Are you planning to purchase a mobile home? This is a convenient alternative to more expensive site-built houses. And while many aspects of home ownership for mobile home owners is similar to traditional housing, other aspects can have significant differences.
Homeowners insurance is one of these elements that has both similarities and important differences. To help you choose the right insurance products and coverage, here are a few things you should know about insurance and mobile homes.
1. Not Every Insurer Covers Mobile Homes
To purchase insurance for your mobile home, you may need to shop different carriers than traditional homeowners coverage. This is because not every insurer works with both types of home, particularly for older models of mobile homes. The perception often is that old models are a higher risk for the insurer, so some carriers have exited the market.
Because you will need to shop in a more niche insurance market, work with an experienced insurance agent who specializes in mobile home coverage.
2. Mobile Home Insurance Can Be Cheaper
The good news for mobile home owners is that you likely will get a break on insurance costs. The main reason is one of simple math. Mobile homes tend to cost significantly less than a traditional home of equal age, and even the cost of new mobile homes can be 20% to 40% less than the equivalent size site-built house.
Since insurance coverage is based on the cost or value of the structure, you may pay much lower premiums. The land on which a mobile home sits may also compose a much larger part of the overall real estate value, also making coverage of the structure less expensive than a comparable house.
3. Covered Events Are Often Similar
For the most part, insurance coverage for site-built homes and mobile homes is generally similar. You usually receive coverage for the following hazards:
Physical damage and medical coverage in the event of things like fire, storms, vandalism, falling objects, and burst pipes
Coverage of household belongings regardless of whether they are currently stored in the home
Liability coverage for family members who may be held responsible for damage or injury to others, such as from a dog bite or neighbor dispute
As with other homeowners coverage, though, you may still need riders (additions to policies) or separate insurance for specific hazards. Coloradoans who live in areas with a high risk of flooding may opt to purchase government-backed flood insurance, for instance.
4. You May Need Transportation Coverage
Perhaps the most obvious difference between a site-built home and a mobile home is that a mobile home travels. So if you purchase a new mobile home or move one to a new lot, you'll probably need specialized insurance coverage during transit. Before purchasing such a home, talk with your preferred insurer about how it is covered once you've contracted with the builder or owner and while it is being moved (usually by truck).
Colorado weather can be fickle and treacherous, so ensure you have the right coverage even if the trip is short or in good weather. A home that must travel through the mountains can run into snow and ice closures, delays, and slick roads. Even in the summer, homes traveling to or from eastern plains can run into sudden hail storms, high winds, and even tornadoes — damaging property before it even arrives on your land.
5. Mobile Homes Have Unique Risks
One of the biggest financial risks for those who do purchase good mobile homeowners insurance is the discrepancy between real estate (or market) price and replacement value.
When you buy a home on land, you purchase both elements together as a package. But mobile homes generally cost much less to replace than a traditional home, and so their insurance may be significantly less than what you borrow to buy the package. If your mortgage lender requires insurance that protects the entire mortgage debt, this discrepancy could mean you can't get high enough coverage.
You can find ways to deal with this challenge, of course. Some mobile home policies allow you to set a maximum coverage limit without regard to the replacement cost of the house. You may also be able to over insure the structure in other policies. But the homeowner should discuss this issue with an experienced insurance agent to find the best options if this problem arises.
When you understand what to expect and what challenges you will face insuring your new mobile home, you can make purchases with confidence. Want to know more about your particular home buying plans? Start with a visit to the Colorado insurance pros at L.A. Insurance. Our team will help you find the right policy for all the risks you face. Stop by or call to schedule an appointment today.