Insurance Costs for Manufactured and Tiny Homes: Breaking Down the Differences
Manufactured and tiny homes have gained significant popularity in recent years due to their affordability and sustainability. These types of homes offer an appealing alternative to traditional housing options, especially for those looking to downsize or reduce their environmental impact. However, even though the initial cost of purchasing a manufactured or tiny home is considerably lower, many homeowners are often surprised by the higher insurance premiums they encounter.
According to Consumer Reports, insurance for manufactured and tiny homes can cost up to twice as much as insuring a traditional home. This begs the question: why does it cost more to insure a smaller and less expensive property? The insurance industry attributes this to the greater vulnerability of these homes to environmental hazards such as wind, hail damage, tornadoes, fire, theft, and vandalism when compared to traditional homes.
While the susceptibility to risks may explain part of the higher premiums, consumer groups argue that insurance companies may be taking advantage of financially vulnerable individuals by charging them more for fewer benefits. Another factor to consider is the potential existence of outdated discrimination from a time when mobile home parks were primarily located in economically disadvantaged and high-crime areas.
Another contributing factor to the higher insurance costs is the limited number of companies that offer insurance for manufactured homes. With less competition in the market, insurance rates tend to be higher. When shopping around for a policy, it is advisable to work with a local independent agent who can provide more personalized assistance and potentially find better rates than searching online alone.
Fortunately, there are several ways homeowners of manufactured and tiny homes can save on their insurance premiums:
1. Maintain a high credit score: A higher credit score can result in lower premium rates. It is essential to manage your credit history responsibly to benefit from better insurance rates.
2. Explore bundling options: Inquire if there are savings available if you purchase both your home and car insurance from the same company. Bundling policies can often lead to discounted rates.
3. Opt for a higher deductible: By increasing the amount you are willing to pay out of pocket before your insurance coverage kicks in (typically $500 or even $1,500), you can save a significant amount on your premium. However, this option requires financial planning to ensure you can afford the deductible if an unfortunate event occurs.
4. Pay the premium in full: If financially feasible, paying the insurance premium in full upfront can result in additional savings. Some insurers offer discounts ranging from 5% to 15% for this payment method.
5. Inform your broker about safety measures: Mention any additional safety measures you have taken, such as installing fire or carbon monoxide alarms and securing your home with anchor ties. These proactive steps not only protect your family but may also lead to further reductions in your insurance premium.
In conclusion, while the cost of insuring manufactured and tiny homes might initially come as a surprise, understanding the reasons behind the higher premiums can help homeowners make informed decisions. By exploring options, such as working with an independent agent and leveraging available discounts, homeowners can find ways to lower their insurance costs while still protecting their investment and ensuring the safety of their families.