Options, Cost, and Recommendations for Mobile Home Insurance
Insurance isn’t something most of us want to think about when buying a new home. It’s new. It’s shiny.
What could possibly go wrong?
Well, unfortunately, in the crazy world we live in, things go wrong all the time. I can think of many natural disasters in the last couple of years that have really devastated people’s homes and communities across the country by no fault of their own.
Although we all hope our home will never need the insurance we’ve purchased, having it is both peace of mind for the unknowns of the future and security for the restoration of one of the biggest investments we’ve ever made.
“Replacement Value” Insurance
Insuring a mobile home is much the same as insuring a site-built home with a small, but important, difference. When deciding on insurance for a mobile home, it is important to realize that although the real estate market has proven that mobile homes appreciate, all insurance companies might not recognize this fact.
When insuring your mobile home, you will want to insure it for what is called “Replacement Value” instead of “Actual Cash Value”. Doing this will mean the insurance company reimburses you for what it actually costs to purchase and install a mobile home of a comparable size instead of what an insurance company decides the value of the home is after accounting for its “depreciation.” Where with a site-built home, insuring the Actual Cash Value means a homeowner receives what the home was worth plus the fair market value appreciation at the time of loss.
Coverage Required by Lenders
As with cars, lenders for mobile homes require insurance for at least the amount that is owed on the loan should anything happen to the home. Some home owners looking to be frugal with their insurance might go, “Yay! We can spend less on insurance!”
In the grand scheme of owning your home, however, considering the large upfront investment, insurance on your mobile home is not really the time to skimp. Consider this, insurance for your mobile home will cost between about $700-$1,200 per year. That’s just $60-$100 per month.
Choosing to insure your home for both the amount owed and the amount initially invested (also known as down payment) will only mean a couple extra dollars more a month. Making this decision will be the difference between merely having the rest of your loan paid and having what you need to reinvest in a new home.
What to Include in Your Insurance Plan
Remember, home insurance is not the place to pinch pennies. There are the basic protections offered in a standard mobile home insurance plan, and then there are the optional ones.
With most standard plans you receive coverage for fires, windstorms, hail, and lightning strikes. But earthquakes, floods, and hurricanes are an additional option.
We always recommend our home owners opt to protect against flooding even when their property isn’t considered to be in a flood plain. In Texas, you might not be in a flood plain until just the right rain storm comes through and suddenly you are. Adding this insurance is about $15 extra per month onto your insurance premium, or just $180 per year.
For homes being installed in areas considered “Wind Zone II” or hurricane prone areas, hurricane insurance is required by lenders as well.
Another optional choice in insurance is coverage for personal effects in the event of theft. Those flat screen TV’s, great-grandmother’s diamonds, and other valuables can be documented and insured up to a specific amount relative to the cost you can have added to your monthly premiums.
How is Mobile Home Insurance Paid
Once you complete the loan process and go through closing—signing all documents from the bank and state—your first year’s premium is rolled into the loan. Your monthly payments will include four parts: principal, interest, taxes, insurance.
Each monthly payment on your mortgage will also pay toward next year’s insurance premium. If you’ve opted for Replacement Value on your insurance, then your payments should really be a “set it and forget it” type of thing—unless you add a structure onto your property you would like included in your coverage.
However, it might still be good to follow up with your insurance agency every five years or so to assess your plan, see what you’re covered for, and make adjustments as needed.
Choose a Trustworthy Company
Braustin is a licensed insurance agent with Standard Insurance, a company we trust to insure mobile homes to their real value. The bottom line is: Your insurance is only as good as the company behind it. Make sure you aren’t vulnerable in a time of disaster and protect your biggest investment right the first time.
There are other companies to insure with, but just as you would with making any huge decision, do your research. Read reviews,ask for explanation of anything you don’t understand (it’s okay not to ask questions, you’re the home owner, not the insurance agent!), and don’t get forced into a plan you don’t want.
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