Most people decide to purchase a manufactured home with the help of a manufactured home loan, which is subject to certain terms and conditions, also referred to as covenants. One common covenant requires borrowers to carry a certain level of homeowners insurance for the life of the loan. If a borrower fails to purchase the proper amount of coverage or to renew his policy on time, the lender is permitted to force-place homeowners insurance on the property and charge the borrower for it, NAIC explains.
Since the lender gets to choose the insurance company and controls the policy along with the terms of the coverage, force placed homeowners insurance typically protects only the lender’s interest, up to the amount of the manufactured home loan. This means that, although you pay for homeowners insurance, it doesn’t cover your equity in the home, personal property and liability.
The Office of the Insurance Commissioner suggests that the easiest way to avoid force placed homeowners insurance is by purchasing comprehensive manufactured home insurance on your own and providing proof of coverage with the lender shown as a lien holder. But according to our manufactured home insurance experts, the best way to avoid this type of insurance is to be diligent about your insurance policy in every aspect. Here are a few things you should keep in mind.
Another important point to consider is that your lender might also become concerned about your financial stability when you fail to keep your homeowners insurance current. They might even think that you present a potential foreclosure risk.
Providing specialized financing options and comprehensive insurance programs in 42 states since 1959, Triad Financial Services has a proven track record of success. When it comes to financing and insuring manufactured homes, our company is recognized as a leading one-stop shop able to meet the needs of all types of manufactured home buyers and investors. To learn more about our manufactured home lending and insurance solutions, please call our experienced professionals today at (800)-522-2013.