the time, choosing lower coverage limits and a higher deductible results in lower premiums. If you choose higher coverage limits and a lower deductible, you will pay more.

The Bottom Line

Your home, personal belongings, and liability claims are all covered by home insurance. You can purchase a standard homeowners insurance policy if you own a modular home. Mobile and manufactured home owners can purchase policies tailored specifically to their needs. A good insurance policy can give you peace of mind and protect you from devastating financial losses regardless of the type of home you own.