Modular homes offer an affordable middle-ground between a manufactured or mobile home and a traditional home built completely on-site. But when it comes to insurance, they’re typically covered using the same kind of policy as a regular house and aren’t eligible for mobile home coverage.
Are All Homeowner’s Insurance Policies The Same?
No, choosing the correct policy is important because each policy has different coverage options. However, the coverages needed for someone buying a modular home are the same as the coverages you need when buying a conventionally built home. There aren’t any special insurance risks for a modular home, but you aren’t exempt from anything, either.
- The value of your home ‐ If your manufactured or modular home is new, you should have a good idea of its value. If it’s not new, there are and/or keep it from depreciating.
- The home foundation ‐ Your rates could vary based on whether your home has a pier and beam foundation or a permanent foundation like a brick or block masonry foundation.
- The location of your home ‐ Your home insurance rates could be higher if you live in an area that has severe storms or other severe weather.
- The year of your home ‐ Your rates can vary by the year your home was built. As a home age, regular maintenance issues come up such as plumbing, electricity, and others. Some insurance companies may offer a new home discount, and some insurance companies may charge premiums as your home ages.
- The amount of coverage ‐ Typically you’re given the option to choose the amount of personal property and liability you would like to cover.
- Liability Coverage
- Personal property coverage is intended to compensate you if your personal items are damaged or suffer a loss.
- Your deductible ‐ With some companies, you have the option to choose the amount of money that you will pay toward home repairs before your home insurance policy is initiated.
HO-3 Insurance Policies
The most common type of homeowners insurance is called an HO-3, or a special form policy. These policies provide all-risks coverage for the home (including modular homes) and personal property. By default, an HO-3 policy covers your home at its replacement cost and your personal property at its actual cash value.
HO-3 policies protect against losses from any cause that’s not specifically excluded in the policy. While that may sound all-encompassing, many perils are commonly excluded, including:
- Animals owned by the insured
- Birds, vermin, rodents, and insects
- Discharge, dispersal, and seepage of pollutants
- Earth movement (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 law (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
- Settling, shrinking, bulging, or expanding of the home’s foundation, walls, or other structural elements
- Damage from smog, rust, and corrosion
- Smoke from agricultural and industrial operations
- Theft while the home is under construction
- Vandalism or malicious mischief if the home is vacant for more than 60 days
- War
- Water damage from flooding, sewer backups, or seepage from the ground
- Wear and tear
In general, you can customize your home insurance policy to get the coverage you need. For example, you can add an endorsement to cover an excluded peril, or you can bump up your coverage limits if you have expensive jewelry, or say, a collection of valuable Star Wars memorabilia.
How Much Does Home Insurance Cost?
Whether you own a modular or a traditional home, your insurance costs will depend on a variety of factors, such as:
- The home’s age, size, and value
- The value of your personal belongings
- The physical address of the home (location-based factors such as the risk of severe weather, floods, and wildfires—as well as local crime rates—affect the cost)
- The building materials used
- History of repairs and renovations
- Existing claims on your home policy
- The home’s safety devices, such as smoke detectors, fire extinguishers, and sprinklers
- The home’s security features, including deadbolts, alarm systems, security gates, and fireproof safes
Whether you own or rent the lot where the home is located (if it’s a manufactured home)
The cost will also depend on the coverage limits and deductibles you pick. Most of the time you pay less if you choose lower coverage limits and a higher deductible. Conversely, you pay more if you elect higher coverage limits and a lower deductible.
