8.2 Mobile Home Insurance
Mobile homes can present unique insurance challenges because they are exposed to risks that differ from those of traditional site-built homes. For example, mobile homes may have different structural characteristics and may be more vulnerable to certain types of physical damage. They may also be exposed to loss while being transported from one location to another.
To address these exposures, the insurance industry provides several coverage options. Mobile homes may be insured under a Basic Form Dwelling policy, by endorsement to certain Homeowners policy forms, or through a separate mobile home insurance policy if the insurer does not permit the coverage to be added by endorsement.
Tenants who rent a mobile home may also be able to insure their personal property under the Contents Broad Form (HO–4) Homeowners policy. However, this option depends on the insurer’s underwriting guidelines and eligibility requirements.
Mobile Homeowners Policy
When a mobile home is insured under a separate mobile home policy, the policy is typically organized in a way that is similar to a Homeowners policy. It includes Section I – Property Coverages, which provides coverage for the mobile home and other covered property, and Section II – Liability Coverages, which provides personal liability and medical payments coverage. This structure helps students understand that, although mobile homes may require specialized insurance, the policy format often follows the same general property-and-liability approach used in standard Homeowners insurance.
Coverage A – Mobile Home insures the mobile home itself, along with property that is permanently installed in or attached to the home. This may include built-in appliances, floor coverings, dressers, cabinets, attached structures, and utility tanks. Coverage also applies to certain property located at the residence premises that supports or will become part of the mobile home. For example, outdoor equipment used to service the residence may be covered. Construction materials located at the residence premises are also covered if they are intended to become permanently attached to the mobile home.
Coverages B, C, and D in a mobile home policy are generally similar to the corresponding coverages found in a Homeowners policy. These coverages typically address other structures, personal property, and loss of use. However, mobile home policies may use different automatic limits. Coverage C – Personal Property is commonly written at 40% of the Coverage A limit, while Coverage D – Loss of Use is commonly written at 20% of the Coverage A limit. These percentages help determine the amount of coverage available for the insured’s belongings and additional living expenses or loss of use following a covered loss.
The Property Removed Additional Coverage provides limited coverage for certain expenses related to protecting the mobile home from loss. If the mobile home is threatened by a covered peril, the policy may provide up to $500 for reasonable expenses incurred to move the mobile home to a safer location. The policy may also provide coverage for outdoor antennas, towers, and masts located on the insured premises. This coverage is subject to a $200 sublimit. In addition, decorative fixtures may be covered under certain circumstances. Because this coverage can depend on the policy language and the type of property involved, the insured should review the policy carefully to determine when decorative fixtures are included.
Mobile Homeowners policies may be written on either a named perils basis or an open perils basis. Under a named perils policy, coverage applies only when the loss is caused by a peril specifically listed in the policy. Under an open perils policy, coverage applies to direct physical loss unless the cause of loss is specifically excluded. Losses to the mobile home itself are generally valued on a replacement cost basis, provided the insured satisfies the 80% insurance-to-value requirement. This means the mobile home should be insured for at least 80% of its replacement cost value in order for replacement cost loss settlement to apply. The valuation method for the mobile home may be changed to an actual cash value basis by endorsement. Other covered property, such as personal property or certain additional items, is automatically valued on an actual cash value basis unless the policy provides otherwise.
Many of the endorsements available for standard Homeowners policies are also available for Mobile Homeowners policies. These endorsements allow the insured to customize coverage based on the type of property insured and the exposures involved. One endorsement designed specifically for mobile homes is the Transportation/Permission to Move Endorsement. This endorsement provides coverage when the mobile home is being transported within the continental United States or Canada. It protects the mobile home against collision losses during transport for a period of up to 30 days. This coverage is important because mobile homes may be exposed to additional risks while being moved from one location to another.