What Type of Insurance Do You Need for Modular Homes?
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A modular home can be an affordable way to get the custom home of your dreams in a location where on-site building is difficult or cost-prohibitive. But just like with a traditional home, once you’ve got your dream house, it’s important to protect it with homeowners insurance.
Here’s what you need to know about modular home insurance:
What is a modular home?
A modular home is a type of home that’s built in a factory and then assembled on the permanent site. Modular homes are typically lumped together with mobile homes and manufactured homes, but they’re quite different.
Modular homes are permanently affixed to the foundation they’re placed on and are typically much larger. These homes are made of several pieces that are transported separately and come together on site.
Meanwhile, a mobile or manufactured home is built according to standards set by the U.S. Department of Housing and Urban Development (HUD) and usually isn’t permanently affixed to the site it’s placed on.
Modular homes are a popular option for people looking for custom layouts or architectural styles that can be difficult or expensive to build on site. They’re becoming an increasingly popular option for sustainably built and self-sufficient homes, as they can be built while producing less waste in a factory than traditional site-built homes do.
What type of homeowners insurance policy do I need for a modular home?
Modular home insurance policies are the same as those for traditionally built homes. This means that you have many types of homeowners insurance to choose from, depending on the coverage level you need.
You might consider getting one of the following policies:
- HO-1 (basic form): This policy provides bare-bones coverage for certain named perils (events that can damage your home).
- HO-2 (broad form): An HO-2 policy is similar to an HO-1, but it covers more perils.
- HO-3 (special form): This is the most common policy and provides a higher level of coverage. It protects your home against all perils, except those specifically named in your policy.
- HO-5 (comprehensive form): An HO-5 policy covers (almost) everything, but it also comes with higher insurance premiums.
What does modular home insurance cover?
Modular home insurance has the same coverage as home insurance for traditionally built homes. What your specific home insurance policy covers depends on the coverage limits you choose and whether you add any additional coverage through riders.
In general, your modular home insurance will cover most types of damage or loss due to accidents, theft, and disasters, with exclusions explicitly listed in the policy.
Your home insurance policy will be separated into six main types of coverage with different coverage limits. The six coverages are:
- Dwelling: Dwelling coverage is for damage and destruction to the home itself.
- Other structures: Other structures coverage is for anything on your property that isn’t attached to your home, like a barn or detached garage.
- Personal property: Personal property coverage is for all your personal belongings.
- Loss of use: Loss of use coverage is for additional living expenses you may have if your home becomes uninhabitable due to a covered peril, such as a fire.
- Liability: Liability coverage helps protect you against lawsuits that may occur because of injuries or property damage that you cause to others. For example, if someone slips on ice in your driveway and falls, liability coverage would help cover your legal expenses.
- Medical payments: Medical payments coverage will help pay medical bills for someone who injures themselves on your property.
Good Read: Is Homeowners Insurance Required?
What does modular home insurance exclude?
Modular home insurance has the same exclusions as a standard homeowners insurance policy. The specific exclusions for your policy will depend on the options you select with your insurance carrier.
However, standard home insurance policies generally exclude damage due to floods or earthquakes. You’ll have to purchase a separate policy or add specific coverage through an insurance rider to protect your home against these disasters.
Other common exclusions in modular home insurance policies include damage from sewer backups, damage resulting from lack of maintenance, and damage caused by an act of war.
How much does modular home insurance cost?
The average cost of modular home insurance is the same as the average cost of standard home insurance, which is $1,278 per year, according to the National Association of Insurance Commissioners. The amount you’ll pay will depend on your specific situation.
Factors that affect the cost of modular home insurance
Modular home insurance rates vary based on several factors, including:
- Location: In general, modular homes in areas with high construction and repair costs will have higher insurance premiums. Homeowners in areas with a high risk of disasters like wildfires and tornadoes can also expect to pay more. Modular homeowners in states with a low cost of living will typically pay less.
- Home size/value: Larger homes with upgraded finishes cost more to insure because they cost more to replace.
- Coverage levels: If you choose a policy with maximum coverage and high limits, you’ll pay more than someone with less coverage.
- Deductible: A deductible is the amount that you’ll pay out of pocket before your insurance kicks in. The higher your deductible, the lower your premium will be. Make sure you actually have the savings to cover your deductible before signing up for a high-deductible policy!
Check Out: How Much Does Homeowners Insurance Cost?
Additional coverage options for modular homes
If your modular home has specialty products or systems that would be cost-prohibitive to repair or replace, consider adding coverage for them through an insurance rider or a home warranty.
The manufacturer of your modular home may have coverage options for you or maintenance plans you can add on when you purchase the home. They built it and will have the most knowledge of how to fix it when something goes wrong. If your modular home includes something like a water reclamation system or whole house battery, a warranty through the manufacturer is a good idea.
Disclaimer: All insurance-related services are offered through Young Alfred.