5 Costly Manufactured Homeowners Insurance Mistakes to Avoid
November 27, 2017
When looking for manufactured homeowners insurance, most homeowners have one goal in mind: to find a policy that provides the best protection in case of a disaster. To help you get adequate coverage and avoid a few common pitfalls, we’ve gathered below the top five manufactured homeowners insurance mistakes along with our suggestions to avert them.
1. Underinsuring your manufactured home.
Underinsuring a manufactured home is the biggest mistake a homeowner can make. Why? If you buy the minimum amount of coverage required by your lender, your policy will actually protect only your lender’s interest in the property. That’s because your lender will have a security interest in the loss settlement from your insurer for the outstanding manufactured home loan balance, provided your home sustains loss or damage as a result of an insured event. This basically means that you’ll receive any amount remaining after the lender is paid. The most significant disadvantage of not having enough insurance coverage is that you may end up paying a large part of the repair costs if your home is damaged in a disaster. For example, if you’re underinsured by 25%, and your manufactured home costs $150,000 to replace, you’d be short by $37,500.
Suggestion: One way to get adequate coverage for your home, additional structures, personal property, additional living expenses as well as liability coverage is to opt for a comprehensive manufactured home insurance policy.
2. Assuming that you have certain coverages.
Purchasing comprehensive coverage is a wise decision. However, manufactured home insurance policies don’t provide protection from all perils. As an example, flood, earthquake, sinkhole, and landslide are some common exclusions that may require separate policies.
Suggestion: To determine the level of coverage you need, you should consider the potential perils in your area and review the policy you intend to purchase in order to find out exactly what’s covered and what’s not. Then, you can add extra coverage, as needed. For instance, if you live in an area prone to floods or earthquakes, standard manufactured home insurance plans don’t always cover these perils. In this case, you may want to consider purchasing disaster insurance in addition to your current policy.
3. Not updating the policy information.
Neglecting to update your policy can cost you a lot of money in the long run, particularly if you decide to build any additions, like a porch or a garage. In this case, it’s essential to know that your insurance carrier will only pay you for the loss of the items covered by your homeowners insurance policy.
Suggestion: To ensure that you’re adequately protected, remember to notify your manufactured home insurer whenever you make changes to your home. The only way to protect your manufactured home adequately is to increase your coverage so that it reflects the impact of any improvements on your home’s value. Even if you don’t remodel your home, but add a garage, deck, or pool instead, you should notify your insurance company. Failing to do so could mean that your insurer won’t cover the injuries or damages that may result from the new features.
4. Failing to renew your policy.
When manufactured homeowners forget to renew their policies, manufactured home lenders have the right to force place a homeowners insurance policy in order to protect their financial interest in the property that serves as collateral for a manufactured home loan. In addition to the fact that the insurance premium is automatically added to the monthly mortgage amount the borrowers must pay, forced placed homeowners insurance carries some other potential drawbacks, including higher costs and limited coverage.
Suggestion: Paying your premium on time, renewing your insurance policy before it expires, and providing proof of coverage to your lender as soon as you renew your policy can help you avoid forced placed insurance.
5. Focusing solely on price.
The least expensive type of manufactured home insurance policy won’t necessarily get you the best deal. Besides the fact that you might need to wait several months, or worse, years to receive a payout from your insurer in the event of a loss, a lower premium often translates into insufficient insurance coverage.
Suggestion: Opting for a slightly more expensive policy from an experienced and reputable insurance company that offers comprehensive coverage and pays claims promptly and fairly is well worth the extra cost.
Since purchasing a manufactured home insurance policy is a complicated process, following a one-size-fits-all approach isn’t always a good idea. A better approach would be to get in touch with our experienced manufactured home insurance agents, who can help you make an informed decision.
This post has been updated on 6/15/21 from its original post.