Table of Contents
Strictly speaking, if you’ve financed the purchase of your home, your lender may require that you carry enough insurance to cover the outstanding mortgage balance. And some mobile home parks may require minimum insurance as part of your lease.
However, when it comes to insuring your mobile home, you’ll likely want enough insurance to cover the full cost of rebuilding the structure should it be destroyed, your belongings within it, and any liability claims made against you. (Note: Homes built before 1976 are mobile homes; those built after are manufactured homes.)
Here’s a look at what you need to know about mobile home insurance and what it covers so you can make sure you get the protection that fits your situation.
Recommended: Manufactured vs. Mobile vs. Modular Homes: Insurance Differences Explained
Key Points
• Lenders financing mobile homes typically require enough coverage to protect the outstanding mortgage balance, and some mobile home parks mandate minimum insurance as part of lease agreements.
• Adequate coverage should include the full rebuilding cost of the structure, personal belongings inside, and protection against any liability claims made against you.
• Replacement cost — not market value — should be the basis for determining dwelling coverage, with insurers able to provide estimates using square footage, local labor costs, and home condition.
• Personal property coverage is typically calculated as a percentage of dwelling coverage, with endorsements available to fully cover high-value items like jewelry or collectibles.
• Replacement cost value policies offer stronger financial protection than actual cash value policies by covering full rebuilding costs without deducting depreciation based on the home’s age.
Breaking Down the Components of a Mobile Home Policy
Mobile home insurance policies, also known as HO-7 policies, are much like a traditional homeowner’s policy, with several different kinds of coverages. HO-7 policies typically include coverage for your dwelling and other structures, personal property, personal liability, and loss of use.
Taking a close look at each type of coverage and calculating your monetary needs, should disaster strike, can help you determine how much coverage you need overall.
Step 1: Calculating Your Dwelling Coverage (Coverage A)
Dwelling coverage can help you cover the cost of repairing—or entirely rebuilding—the structure of your mobile home in case of a covered event.
A covered event is any type of incident, loss, or situation that’s explicitly included in your policy for which your insurance will pay out money for a claim. Covered events tend to be sudden or accidental, such as a major storm, a fire, or theft.
Be aware that mobile home insurance typically has an insurance deductible, the amount that you have to pay before your coverage kicks in.
The Cost to Repair or Replace the Structure
To estimate the replacement cost of your mobile home, do not use its market value. Rather, you may ask your insurer to offer a replacement cost estimation.
Factoring in Skirting, Awnings, and Attached Porches
Included in your mobile home dwelling coverage are other structures that may be attached to your mobile home, such as a deck or awnings. Be sure to include these in replacement cost estimations.
Actual Cash Value vs. Replacement Cost for Older Homes
Your insurance policy likely uses actual cash value or replacement cost when establishing coverage. Actual cash value pays the repair or replacement cost minus depreciation based on the age of the structure. This amount may be lower than the replacement cost, which covers the full cost to replace your structure.
Step 2: Estimating Other Structures Coverage (Coverage B)
Coverage for other structures pays for the repair or replacement of structures on the property that aren’t attached to the house. These could include detached garages, carports, sheds, or fences.
Step 3: Determining Personal Property Limits (Coverage C)
Personal property coverage covers belongings inside your home from coverage events, such as fire or theft. These can include everything from furniture to electronics to clothing.
As with dwelling coverage, your personal items may be covered at replacement cost or actual cash value, which takes depreciation into account.
Manufactured homes do have coverage limits. Policies typically use a percentage of your dwelling coverage to determine your property coverage. For example, your personal property limit may be equal to 50% of your dwelling coverage.
Taking an Inventory of Your Belongings
It is essential to take an inventory of your personal belongings that establishes what you own and its value.
To take a thorough inventory, make a list of items, with a description, manufacturer, model, and serial number if possible. Take pictures of your home as well as videos from multiple angles. A complete inventory provides your insurer with proof of ownership and can simplify the claims process.
Adding Endorsements for High-Value Items
Certain high-value belongings, such as jewelry or collectibles, may only be covered up to a certain limit. You can add an endorsement—also known as adding a rider—that can help provide coverage for the full amount needed to protect these items.
Step 4: Choosing Liability and Loss of Use Limits (Coverage D & E)
Personal liability coverage will cover you in case you are found legally responsible for damage to someone else’s property or for injuries to their person. If a covered incident prevents you from using your home, loss of use coverage can cover the cost of a hotel and other costs beyond what you would normally pay at home.
Protecting Your Assets with Personal Liability Coverage
If you are held legally responsible for damage to another person’s property or their person, you may be legally responsible for covering the cost of replacement or repair, medical bills for injuries, lost wages, and legal fees. Personal liability coverage helps ensure you can pay for these without having to liquidate your own property.
Planning for Temporary Housing with Loss of Use
Loss of use coverage can pay for hotel stays or home rentals up to your policy’s limit. It may also cover other expenses you would not normally accrue if you had use of your home, such as moving or storage costs, increased living expenses, or additional transportation costs from a different commute.
Be sure to keep meticulous receipts of your expenses, and reach out to your policyholder to understand what daily and total limits may be.
Recommended: How to Lower Mobile Home Insurance
The Takeaway
Choosing the right amount of mobile home insurance comes down to more than just meeting lender requirements. The right policy should provide enough coverage to rebuild or repair your home, replace your belongings, and protect you financially if an accident or disaster occurs.
By reviewing your home’s value, personal property, and liability needs, you can build coverage that fits your situation and gives you confidence that you’re protected when it matters most.
If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.
SoFi brings you real rates, with no bait and switch.
FAQ
Should I insure my mobile home for its purchase price or replacement cost?
Typically, an insurance policy that covers the replacement cost of your home is ideal. It will cover the amount needed to replace your home in the current market environment and does not deduct depreciation. So even if your older mobile home is destroyed, it will pay to cover the cost of a brand new home comparable to your old one.
Does my mortgage lender determine how much mobile home insurance I need?
Your mortgage lender will play a part in determining how much mobile home insurance you need. At a minimum, they will likely require that you carry enough insurance to cover their financial interest in your home, such as enough insurance to cover the loan amount or the remaining balance.
Do I need liability insurance if my mobile home is in a park?
Your mobile home park will almost certainly require that you carry some kind of liability coverage, but check with them to understand what kind of insurance they require.
Can I increase my mobile home insurance coverage later?
Yes, in most cases, you should be able to increase the amount of home insurance you have, adding additional protections or increasing the amount of dwelling coverage, for instance.
How do I know the replacement cost of my manufactured home?
The easiest way to calculate your replacement cost may be to ask your insurance provider to do it for you using a replacement cost calculator. They will take into account factors such as your home’s square footage, local labor costs, and the age and condition of your home.
Photo credit: iStock/WeBond Creations
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
SOPRO-Q226-026