A residential property built in a factory and then moved to a site either as a complete piece or in separate pieces is known as “manufactured housing.” Manufactured homes range in size from 500 to 3,000 square feet.
They are popular choices for many homebuyers because they are not as expensive as traditional homes.
Home insurance is required for manufactured homes just as much as it is needed for traditional housing. Homeowners’ insurance protects your home and your personal possessions. If you intend to get a mortgage to purchase a manufactured home, you need to provide proof of insurance. Find out further details about standards coverage for manufactured homes in the following handy guide.
Learn About Basic Manufactured Home Insurance Policies
Home insurance policies for manufactured homes consist of basic protections for the whole of your home and your belongings. As with any type of insurance policy, it is subject to standard exemptions and strict limits. Typically, homeowners’ insurance for manufactured homes provides coverage for:
- Your Home: A standard home insurance policy for a manufactured housing unit protects both the interior and exterior of the property against damage from eligible incidents, such as fires, explosions, landslides, lightning, theft and vandalism.
- Your Possessions: Personal belongings include furniture, clothing, books and memorabilia. Generally, personal possessions are covered up to a standard cap for the category or a dollar limit. Some policies even cover your belongings while you are traveling.
- Personal Liability: This protects you, your family and any guests to your home in the event someone is injured on your property. Personal liability insurance pays compensation for medical and legal bills. Sometime this type of coverage extends to persons who are injured off-site of your property, if a person is injured by the property owner, a member of his or her household or his or her pet.
- Additional Living Expenses: This provides funds for the cost of living in the event you need to temporarily live elsewhere because the damage to your manufactured home is too severe to allow you to remain in residence.
Each of these coverages are subject to reimbursement caps and limits. Before you decide on an insurance company and policy, be sure to carefully review your options. You need to determine you are choosing the appropriate coverage for your personal situations.
Learn About Actual Cash Value vs. Replacement Value Coverage
There are three standard policy options for owners of manufactured homes who want to insure their personal belongings. Insure your possessions at an actual cash value, a replacement value or an extended value. An actual cash value policy covers your possessions at the present depreciated value of the item.
This means you receive compensation for the resale value of an item. For instance, if you originally bought a couch for $500, its value will have depreciated over the years. It could therefore only be worth $300 for reimbursement under an actual cash value policy.
If you get a replacement cost policy, you receive full compensation for the same couch: its original $500 price tag. Though this policy costs more than the other, it is worth it in the eventuality something terrible happens.
An extended value policy insures your personal possessions up to 25 percent more than their replacement value. Theoretically, this means the $500 couch could be worth a payout of $625 in the event of it being damaged or lost.
An extended value policy protects your belongings against inflation. Because prices rise over time, you often need more money to replace an item than you required years ago when you first bought the item. If you plan to live in your manufactured home for a long time, an extended value policy is worth obtaining.
What do insurance policies for manufactured homes not cover?
As with other home insurance policies, standard homeowners’ policies for manufactured homes typically do not cover damage to your property caused by floods, earthquakes and other catastrophes. In insurance terms, these types of events are known as “acts of God.” Human-caused disasters are usually exempt from standard homeowners’ insurance policies as well.
Some home insurance policies restrict coverage to your manufactured home only. This means other independent constructions like non-attached sheds, garages and barns are not covered by your policy. Standard policies also generally lack in coverage for sewage backups and water damage. It is therefore advisable to get additional coverage for such specific incidents.
Learn About Standard Homeowners’ Insurance vs. Manufactured Home Insurance
Due to manufactured homes being constructed differently and having alternative foundations to traditional properties, they are sometimes disqualified from standard homeowners’ policies. If this is the case for your home, you need to seek specific coverage to protect your property. In addition, the insurance rate for a manufactured housing unit depends on your home’s cost, location, condition and other factors.
If your manufactured housing unit was previously owned, the availability and cost of an insurance policy for the home could be impacted by the previous owner’s history of insurance claims. If your manufactured home is brand-new, you may need to buy transportation insurance. This provides coverage for your home while it is being transported to the site and during its construction on-site.
Manufactured homes have some aspects that do not apply to traditional housing. For instance, most policies for manufactured housing address issues like matching side endorsements.
This covers the partial loss of home siding when it is no longer possible to get replacement siding that matches the rest of the manufactured home. This means homeowners and insurers would need to determine whether to use mismatched siding or re-side the entire home.
The value of a manufactured home depreciates more than a traditional property, although this depends on factors like the construction and style of your home. A depreciating property means the potential levels of compensation drop over time. Due to the depreciation rate of many manufactured homes, not all major insurers offer homeowners’ insurance policies for a manufactured home. You therefore need to shop around.