Most people that have never bought or owned a mobile home are surprised that there is such a thing as mobile home insurance. Mobile home insurance does the same job as any other form of property insurance; to ‘insure’ the homeowner is protected from financial loss in case of property damaged.
Mobile home insurance can be purchased at top rated insurance carries plus countless of other small-town insurance companies. Compare rates, services, and policy coverage between a few insurance carriers before committing to one. Insurance policies may vary wildly from company to company; make sure to read your own insurance policy before signing and agreeing. You may think you are protected when really you are not.
How does mobile home insurance compare to traditional home insurance? Mobile home insurance is typically based on the amount of money it will take to rebuild the same home. Since mobile homes are typically less expensive to build than traditional wood or concrete built home it stands to reason that in most cases mobile home insurance can be drastically cheaper than traditional site built property.
The price you pay will also vary due to:
- Will you (the owner), your tenants, or no one be living in the home while the property is insured?
- Would you like to insure the personal contents of the home (TVs, furniture, jewelry, etc.) against damages or just the mobile home itself?
- Do you want to insure yourself against theft?
- What value would you like to insure your home for?
- How high or low in price do you want your deductible?
- Is your mobile home located in a flood zone?
Bad things happen to good people all the time, this of course is the purpose of insurance. However in most cases it is not the homeowner’s choice to place insurance on the home. In most cases when there is an existing loan on a property you will not have the luxury of choosing to buy insurance; most mortgages have a “property insurance provision” which requires insurance be kept on the property (at your cost) at all times. The bank that has loaned the money to help purchase the home has the right to protect its investment with insurance. If you do not keep insurance on the home the bank will automatically pay for property insurance and pass the cost along to you.
If you own your home(s) free and clear (without a mortgage) you may choose to not insure your home. When is it a smart financial decision to not always cover your assets?
Insurance Vs Self Insurance
When I reached my twenty-fifth F/C (free and clear) cash-flowing mobile home I was spending just over $14,000 a year to insure my investments. Keep in mind I am purchasing homes for under $5,000 each — that is 3 mobile homes a year that I could be buying. Now $14,000 may not sound like a lot for twenty-five properties, but to this day I have never made a single claim. Like many other landlords I have decided to ‘self-insure’ many of my properties. Self insuring is the calculated choice to not insure your properties. Logically it may make more financial sense to not pay for insurance than it does to pay.
In the end make sure to do your own research, compare policies, and find a company you like and trust. Make sure your home is correctly covered by the insurance policy that best fits your needs. In addition, if you have enough properties with minimal past claims it may be wise to self insure some of your homes.
- John Fedro