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Home insurance is never one-size-fits-all. Policies vary widely, depending on factors such as location, age, building materials, and building type.
This is especially true for manufactured, mobile, and modular homes. By the sound of these names, these structures may seem similar, but the way insurers evaluate them is quite different. And these differences are important to understand if you’re considering buying one of these homes, or if you own one and you’re shopping for the right coverage.
Key Points
• Mobile homes built before 1976 followed few safety standards, while manufactured homes built after 1976 must comply with strict U.S. Department of Housing and Urban Development standards
• Both mobile and manufactured homes are covered under HO-7 insurance policies, which protect the home structure, personal belongings, loss of use, liability, and medical payments for guests
• Modular homes require HO-3 policies — the standard homeowners insurance for single-family homes — and must comply with local building codes rather than national HUD standards
• HO-7 policies carry lower absolute costs due to lower home values, but relative costs can be higher because manufactured homes face greater susceptibility to risks.
• A HUD tag on a manufactured home confirms it was inspected during production by an approved agency, and having this tag can help reduce HO-7 insurance premiums
Why the Terminology Matters for Insurance
At a high level, each one of these labels—manufactured, mobile, and modular—refers to how these buildings look, but also to how they are built and the regulations surrounding them. Insurers rely on this information when they underwrite policies.
What Is a Mobile Home?
Mobile homes are typically designed to offer affordable, permanent housing. They are built in factories and then transported to a site, often in mobile home communities.
Definition and Construction Standards (Pre-1976)
Officially, a “mobile home” was constructed before 1976. At that time, there were few required safety standards. Homes were often built with cheaper, lightweight materials, and they may have had very little insulation. They weren’t built to withstand extreme weather conditions, and they were also more susceptible to fire damage.
Insurance Policy Type (HO-7)
Mobile home insurance is known as an HO-7 policy. These policies cover single-wide, double-wide, and triple-wide mobile homes. They typically cover the home itself, your belongings, loss of use in case damage to your home renders it temporarily unusable, personal liability, and medical payments to guests if they are injured in your home.
HO-7 policies are open peril policies. That means they cover everything that may cause damage except what is specifically excluded. Typical exclusions might include damage caused by floods or mudslides, mold, sewer back up, normal wear and tear, and damage caused by animals you own.
Recommended: Mobile Home Insurance (HO-7): What It Is and What It Covers
What Is a Manufactured Home?
A manufactured home is essentially a mobile home that was built after 1976. These must adhere to standards set by the U.S. Department of Housing and Urban Development (HUD).
Definition and HUD Code Standards (Post-1976)
Manufactured homes are factory-built housing units that are at least 320 square feet in size. They are constructed on a permanent chassis, allowing them to be transported, at least initially, to their permanent site.
In the U.S., homes built after June 15, 1976, must include a HUD certification label showing they meet federal construction and safety standards. These HUD standards regulate key areas like structure, fire safety, plumbing, electrical systems, and insulation, and are outlined in federal regulations.
Insurance Policy Type (HO-7)
When considering manufactured vs mobile home insurance, it’s important to know that manufactured homes—as with their older counterpart, the mobile home—are covered under HO-7 insurance policies as well.
What Is a Modular Home?
While it may sound similar to mobile and manufactured homes, a modular home is quite different. You may actually know these homes as “prefab” houses. That’s because they are prefabricated in a factory setting in sections known as modules. These sections are then shipped to a permanent site where they are put together on a foundation. They are not moveable once they are set in place.
Definition and Local Building Codes
Modular homes must adhere to the same local building codes as homes built on-site from scratch. There is no national standard like the HUD codes that modular homes must follow. Instead, before construction begins, your builder will submit plans to state and local regulators to ensure that they are in compliance with local law.
Insurance Policy Type (HO-3)
As you consider modular vs manufactured home insurance, know that modular homes are covered by HO-3 insurance policies. This is the most common type of homeowners insurance for single-family homes, and the coverage you would buy for a house built on-site or for a pre-existing house.
Like HO-7 policies, HO-3s provide homeowners insurance that covers your home, your personal belongings, your liability as a homeowner, medical payments, and the cost of housing if your home is rendered unusable for a period.
These, too, tend to be open peril policies, meaning they cover damaging events that are not explicitly excluded by the policy.
Recommended: Hazard Insurance vs Homeowners Insurance
Key Differences in Coverage and Cost
Comparing HO-7 and HO-3 insurance policies is a bit tricky because they insure fundamentally different types of buildings, and the policies are not interchangeable. However, there are several key differences you may wish to be aware of.
In absolute terms, HO-7 policies may be cheaper of the two policies. That’s because they are insuring manufactured homes, which tend to be much cheaper than traditional homes. Relative to home value, however, HO-7 policies may be more expensive because manufactured homes tend to be more susceptible to risks. For example, they may be more likely to be damaged by extreme weather. Higher risk can lead to higher relative prices.
What’s more, fewer insurers offer HO-7 policies, while many offer HO-3 policies. Less competition is another reason HO-7s may be relatively more expensive.
The Takeaway
Carefully considering types of insurance coverage is critical. When shopping for insurance for your home, how your home is defined matters. It can help determine what kind of policy you are able to buy. These classifications can also help you decide what type of structure is right for you if you’re in the market for a home, and understanding helps match you with the correct policy type to ensure you’ve got the coverage you need.
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.
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FAQ
Is it cheaper to insure a modular or manufactured home?
On an absolute basis, it may be cheaper to insure a manufactured home, since this type of building tends to be built with cheaper materials than modular homes. Modular home insurance may be cheaper on a relative basis if you compare the price of insurance to the value of the building.
Do I need special insurance if my manufactured home is in a park?
Insurance for manufactured homes is known as an HO-7 policy. While insurance is not always required by law, it may be required by some manufactured home parks.
Can a manufactured home qualify for standard homeowners’ insurance?
No, a manufactured home does not qualify for standard homeowners insurance, known as an HO-3 policy. You will need an HO-7 policy instead.
How do I know if my home is mobile, manufactured, or modular?
Mobile and manufactured homes are built on a steel I-beam frame. “Mobile” homes were constructed before 1976, while manufactured homes were constructed after 1976 and have a HUD tag on the exterior. Meanwhile, modular homes resemble traditional homes. They are built from pieces that are assembled on site and must be attached to a foundation or slab.
Does the HUD tag affect my insurance rates?
The presence of a HUD tag on a manufactured home demonstrates that the home was inspected during production by an inspection agency approved by HUD. The tag can help reduce the amount you pay for HO-7 insurance.
Photo credit: iStock/benedek
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