As some might have come to expect, insurance policies contain many exclusions and stipulations when it comes to offering coverage and paying a claim. Not only that, but not all insurance policies are created equal – which means some contain more exclusions than others. So, let me ask you, what kind of coverage do you have? Do you even know?
What good is an insurance policy if it doesn’t provide coverage when you need it? Some insurance policies for mobile homes contain exclusions for perils such as sinkholes, interior sourced water damage, theft - and that’s just to name a few! There are likely many more exclusions hidden beneath your policy that you know nothing about.
To start, it is best to understand that mobile home insurance is generally available in two different types:
- Mobile / Manufactured Homeowner (also known and coded as a “HO3” or “MHO3”): This is a type of policy tailored for owner-occupied homes and is best for someone who cares about having the most complete form of coverage available.
- Mobile / Manufactured Dwelling-Fire (also known and coded as a “DP1” or “MDP1”): This is a type of policy that was originally formed with the ‘rental property’ and ‘landlord’ in mind. It is tailored for someone who cares less about what is ‘actually covered’, but more about having a piece of paper they can call ‘insurance’.
When presented as quotes, these policy forms may visually appear to be the same, but both forms are drastically different from one another. In fact, when mailed out, one policy contains nearly twice as many pages as the other – so how can they be the same?!?! Although there are too many differences to count, three of the biggest differences include:
- COVERAGE: The underlying coverage on the mobile homeowners form is far better than what’s included on the dwelling-fire form. Even though the limits and deductibles appear to be the same, the policy language within the policies vary greatly. The dwelling-fire form simply has more hidden exclusions than a mobile homeowners form.
- ELIGIBILITY: Unless you do not qualify for a mobile homeowners form, or unless otherwise allowed by that carrier, mobile homes occupied by the homeowner usually do not qualify for dwelling-fire policies. MDP1/DP1s are generally designed for homes being rented out to tenants and therefore some carriers stipulate they be utilized as such to qualify for that type of coverage.
- COST: When comparing a dwelling-fire quote with a mobile homeowners quote, you will notice the mobile homeowners quote is nearly 50% higher in cost - which makes sense when you know it’s far better than the other (MHO3/HO3s are better policies in terms of broader policy language and fewer exclusions)
MOBILE HOMEOWNERS (MHO3/HO3)
Although a mobile homeowners insurance policy generally appears to be a bit more expensive, the coverage included in that policy form is far better! Here are just a few things that ARE covered by a Mobile Homeowners insurance policy but ARE NOT covered by a dwelling-fire insurance policy:
- Malicious Mischief
- Law and Ordinance
- Interior Borne Water Damage
- Loss Assessment
- Loss of Use/Additional Living Expenses
- Debris Removal
- Coverage Settled on a Replacement Cost Basis*
- Personal Liability
- Riot or Civil Commotion
- Windstorm and Hail (only if WIND coverage is purchased)
*Please be advised: (1) certain classes of Personal Property contain lower sublimits embedded into the policy and therefor those items may not be covered for their full replacement value, and (2) not every carrier provides dwelling coverage based on replacement cost due to underwriting guidelines and/or insured request to remove or opt-out of such coverage.
On the contrary, many of these perils that are covered on a Mobile Homeowners policy ARE NOT covered on a Mobile Dwelling-Fire policy. Not only that, but by purchasing a Mobile Homeowners policy, you are able to add-on even more coverage that would otherwise be unavailable. Some of the available coverage enhancements you may be able to add-on include:
- Water Backup†
- Animal Liability†**
- Scheduled Personal Property (for certain classes of property) †
- Swimming Pool or Trampoline Liability†
- Mortgage Payment Protection†
- Golf Cart Liability and Physical Damage Coverage†
- Equipment Breakdown Coverage†
- Identity Theft†
- Increased Limits on Select Coverage (i.e. Debris Removal, Mold/Fungi/Rot, Animal Liability) †
† Not all insured’s may be eligible for any or all add-ons. Inquire with an agent directly for more information specific to your home/quote.
