This is current as of March 1, 2015. It may vary by date and region in the US.
Do I need to get insurance?
How much exposure do you want? If you have a loss, or theft, you must pay for it out of pocket or have insurance.
If I have an uninsured property and have a fire causing a total loss. What happens?
You cannot haul a burned out unit down the road. It must be demolished and disposed of. Unless the park gives you a rent waiver, you will probably continue to pay rent until corrected or removed. Costs can be $2k to $3k or more in demolition labor, hauling and dump/recycle fees.
What kinds of insurance are there and what do I need?
Types of Insurance of Interest to Manufactured Homes
- Homeowners – Typical insurance for Homeowners. Covers the home and contents.
- Landlord and Commercial Rental – Covers the home but NOT contents. This is for coverage to protect the owner. Either landlord renting the property or lienholder if financing the property. NOTE: Many insurance companies don’t cover while rehabbing a property if it’s empty for a period of time.
- Renters – Covers contents usually for $20k or more. Renters and Tenant Buyers must carry this to be covered in the event of a loss.
- Umbrella Policy – You can opt for additional coverage to cover your business AND properties. Some companies allow you to move properties in and out of coverage as your needs change. Speak to your agent about options and pricing in your area.
- Home Warranty – Appliance, Heater, AC, Plumbing coverage. Most properties we deal with are used. If something goes out, this coverage will pay to fix it.
What Can You Do?
To protect against loss, you can insure your properties through several companies. Depending on your state, companies differ. They can include 21st Century, Farm Bureau, Nationwide, Progressive, Geico, Foremost and others.
Foremost, a subsidiary of Farmers Insurance, is very common, has good rates and covers most, or all, of the US.
They cover homes for 100% of what you insure them for. That means if you have $20k coverage. It’s covered for $20k. I get full coverage with $100 deductible for loss. So if a total loss, you would receive a check for $19,900.
This also includes $500k liability. So, if you have a loss that affects any neighbors’ properties, you are covered up to $500k.
There is no depreciation, wear and tear, comps needed ‘to prove value’, etc. You would get a check for the covered value minus the deductible.
We carry coverage for the value, or sales price, with a $100 deductible for damage or theft. $500k liability. I drop the coverage when someone buys for cash, and my agent calls them to write them a new policy, if they want. Or we keep the coverage on the unit, while the Tenant Buyer (TB) is making payments. To insure that the TB has renters insurance, I pay it up front and charge them monthly for the insurance.
Commercial Rental = $35/mo plus Renters = $15/mo. Total $50/mo. The Tenant Buyer pays an extra $50/mo for insurance. If they bought a home through a bank, they would pay for insurance. They need to pay with you, also. They can get their own insurance through an agent of their choosing. Since we have several properties with one agent/company, they will get a discount by going through my agent. It’s their choice, though.
If you cover a property for $10k, while repairing it, and then sell it for $20k, just call your agent and adjust the coverage.
If There is a Loss, What Happens?
NOTE: I have not had a loss or theft on a mobile home. I have not needed to make a claim. This info is according to agents I’ve spoken with, worked with and research I’ve done.
If there is a loss, an adjuster would come out to evaluate the damage. If/when approved, you receive a check.
If the TB gets their own insurance, make sure they add you as an ‘Additional Insured” and get a copy of the proof of insurance form or binder. A Binder is the proof of coverage papers from insurance companies. You got one with your car or home insurance. Verify that your name is on it as additional insured.
If there is a loss, the check comes to you, AND the TB. If you are an Additional Insured, both the TB’s name and your name are on the check. Both parties must sign. TB cannot cash it without your knowledge.
If there is a major loss and the TB receives the check, do you think they would fix the home or use the money to move? Who knows? Why risk it, keep it in your name or as an additional insured.
NOTE: While fixing up a property. If you have materials at the home for repairs, keep receipts and take pictures of the project in progress, every couple days. This serves 2 purposes. It documents your project and if there is a theft, you have proof that the materials were there.
How much does it cost?
At the time of this writing, approximately $30/mo for $20k coverage. Again there are regional differences.
I called an agent and was told that they won’t cover the home while I’m fixing it up i.e. rehabbing or while it’s empty.
Ask for a ‘Commercial Rental’ policy. Foremost has that. If another company does not, you can call Foremost. Most Farmer’s agents (not all) carry Foremost. And they won’t want it empty over several months.
Fix it quickly and get it sold, right?
What About The Appliances, Heater, Plumbing, etc.?
What if after 2 months, the TB calls and says the heater went out? I don’t want to pay $1500 to replace it. If they do the repair, they may say they can’t make their monthly payment.
You can add a Home Warranty for approximately $400/yr. Again, check in your area. If anything goes wrong there is a $45-$60 deductible and the item gets fixed or replaced. Heater, dishwasher, fridge, etc. One that we sold in Sept 2014, the lady called us on the heater. We had the warranty on the home. She had called the home warranty company and they fixed it for $60. Peace of mind.
We buy the policy from First American for Washington state and transfer it to the TB if they buy for cash. TB calls if they have an issue. First American has a $60 deductible.
Or keep in your name if TB is on payments. Works the same for repairs. You’ll have to make the service request call, instead of the TB. This way you are in control and know what issues come up, when the home is still on payments.
In Idaho, we used Choice Warranty with a $45 deductible. They aren’t available in Washington, where we are now. Check in your area.
Different areas have different rates and deductibles. They may charge more for Central Air Conditioning.
NOTE: To my knowledge, none of the companies will cover roofs.
But That’s an Added Expense
What if I don’t want to incur the added cost of insurance or home warranty?
Either cover it for your peace of mind. Or – Give the TB the option and add it to the payments. $35-$50/mo for their peace of mind. If anything goes wrong they, and you, are covered.
NOTE: Thank you to John Fedro for the tip of adding it to the monthly payment.
Here is one review for companies who provide Home Warranties for Mobile Homes. Not the final word, but may help in your search. Try searching Google or Bing for ‘home warranty for mobile homes’ for an agent near you. Get a couple prices. We used Choice Warranty in Idaho.