Ask the expert: Homeowner’s Insurance for Manufactured Homes
For owners and buyers of a manufactured home, there are additional factors when locating an insurance carrier and selecting the right insurance. I am Dominic Corriveau and this is part three of my interview series breaking down complex insurance topics for non-experts.
For this interview, I sat down with Darcey Beck, an agent with Trucordia and a multi-talented insurance professional who works with hundreds of clients to find the best protection for their homes. Finding the right protection for a manufactured home is different than other residential properties and comes with a different risk evaluation. In this discussion, Darcey provides insights into why manufactured home insurance is different and what factors go into finding the right carrier.
Give our discussion a listen, watch the video, or read the full transcript below.
Overview
• How are manufactured homes different? (jump to section)
• What factors do insurance carriers look at for manufactured homes? (jump to section)
• What is fire protection class? How about flood? (jump to section)
• Does living in an HOA or manufactured home community impact insurance? (jump to section)
• What advice do you have for people purchasing existing manufactured homes? (jump to section)
• How is insurance different for a manufactured home versus a mobile home? (jump to section)
Music: “Carpe Diem” Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0/
This transcript was generated using a combination of speech recognition and human transcribers. It has been lightly edited for clarity and general grammar corrections but may still contain errors.
How are manufactured homes different?
Dominic: First topic that came to mind for me was manufactured homes, because I’ve heard sometimes they’re hard to place, there’s only certain carriers that we can place them with, and to be honest with you I don’t know why it is that way. I have some guesses. But how is home insurance for a stick built single family home different to than it is for a manufactured home?
Darcey: A stick built can go with just about any company. A manufactured home, because it has to be built and approved by HUD or a factory, or, you know, the federal government, they treat it a little differently than a normal stick-built. So if you go out and build a house, you’re going to get inspected by the county and the city, et cetera, to make sure that all the permits that you received, all the work is being done as described. Whereas a manufactured home or a mobile home, it’s built in a factory and requires a plate from HUD and the federal government has to approve it and et cetera. So they are homes. Because it’s built differently and approved differently, not all companies just want to play with it.
Dominic: That’s a side I hadn’t thought of. Because when you have a more traditional home build, that means that the city can come by and inspect it at certain phases as it goes through the construction. And so it’s a little bit more hands-on as that construction happens. But because manufactured homes are exactly that, they’re manufactured and then shipped to the location where it would be finally placed on a foundation or a temporary foundation or whatever have you, doesn’t give them the opportunity to be able to do that, but they still need to do that.
Darcey: Correct.
Dominic: So that also changes the risk for the insurance company and how they would insure it because of the manufacturing process, shipping process, and then ultimately where it ends up being placed.
Darcey: Correct. There’s always that argument that a manufactured home is built in a controlled environment, which it is. And while they use very similar materials, they are just a little different than what a stick built house uses. Not a whole lot, because it still is drywall and it still is the framing wood and all of that. But it’s just a little different. But even though it’s built in a controlled environment, indoors, et cetera, because it has to be picked up and put on a truck and maybe it has wheels, or maybe it has a tongue and it has to travel sometimes thousands of miles and it then has to be put on, and there’s just a lot of different work that goes into it versus a stick-built. And it kind of changes the risk just a little bit more.
What factors do insurance carriers look at for manufactured homes?
Dominic: When a carrier is looking at a manufactured home and considering their rates for it, what are, or if they’re going to even cover it at all, what are some of the factors that they look at for a manufactured home?
Darcey: The primary factor is the age, pretty much if it qualifies within the age limit. Like Grange, anything 10 years or newer they’ll accept it. So if it’s 11 years old, Grange won’t take it as new business. So if you get in there at five, you know, you have a five-year-old manufactured home, and you go with Grange and 15 years later you’re still with Grange, they’ll still keep you on the books but you can’t go in as new business as a 15 year old manufactured home. Safeco accepts up to 20 years. Beyond that, the age is not so much a factor when you get into the kind of standard or non-standard markets like Foremost and American Modern cause they’ll still accept it, they have products that are specifically made and tailored for older manufactured homes. So the age is the biggest one. And then kind of the next one is protection class, where it’s located. I mean, if it’s in a protection class 10, some companies won’t even take it at all. At which point, then you have to go back to Foremost or American Modern or Markel, et cetera.
What is fire protection class? How about flood?
Dominic: What does that class mean? What is protection class?
Darcey: Sure. Protection class is your fire protection class. So how far you are from a fire hydrant, from a fire department, or it’s one of the stations. And then how much or how the district that serves your area is built up or how trained, how much equipment they have, how many paid or volunteer employees they have. Like where I’m at in Port Angeles, in city, it’s a protection class four, is that most majority of people that live within the city limits. They have a fire hydrant usually at least at the end of the block, within two miles from the fire station, and they have full fire equipment and the employees of the fire department are paid. So they’re always on schedule. Once you get outside the city limits. Now you’re getting into a higher protection class because the fire district is primarily an all volunteer fire district. And they have pretty much the same equipment as any other fire department, but it may be scattered between a couple of different stations and it may take longer for them to get to your location from wherever that station is.
Dominic: I can see that being a big challenge here in Washington, too. There are so many opportunities to be able to buy a big plot, you put a manufactured home on it. Like here for example, you technically have an Olympia address, it’s in rural Thurston county, you have water and electricity. But you’re way out a rural road that then forks off into a gravel road and there are six or eight different plots down that gravel road. So I’d imagine that’s a pretty common scenario.