** If purchased, a sublimit of coverage and breed restrictions may apply.
MOBILE DWELLING FIRE (MDP1/DP1)
A Mobile / Manufactured Dwelling-Fire insurance policy is less expensive and contains far less coverage. We refer to this policy as a ‘Fire and Liability-Only’ policy. If anything else is covered under this policy form, consider yourself lucky!
The dwelling-fire policies for mobile homes are issued on a DP1 form: the lowest form of property coverage available. The biggest, yet the most obscure difference with the two policy forms here is how the ‘guts’ of the coverage is worded. In a Mobile Homeowners form, coverage is provided on an All-Risk basis – which essentially means unless it is SPECIFICALLY EXCLUDED within the policy, it IS covered. That is why a Mobile Homeowners type of policy is twice as large as a Mobile Dwelling-Fire in terms of physical pages! In the case of a Mobile Homeowners policy, the carrier must clearly address any peril they plan on not providing coverage for. In a Mobile Dwelling-Fire policy, however, you are basically given the opposite – the policy will clearly tell you what IS covered and that’s it – anything missed, forgotten about, or simply not addressed is plain out NOT COVERED.
There are a few important things you should note about Mobile Dwelling-Fire policy forms, including:
- There is ABSOLUTELY NO FORM of water damage coverage
- Loss of Use/Additional Living Expenses coverage generally is NOT INCLUDED on a Mobile Dwelling-Fire policy form. Instead, a MDP1/DP1 will provide you with “Fair Rental Value” coverage.
- “Fair Rental Value” provides coverage for the loss of rent you incur, minus any expenses that you do not continue, while the home is uninhabitable due to a covered loss. This coverage will not extend if the home is being occupied by the owner instead of a tenant.
- Debris removal coverage is paid as PART OF the dwelling coverage under a Mobile Dwelling-Fire policy form, minus the applicable deductible.
- Under a Mobile Homeowners policy, debris removal coverage is paid IN ADDITION TO the limit on the house, minus the applicable deductible. However, it is important to note that debris removal coverage is not ‘unlimited’ and does have limitations as spelled out in your policy. A common stipulation is no more than 5% of Coverage A can be extended for debris removal – double check your specific policy for exact details about your home as this may not apply to your scenario.
- Personal Property is generally covered based on an actual cash value basis - meaning the carrier will factor in depreciation that takes place over time and subtract it from the cost to replace with new property of like kind and quality. A good example of this would be “Goodwill” or “Yard Sale” value – that is what your property would be valued at when it comes time to pay a claim.
- Under a mobile homeowners policy form, you have the ability to choose if you want to insure your personal property on an actual cash value basis OR on a replacement cost basis.
- You DO NOT usually have Personal Liability coverage included on a Mobile Dwelling-Fire policy. Instead, “Premises Liability” coverage will generally be included under this form.
- Premises liability coverage will only extend liability coverage to the premises the home is on (it does NOT travel with you).
Evolve Insurance Agency does not recommend the Mobile Dwelling-Fire policy form due to its severe limitations.
So how can you spot the difference between a Mobile / Manufactured Homeowners policy form vs. a Mobile / Manufactured Dwelling-Fire policy form?
Most carriers will list the policy form quoted somewhere on the quote sheet you are provided. Be sure to not only look out for the policy form name, but the coding as well:
- Mobile / Manufactured Homeowners form: “MHO3 / HO3”
- Some carriers might name this policy form under “Preferred Park or Family,” “Senior Standard,” "Signature Adult," and “Private Property”
- Mobile / Manufactured Dwelling-Fire form: “MDP1 / DP1”
Be sure to check with your agent for more information if you are unsure about the policy or quote form you were provided.
Our goal at Evolve Insurance Agency is to educate and service our local community here in Venice, Florida, and all of our surrounding communities throughout the state, for all things related to insurance. We hope you found the information in this article to be helpful! Be sure to check our site again next Wednesday for another blog post.
If you would like request a free mobile home insurance quote, please call our office at 941-244-2760 or click here!