Standard Manufactured Home Coverage

The term “manufactured housing” refers to any residential building that is built at a housing factory and then moved, whole or in pieces, to the housing site at which it will be installed.

Manufactured or modular homes range in size from 500 square feet to more than 3,000 square feet. This style of housing is often attractive to buyers because manufactured homes tend to be less expensive than comparable “stick built” housing.

Owners of manufactured homes require homeowners’ insurance just as the owners of “stick built” homes do. Regardless of the type of housing one owns homeowners’ insurance provides essential protection against damage to property, personal possessions and the house itself. If the owner of a manufactured home wishes to take out a mortgage on his or her land and house, proof of insurance is generally required by the company issuing the mortgage.

Basic Manufactured Home Insurance Policies

Homeowners’ insurance for manufactured homes is intended to provide coverage that encompasses basic protections for the whole of a policyholder’s home and property. Like all insurance policies, it is subject to firm limits and standard exemptions. Owners of manufactured homes can expect coverage for:

  • Their homes. Insurance policies for manufactured homes protect both the inside and outside of insured homes against most forms of damage resulting from qualifying events such as fires, landslides, explosions, vandalism or theft, lightning strikes and storms and their aftermath (e.g. accumulated snow or ice).
  • Their belongings. Personal belongings, including clothing, consumables, furniture and memorabilia are generally covered up to standard category caps or total dollar limits. Some policies extend this coverage to policy holders’ belongings even when they are not on site, such as when the policy holder is traveling.
  • Personal liability. Liability coverage protects homeowners and their families in the event that a guest, visitor or service provider is injured in their home and sues for coverage of their medical expenses related to the incident. In most cases, this coverage extends to injuries sustained by others off-site (e.g. not on the homeowner’s property) if the homeowner, a member of his or her household or his or her pet is determined to be the (unintentional) cause of the injury.
  • Additional Living Expenses (ALE). ALEcoverage provides additional funds to cover the costs of living off-site for a period of time in the event that a house or property becomes too damaged to live in and the family must temporarily reside somewhere else while it is repaired.

Each of these aspects of coverage will be subject to limitations and reimbursement caps. Owners of manufactured homes should carefully review their options before deciding on an insurer and policy to verify they are selecting coverage appropriate to their needs in each category.

Actual Cash Value vs. Replacement Value Coverage

Owners of manufactured homes may choose standard policies that insure their belongings at their actual cash values, their replacement values or their extended values. Actual cash value policies will cover policy holder’s belongings at whatever the current depreciated or resale value of the item is. For example, a couch originally purchased for $600 that has depreciated for several years might qualify for up to $400 worth of reimbursement under an ACV policy. Under a replacement cost policy, that same couch would qualify for the full $600 it originally cost.

Extended value policies allow homeowners to insure their belongings for up to 25 percent more than their recorded replacement value. Using the previous example, then, a couch purchased for $600 could theoretically be insured for a payout value of up to about $750. Extended value policies are designed to protect homeowners against the costs of inflation since, as prices increase over time, owners can expect to need more money to purchase the same type and qualify of item they had previously. Extended value policies are generally recommended for homeowners who expect to remain in their homes for a long period of time.

What do insurance policies for manufactured homes not cover?

Standard insurance policies for manufactured homes, like most insurance policies, generally do not cover damage to homes or properties from flooding, nuclear attacks, earthquakes and other commonly exempt catastrophic events. These events may be referred to in insurance polices as “acts of God.” Human-initiated disasters, such as terrorism, are also generally exempt from coverage.

Some policies may restrict coverage to the home only, excluding independently constructed, non-attached garages, sheds, barns or other structures. Owners of manufactured homes are strongly advised to review their policies’ protections against water damage and sewage backups, as policy coverage in these areas is commonly and notoriously lacking. Homeowners who desire additional coverage or better coverage for these incidents may need to specially request it.

Standard Homeowners’ Insurance vs. Manufactured Home Insurance

Although manufactured homes need to be insured against the same threats as “stick built” houses, their different construction and the differences in their foundations (or lack of foundations, in many cases) can sometimes disqualify them for standard homeowners’ insurance policies. Like homeowners’ insurance, manufactured home insurance availability and rates may be influenced by the home’s location, cost, condition and other factors.

If a manufactured home was previously owned, the former owner’s history of insurance claims may impact the availability and pricing of insurance policies for future property owners. If the house is newly constructed, owners may be required to purchase transportation insurance for its delivery and setup on site.

Some aspects of manufactured housing insurance do not come standard in traditional homeowners’ insurance. For example, most manufactured housing insurance policies will address issues such as Matching Siding Endorsements which do not come up in more traditional housing insurance policies. Matching Siding Endorsements address the issue of a partial loss of home siding in circumstances in which is no longer possible to get siding that matches the rest of the house, forcing homeowners and insurers to decide between mis-matching siding or residing the entire residence.

Depending on the style and construction of a manufactured home, its value may be subject to depreciation over time in the eyes of the insurance company issuing the homeowner a policy. This can present a serious challenge, as potential payout levels will drop as time goes on in alignment with the insurer’s calculations of the home’s depreciating value. In part because of this perception that some forms of manufactured housing lose value over time, not all major national insurance companies offer manufactured home insurance policies.

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