Darcey: It is, all over Washington it’s a pretty common scenario. But it’s still doable. Every fire department and every district has its own different ratings. And they go through pretty rigorous assessments from the WSRP or the Washington State Rating Bureau that gives out those protection class numbers. They come in and assess all their equipment, assess, you know, the training that the guys and gals have and how many people are on board working or volunteering, et cetera. So it’s a pretty common thing all across the state. It does matter where your home is.
Dominic: I was just thinking that it’s probably a pretty crucial evaluation because of flood, too, where you could be in a rural area and the flood situation is much different in that part.
Darcey: It can. And flood is a little different because it doesn’t care about fire, it just cares about water. So if you’re right next to a river, Skagit River is a great example as it floods quite often, throughout the years it has. And if you’re a little farther up towards Concrete, there’s a lot of homes that are sitting right on the river that get flooded regularly. Whereas if you live closer to Mount Vernon, unless you’re living in the downtown area next to the river, you’re not at too much of a risk, but you still have that risk of that flood. It kind of depends though. Further you’re out you may not even have to worry about flood because it’s a matter of how close you are to a body of water.
Does living in an HOA or manufactured home community impact insurance?
Dominic: Is there any difference when it comes to placement for the insurance whether if you’re in one of those, like a community, a manufactured community where you technically rent the space where the home is placed?
Darcey: It gives you a discount on some companies if you’re in a community like that. You still own the structure so you’re still insuring the structure as normal homeowners, but some companies do give you discounts for being in a community like that, a homeowners association, or you know, a manufactured home village. They do give you a discount for that. So that’s always a plus. Cause more often than not when people are in those communities, the homes are still well taken care of. But they tend to be, as time goes on, they tend to get older and they are a little harder to place.
Dominic: I saw several of those communities when I lived in Arizona. They were obviously very popular in the ’90s. And then, but now those homes are 30 years old.
Darcey: Yeah, and Arizona’s a good one because they do have a lot of those little communities all over the state around. It’s not impossible to insure them. It’s just you don’t have as many options. The other thing to think about too, is that some companies, they may not care about the age and they’ll still insure it, but if they want replacement costs then it’s dependent upon the age. For instance, none of the companies that we work with, but a couple of the bigger known companies, they’ll insure a newer or older manufactured home, but they’re only going to provide actual cash value. So if that house were to burn down or have a total complete loss, the client’s only going to get the actual cash value of the home. So you might have it insured for $100000. That doesn’t mean that’s what you’re going to get. As opposed to, if you go with our companies, majority of our companies, we have the ability to add replacement costs. And it just gives an extra 10% or 25% onto the value of the coverage. So again, though, if you have $100000 on the home, you have a total loss, you still have the ability to get $100000 to replace it with like kind and quality. You’re not going to be subject to that actual cash value settlement.
Dominic: Actual cash value versus replacement costs, it’s something I talked to Stephen a while back and gave me more clarity around that. Like how big of a deal that can be.
Darcey: Yeah, and it can be, especially on the manufactured home side. Because again, it’s different than a stick built. The value of the home does decrease over time, rather than stick-builts, they tend to increase. If you have an older manufactured home and list it at actual cash value, you might have it insured for $100000 but ACV is only at $42.
What advice do you have for people purchasing existing manufactured homes?
Dominic: Speaking of that, the value of the homes in the last year, there’s been a really bad housing crunch because lots of people want to buy but there’s not that many houses available, getting up on homes. And I understand with new, you would work with the manufacturer out of the gate. And then when you try to place the insurance, that probably all happened right at the very beginning when you decided to purchase a manufactured home. But for people who are out in the market, I think a lot of people found themselves in the last year more and more considering purchasing an existing manufactured home because they couldn’t find anything else. I know my brother went through that process and he’d been on a lot of very old manufactured homes because in his price range, there wasn’t any other options in the market because the housing was being bid up so fast. What should people do who are considering buying an older manufactured home, take into consideration before they get into it when it comes to insurance?
Darcey: Put your expectations of what you want to pay off the table. Because the older homes, again, they can’t go into the preferred markets if you want replacement costs and you want the actual right coverage. They would have to go with other non-standard or like Foremost, et cetera. And they can be a little pricey sometimes. Again, it’s not impossible to insure the home.
Dominic: Because there’s less places to put it. And then also there’s just more risks as the home is built different. They wear faster than other homes. And so just expect there to be a higher cost that comes along with that.
Darcey: Correct. Part of the issue with manufactured homes is that statistically there’s a lot more water damage claims or roof leaking claims. You know, when they have to put the homes together where the roof line is, that peak. And then water damage from leaking pipes. And they have to really tear into the manufactured home to be able to repair it. So statistically there are higher, or a more amount of claims on that front, which then every company looks at that and bases their judgment on, do we really want to continue down that road of consistently paying out on these claims? So that’s also why certain companies just won’t write them, or they write it at actual cash value.
How is insurance different for a manufactured home versus a mobile home?
Dominic: This is probably a question for next time, but how is this different than if you have a mobile home versus manufactured home? Is there a big difference between those two as well?
Darcey: For insurance? No. No, they go in the same markets. I know there are some differences, like mobile homes, they have the option of taking the wheels off. And you might still have the tongue at the front of it for when it was pulled in. You know, there are some other factors that really make it a mobile home versus a manufactured home. But for insurance purposes, they’re the same for us. They go to the same company and they’re insured the same way.
Dominic: Is there a way that people might be able to have an easier time or save money on home insurance for their manufactured home?
Darcey: Similar with any other home, if you have a burglar alarm, keep your roof clean and updated when it’s necessary, if you have a home in a community area, deductibles, having a higher deductible versus a lower deductible saves you some money. And then some companies also look at if you’re a member of certain affiliates like USAA or AAA or some of the other veterans’ programs too.
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