How Does Insurance Work for Modular Homes?
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Modular homes offer an affordable middle ground between a manufactured or mobile home and a home built completely on-site. But when it comes to insurance, they're typically covered by the same policy as a traditional house and aren't eligible for mobile home coverage. This works to a modular homeowner's benefit, as regular homeowners insurance is much more affordable.
How does a modular home differ from a manufactured (mobile) home?
Modular homes are commonly associated with manufactured homes, but their only similarity is being built in a factory. While a manufactured home — also called a mobile home — is completely finished in the factory and delivered in one piece, though, a modular home is shipped in sections and assembled on-site.
A modular home is far more customizable than a manufactured home and has much more in common with traditional homes. Modular homes and homes built on-site must meet the same building standards, which vary by state and county. (Many states use the International Building Code, or IBC, to set the standard).
In many cases, it's difficult or impossible to tell that a modular home was built in a factory. The only guaranteed identifying mark is a small metal tag or sticker somewhere in the modular home, often under the kitchen sink. In contrast, manufactured homes are subject to the federally controlled US Department of Housing and Urban Development (HUD) building codes for manufactured homes.
Differences between modular and manufactured homes
Common characteristics of modular homes | Common characteristics of manufactured homes |
|---|---|
| Delivered to the property in multiple pieces | Delivered to the property in one piece |
| Typically built on a slab or over a crawl space or basement | Typically built on a metal frame, sometimes with wheels |
| Look like a regular home | Often look boxy or like a trailer |
| Maintain value about on par with a regular home | Depreciate in value over time |
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What type of insurance do I need for a modular home?
If you live in a modular home, you'll need a standard homeowners insurance policy. This is the same as you'd get for a traditionally built home, with similar rates. This is because insurance companies consider modular homes the same as site-built homes.
For example, State Farm and Farmers don't even ask if your house is traditional or modular when getting a homeowners insurance quote.
Homeowners insurance for a typical site-built house is usually cheaper than coverage for a comparable manufactured home. That holds true for a modular house as well.
Modular home insurance coverages
The coverages needed for a modular home are the same as the coverages for a conventionally built home. There aren't any special insurance risks for a modular home, but you aren't exempt from anything, either.
Dwelling, personal property and liability protection are available, as are add-ons you might need. That includes things like umbrella insurance or extended coverage for valuables like jewelry.
Dwelling coverage: Dwelling coverage pays for repairs to the structure of your modular home if it's damaged. This includes the exterior and interior walls, roof and internal home systems, such as wiring, plumbing and heating. In the most common type of homeowners insurance, (HO-3), your dwelling is protected against "open perils," which means your coverage only has a few named exclusions, such as war.
Personal property coverage: Personal property coverage pays to repair or replace your personal property if it's damaged or lost due to a covered peril. Damage and theft are typically covered, whether the property is in or outside of your home. However, for a standard (HO-3) homeowners insurance policy, you're only covered if the damage is due to a named peril, such as fire or wind.
Liability protection: Liability protection covers medical and legal expenses for other people. The most common scenario for a liability claim is if someone is injured on your property, such as from a fall or dog bite.
Additional living expenses: Additional living expenses (ALE) coverage, also called loss of use coverage, pays for extra expenses if your home is uninhabitable. For example, if your house caught fire, ALE coverage would pay for a hotel room until your home could be lived in again.
Other coverages: There are many other protections available for modular homeowners insurance, such as coverage for a detached building (like a garage), debris removal and identity theft protection. Availability varies by company, so you may need to check with multiple companies if there is a specific coverage you need.
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