Modular vs. Manufactured Home Insurance

If you own a home, a good insurance policy can provide peace of mind and help you avoid devastating financial losses if something bad happens. Home insurance covers the home, your belongings, and liability claims, but the policy you need depends on your home type. If you own a modular home, a standard insurance policy should suffice, but if you own a manufactured home, you will need a special policy.

What Is a Modular Home?

Modular homes are built off-site in indoor facilities. Each home is built in sections (aka modules) that are transported to a building site and assembled, usually with the help of a crane. Unlike a manufactured home, you can’t move a modular home once it’s been attached to a permanent foundation, such as a slab, crawlspace, or basement—just like a site-built (or stick-built) home.

Modular homes can be on a single level or have multiple stories, and they can be virtually indistinguishable from traditional, site-built homes in design, features, and construction. In fact, modular homes are built to the same building standards as site-built homes. 

What Is a Manufactured Home?

Manufactured homes have two defining characteristics: They’re built in factories instead of on-site, and they sit on a movable chassis instead of a slab, crawlspace, or basement.

Even though manufactured homes can be moved after the initial installation, most stay put because they are expensive to transport. Manufactured homes are always one story, but they come in several sizes, including single wide, double wide, and triple wide. 

What Is a Mobile Home?

While the terms “manufactured home” and “mobile home” often are used interchangeably, they do differ. Both have been built in factories, and both rest on a movable chassis. The distinction comes down to when the home was built.

The U.S. Department of Housing and Urban Development (HUD)’s Manufactured Home Construction and Safety Standards were established on June 15, 1976. So, mobile homes built before that date do not meet HUD’s standards for manufactured homes. 

Modular Home Insurance

If you own a modular home, you can buy a standard homeowners insurance policy to protect your investment. Because there aren’t any specific insurance risks for modular homes, the coverages are the same as those for a traditional home, including:

• Dwelling Coverage: This helps pay to repair or rebuild your home if it’s damaged by a covered peril, such as a fire or wind storm. The coverage applies to the physical structure of your home; any attached structures, such as a garage or deck; and any built-in appliances, such as a furnace or water heater.
• Personal Property Coverage: This helps pay repair or replace personal property that’s damaged by a covered peril. It usually covers damage and theft, whether the property is in your home or somewhere else. For example, if you take your laptop on vacation and it gets stolen, insurance would cover the loss (depending on the policy, of course). 
• Liability Protection: This helps pay for medical and legal costs if a household member is found liable for damage to someone else’s property or if a non-household member is injured at your home. Falls and dog bites are two of the most common incidents that trigger liability claims.

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, say, a collection of valuable Star Wars memorabilia (say an Obi-Wan Kenobi with a double-telescoping lightsaber and a vinyl-cape Jawa).

Mobile Home Insurance

Mobile and manufactured homes are typically covered with an HO-7 or a mobile home form policy. HO-7s are virtually identical to HO-3s (standard homeowners insurance policies), and, just like HO-3s, they provide dwelling coverage, personal property coverage, and liability protection.

Still, even though the two policies are similar, you can’t insure a mobile home or manufactured home with a standard homeowners insurance policy. You must buy a policy that’s specially designed for a mobile or manufactured home.

Mobile home insurance is generally more expensive than standard homeowners insurance. That’s because mobile and manufactured homes are less able to withstand incidents such as floods and fires, more susceptible to wind damage, and tend to be at a higher risk for theft and vandalism.

How Much Does Home Insurance Cost?

Whether you own a modular or manufactured 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.

The Bottom Line

Home insurance covers your home, personal belongings, and liability claims. If you own a modular home, you can buy a standard homeowners insurance policy. Mobile and manufactured homeowners can buy similar policies that are designed specifically for these types of homes. No matter what type of home you own, a good insurance policy can give you peace of mind and protect you from devastating financial losses.