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Home sweet mobile home

Be it ever so humble, there's no place like a mobile home. But if you want to protect it, you need to have the right insurance.

These days, manufactured homes -- the preferred industry term -- are looking a lot more like conventional homes, sporting everything from fireplaces to basements.

"Today's mobile homes are very much like site-built homes," says David Emaus, CPCU, a senior product manager for Foremost Insurance Co., which concentrates on specialty insurance on everything from mobile homes and boats to antique autos.

Shop around
But whether you've got a newer model that looks more like a conventional home or the old-fashioned trailer park variety, the right coverage is important. As with any policy, you want to get a number of quotes from a few different companies. You may find that fewer companies are willing to write either homeowners or contents insurance on older homes.

Make sure your insurance carrier has a good reputation and is financially strong, with an A+ or A rating from an independent rating firm like A.M. Best Company, says Emaus. A good resource: your state's insurance office Web site.

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And you may be better off going with an insurer that specializes in manufactured homes, says Jeanne M. Salvatore, vice president of consumer affairs for the Insurance Information Institute, an industry educational organization.

"If you're doing anything outside the norm, you want someone who writes a lot of it," she says. "They can best advise you of special needs and special coverages."

If you own your home, you want replacement value coverage on your dwelling. First the bad news: you will likely pay more for less coverage than in a conventional home.

Manufactured homes "tend to have much higher premiums because the value is not so great and they tend to experience more loss," says Robin Olson, senior research analyst, International Risk Management Institute, an insurance and risk management research and publishing company.

As a result, although the average homeowners policy value is $120,000 and the average mobile home owner's value is $30,000, Emaus says, both will pay about the same amount for their coverage.

As you're shopping coverage, there are two major issues you want to examine, says Emaus. What articles or structures are covered under the policy -- and what specific dangers are either included or excluded?

You may encounter a policy that covers your home but excludes wind or hail. Or perhaps it covers you from a roster of specific dangers -- the industry calls them 'perils' -- but you are limited to damage caused only by those forces.

Instead, says Emaus, you want to make sure that your home and belongings are covered under any scenario.

Some companies are not including flood coverage in their standard policies, says Kevin E. Randall, senior vice president of American Modern Insurance Group, which insures manufactured and mobile homes.

"[But] that's a must," he says. "A lot of manufactured homes are put in flood plains, and some are more susceptible to flooding because of the foundation."

Wind, too, is a particular danger for some manufactured homes.

Insurance companies can also set different standard deductibles for different types of damage, says Randall. For instance, if you live in a tornado-prone area, you might have to pay extra for a lower deductible for wind-related damage. When it comes to setting your deductible, the higher it is, the less you pay.

"Ask yourself: For this much more, are you willing to take this much more risk?" says Emaus. And if possible, bank the amount of your deductible -- or more -- to cover minor damage.

One fairly recent trend is that insurance companies will calculate your deductible as a percentage of the home's value "as opposed to a fixed amount," says Bruce Savage, vice president of public affairs for the Manufactured Housing Institute, a national trade association.

"You want it clearly understood what your deductible is going to be, so that you're not blind sided by this," he says.

With a mobile home policy, any structures not attached to the home -- such as a carport, shed, detached garage or fence -- might not be covered. So it's usually a good idea to add them to the policy.

As your home ages, the premium will likely increase. If your home is 10 years old or more, your premium may be 15 percent to 25 percent higher than when it was new, says Randall. That's because the cost of replacing your home with a new model goes up every year.

"When you're buying a new mobile home, they go up every year, just like cars," says Emaus.

Especially with older mobile or manufactured homes, "it's hard to know what that home's value is," says Savage. "Ask the insurance company to assess the value of the home. They will have some type of process in place."

"Proper valuation of the home is essential to get the proper amount of insurance for that home," says Savage.

But what about my stuff?
Some homeowners policies include some contents insurance -- perhaps 30 percent to 50 percent of the value of the home, says Randall. His advice: make sure that's enough to cover your possessions, and if it's not, add extra.

If you rent your home, you want to have contents insurance, similar to an apartment renters policy, to cover loss of possessions under any situation. Be wary of a policy that covers your belongings in some situations, but not others.

Look for 'replacement value'coverage. That way, the insurance company is promising that if you lose something, whether it's the mobile home or just the stove and refrigerator, you will get a new version of that same item. Otherwise, the policy will just pay you whatever amount you could get for the item if you sold it, depreciation and all. And make sure that the insurance covers all types of loss, not just the ones named in the policy.

"In most cases, you have to ask for replacement value coverage," says Randall.

You also want to include provisions if your home is damaged and you have to live somewhere else while it's being repaired. Usually, says Randall, it's written into the policy for 10 to 20 percent of the dwelling amount.

But this is another area where renters have to be careful. If you own the home, and are taking out $20,000 worth of coverage to protect the entire dwelling, you'd get up to $4,000 to cover your living expenses while your home was repaired or replaced. But if you're renting, and have a contents policy for a much smaller amount, you'll recoup much less for living expenses. Best bet: Bank some money for an emergency fund.

Here is something else to think about. It could be as much as one month before your claim is settled. Before you sign up for coverage, ask how your carrier handles a temporary housing need if you have to vacate, says Savage.

Whether you own or rent, you probably want to include comprehensive personal liability insurance, which pays if someone is injured on your property. In many cases, you can increase the base amount that comes standard with your policy "and it doesn't cost very much," says Randall.

Preparing for a loss
When it comes to your home or your possessions, ask exactly how much money you'd receive if you had a total loss. If you have replacement value insurance on your home for more than it's worth, some companies will give you the amount of your policy. Others will give you only what it would cost to replace your home and possessions, says Emaus. Do your own homework and only insure your home and possessions for what it would actually cost to replace them, and no more.

"You can pay too much if you're over-insured," says Emaus.

Some questions to ask: If you have a total loss, how much would the company pay out? And how exactly do they calculate the loss? Get the answers in writing and keep that paperwork with your policy.

Make a copy of your policy, as well as any other valuable papers, and keep the copies in a safe location off site. That way, if you have a total loss you'll have all your paperwork handy. And a videotape or snapshots of your possessions, stored with that copy of your policy, will make the claims process easier.

Likewise, if you have a large or total loss, you want the policy to cover the cost of hauling debris from your site. In a homeowners policy on a conventional home, debris removal is based on a percentage of the total home value, says Emaus. But since mobile homes are often worth less, "it becomes a real issue because generally these things have to go to landfills," he says.

'Mobile' homes and discounts
The term 'mobile home' is a misnomer. Most remain in one place after set up, says Emaus. But if you are moving your home, you need a special policy to cover it while in transit.

Your regular policy is null and void once you disconnect the utilities and take the home off its foundation, he says. A moving policy is good for 30 days and will cost from $25 to $100, depending on the size of the home..

And when you shop for homeowners or contents insurance, don't forget to ask about discounts. Depending on the company, you could get price breaks for a basement or foundation, a shingle or pitched roof, smoke detectors and fire extinguishers, skirting around the bottom of the home, or simply being 50 or older or for owning a newer manufactured home.

If you want to shave a few dollars on insurance and maintenance, have a professional mobile home inspector (your insurance agent can recommend someone reputable) make sure the home is properly set on the foundation before you rent or buy.

Or you can call your state insurance office or department of motor vehicles, depending on which has oversight in your state, and get a list of inspectors with experience in manufactured or mobile homes.

Having a home that is properly set on its foundation, says Randall, can eliminate "a lot of the problems [that might necessitate] paying insurance claims."

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: Sept. 23, 2003

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