Insurance is a necessary expense of home ownership, offering a way to repair or rebuild your home if it’s destroyed by natural or man-made disaster. But what happens when your home has specific coverage issues because of the way it’s built?
Are modular homes more expensive to insure?
According to the Manufactured Housing Institute, modular homes are one of the fastest-growing sectors of the construction industry. But because of their portable nature and other factors, you may pay slightly more to protect your investment.
With that being said, coverage options for these types of homes are standard fare and offered by well-known insurance companies like Progressive, Allstate, State Farm, Liberty Mutual, and many more. These days, they also feature easier-to-read language and a flexible policy structure.
But is it true that insurance to protect your modular home should cost more? The question is straightforward, but the answer is more nuanced. Like other insurance policies, it depends.
What’s the difference between a modular / mobile / manufactured home?
The key difference in prefabricated housing lies in the construction.
In choosing to build a modular home, homeowners target what the builders are good at, i.e. framing. This means a factory will build the home in sections, or modules, before transporting it to a final destination where it can be assembled.
Once the modules are set (and placed on a crawl space, basement, or slab), the builder comes in and finishes all remaining items. The home is also built to the state or regional code where it will be located.
Whereas most people think of mobile homes as those resembling more of a camper or trailer that can be easily moved, the very definition of a mobile home refers to prefab homes built before 1976 and not built to a uniform code. Manufactured homes are those built after that time and under a tougher set of standards.
Today, manufactured homes are factory-built and are not really mobile. They’re generally meant to be moved just once — from the factory to their final destination.
Modular home insurance basics
With figuring out the mortgage and property taxes, new homeowners already have a lot on their minds. Homeowners insurance is probably an afterthought for many, yet it remains the most important purchase you can make before closing.
Insurance not only covers the structure of your home and your personal property, but it also limits your liability for injuries to others while they’re on your property. More importantly, insurance satisfies your mortgage lender, which requires you to have a policy as long as you have a mortgage and list them as a mortgagee.
If you’re considering a modular home, here’s a breakdown of the standard coverages in a policy, according to the National Association of Insurance Commissioners:
This covers any damage to the physical structure of the home and to attached structures, such as the garage.
This covers a fence, shed, freestanding garage, or any structure not attached to the home.
This covers the value of your possessions, such as furniture, clothing, appliances, electronics, and more.
Loss of use
This pays for expenses incurred while your home is under repair.
This pays medical bills or covers any financial loss if you are found responsible for injuries to someone else while they’re on your property.
What’s unique about insuring a modular home?
Modular homes are constructed with standard building materials and are as strong and sturdy as any other type or quality of home available to buyers. The construction process allows for the same customization you would find in a site-built home, such as vaulted or trey ceilings, top-of-the-line kitchens, and baths, or working fireplaces.
The biggest difference when it comes time to insure the home is the type of policy form you’ll need. The type of home you’ll be living in — in this case, a modular home — will determine this.
Modular home insurance is known as an HO-7 policy and specifically covers manufactured homes. HO-7 policies are virtually identical to standard homeowners insurance policies (known as HO-3s).
The cost will depend on certain factors, such as:
- The materials used
- The physical address where the home is located
- Weather risks in the geographic area
- The home’s size and value
- The crime rate in the neighborhood
- If your policy is bundled with other policies through the same insurer
- The coverage limits and deductibles you select
What’s not covered when you insure a modular home?
Modular homes are fresh from the factory, and for that reason, insurance policies won’t provide coverage for when parts of the home are in transit. It also won’t cover defective construction or design.
There may be additional policy exclusions, such as vandalism or damage to the home while it’s under construction.
Even the best home insurance policies won’t cover everything, and getting the best protection definitely takes some research. But one myth we can shoot down is this: modular homes cost more to insure because they’re just not great quality.
That is simply not true.
Over the last few decades, modular home manufacturers have upped their game considerably, offering many new design capabilities and amenities. Manufacturers of modular homes also use the latest high-tech advanced systems and machinery to ensure the highest possible quality of workmanship.
Modular home builders must adhere to state and local building codes and their products are constructed of the exact same materials found in site-built homes. They also go through a meticulous inspection process.
Your modular home won’t be more expensive to insure based strictly on the fact that it’s a modular home, and buyers who work within that concept to build a home shouldn’t be concerned about unreasonable costs related to homeowners insurance. You may even come out ahead, with the insurance company appraising the home for more than what you spent to build it.
If you have concerns, talk to an insurance agent who can provide personalized service and support throughout the process. You can customize your policy to get the coverage you need without spending much more than you would for standard homeowners insurance.