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Why is Manufactured Home Insurance More Expensive?

By February 9, 2020June 26th, 2020Personal Insurance

A standard home insurance policy and manufactured home policy have very few differences besides cost.  Which poses a good question:  Why is manufactured home insurance more expensive?  A lot of people wonder why insurance for a manufactured home is so much more costly than insuring a stick-built home.  After all, manufactured homes are typically less expensive to buy.

Before we dive into the answer, we are going to start by looking at what insurance is.  Insurance is a transferring of risk.  For example, you may not want to risk your house being destroyed in a fire and having to come up with the money to rebuild it, so you may choose to pay an insurance company to take on that risk for you.  In exchange for an annual premium, the insurance company will provide you with an insurance policy to cover your home in the event of a loss.

Since insurance is a transfer of risk, you can imagine that a bigger risk means a higher premium.  Here is where manufactured homes come into the picture.  Statistics show that manufactured homes prove to be higher risk.  Why you might ask?  Manufactured homes have an increased number of damage claims and theft claims; which we will elaborate on below.  There are additional factors that make manufactured homes more costly to insure, but these are the main ones that we are going to discuss.

Increased Risk of Damage – although manufactured homes are being built more structurally sound, they still have a greater risk of damage.  Let’s take a look at a few examples.
  • Fire Damage:  Although a manufactured home is not more likely to catch on fire than a stick-built home, it is more likely to have a greater amount of damage done to it as a result of a fire.  Studies show that a fire in a manufactured home will spread more quickly resulting in an increased amount of damage.  For fire safety tips in manufactured homes please visit the National Fire Protection Association’s website.
  • Wind Damage:  Manufactured homes are lighter than stick-built homes and are more likely to be affected by wind damage.  Some states and counties that experience high winds even require manufactured homes to be securely tied down to prevent them from tipping over.
  • Broken Pipes:  Manufactured homes are typically not insulated as well as stick-built homes posing a higher risk of pipes freezing and then breaking or leaking.

Increased Risk of Theft Claims – Manufactured homes tend to have more theft claims than stick-built homes.  This may be caused by locations, whether your manufactured home is out on acreage making it easier for a burglar to sneak in and out un-noticed, or maybe your manufactured home is in a higher crime location.  These are a few possible explanations for the increased number of theft claims for manufactured homes.