Insurance and Warranties
The reasons to carry manufactured homeowner's insurance are the same as for a site-built
home: fire, vandalism, and the more general category, "falling objects." That last
category is not always clearly defined. Any unexpected scenario - whether it's a giant
tree toppling over or Superman having a bad day - can put a serious dent in your roof,
and in your savings.
Thanks to dramatic improvements in manufacturing processes, more and more people view
factory-built homes as a long-term investment rather than as "a
step-up-from-an-apartment," or "temporary" housing. In fact, fewer than 2 percent of
today's factory-built homes leave their permanent foundation. Industry experts say that
when kept in one location, these homes can last up to 50 years.
This means that insurance rates for factory-built homes, which once were typically
20 percent higher than rates for site-built homes, are now considerably lower. That's
due to the fact that these homes are now as solidly constructed as their site-built
counterparts. Foremost Insurance Company, one of the largest insurance companies for
factory-built homes, no longer distinguishes between manufactured and site-built homes.
If the manufactured home is put on private property and on a permanent foundation, our
position is that we don't care whether it's made in a factory, or built on-site," says
Richard "Bill" Stegman, a Vice-President in Marketing for Foremost. "In fact, the cost
of the average factory-built home policy, if compared to a site-built house, is
basically the same. There isn't a great deal of difference."
Of course, another factor is where you site your home. In Florida, for example, the
weather is generally warm, but volatile, so there might be as many as seven or eight
different insurance rates. In California, however, the considerably more temperate
climate there are only two or three rates.
Types of Insurance
The amount and degree of coverage can vary dramatically from one policy to another.
That's why it's important to read everything and carefully compare policies before
buying.
A factory-built home placed on a permanent foundation has a better chance of being
viewed as similar to a site-built house. This is a big advantage in terms of the kind
of mortgage you qualify for and the cost of your insurance.
Most factory-built home insurance policies provide three basic kinds of coverage.
Here's a brief overview:
- Physical Damage Insurance:
An "all risk" policy offers more complete
protection than a "named peril" policy because, as the name implies, it provides
coverage against all perils, except those specifically excluded. With an "all risk"
or comprehensive policy, you'll sleep a little more soundly at night knowing that
nightmare scenarios such as bursting pipes, explosions, smoke, falling objects,
windstorms, hail, lightning, and your basic assortment of disasters are covered.
Harder to find are policies that offer flood and earthquake insurance. If you live
where there's a whole lot of shakin' going on, or in a known flood zone, you might
want to pay the extra bucks (which can be considerable) for flood and/or earthquake
insurance.
Usually, earthquake insurance must be purchased separately; however, statistics show
that only about one third of homeowners purchase this coverage. Most homeowners
(especially Californians) are aware that it's not usually the earthquake itself that
causes the most damage to a home - it's the ensuing fire. In that scenario, the
homeowner's fire insurance covers most of the damage. Flood insurance is also
difficult to obtain, though again, most people (fewer than 10 percent nationally)
don't buy it for two reasons: It's expensive and most homeowners don't need it.
- Liability Coverage:
As with physical damage insurance, liability coverage
can vary from policy to policy - not so much in terms of the type of coverage, but
in the amount of coverage. Make sure that whatever policy you choose provides enough
liability to protect you in case you are sued and a judgment is made against you.
- Credit Life Insurance:
Also known as "peace-of-mind" insurance, this
"extra" insurance is necessary if you don't want your spouse to be stuck with the
mortgage if you die. Credit Life Insurance pays off your mortgage to protect your
interest but does not replace the need for other personal life insurance policies.
Insurance coverage (fire, theft, and physical damage) required by lending institutions
is usually included as part of the financing package. The cost of the insurance premium
for the entire period of the loan can be computed in advance, along with the interest
on the loan. Thus, the total insurance premium for a certain number of years, which is
included in the face amount of your loan, is calculated by dividing the number of
months to determine the monthly payments. This method of handling the insurance
makes payment of the premiums automatic. It also protects you against increased
rates during this period.
For more information on insurance, visit
Homestore's Insurance Professor.
HUD Standards
Since mid-1976, all factory-built homes have been constructed to meet the federal
building standards adopted and administered by the U.S. Department of Housing and
Urban Development (HUD). This national code is called the National Manufactured
Home Construction and Safety Standards; it regulates factory-built home design and
construction, strength and durability, fire resistance and energy efficiency. It
also prescribes the performance standards for the heating, plumbing, air conditioning,
thermal, and electrical systems.
The National Manufactured Housing Construction and Safety Standards Act also requires
that you receive a homeowner's manual when you buy your home. This manual will explain,
among other things, what to do if something goes wrong with your home. Some of the
important subjects covered in the homeowner's manual include general maintenance,
safety and the various state agencies that are involved in enforcing the federal
manufactured home standards.
Every factory-built home now offered for sale has a small red-and-silver seal
certifying that the home has been inspected during construction and meets federal
home construction and safety standards. You should also find a data plate on each
unit listing the manufacturer, serial number, design approval, heating specifications
and wind resistance. (If you can't find either one, don't buy the unit!) Again, these
standards were developed to assure a suitable level of performance in every
manufactured home constructed in the United States. Such standards, together with
the manufacturers' warranties, serve to protect you, the homebuyer.
Warranties
The Manufacturer's Warranty
Most manufacturers offer a warranty that covers the structure and factory-installed
plumbing, heating and electrical systems during a specified warranty period.
Retailers are obligated to give you a copy of the warranty to review and read before
you buy one of their homes. By carefully reading the warranty, you can make sure the
home you buy is covered by the protection you want.
The following questions may help you to decipher these warranties and compare coverage:
- What coverage comes with the home? You may get warranties from the home
manufacturer.
- What components and what types of problems does each warranty cover?
What's not covered?
- Does the manufacturer's written warranty cover transportation and installation?
If not, are they covered by other written warranties? (Ask the transporter and
installer if they also warranty their services.)
- How long do the warranties last?
- How do I get warranty service? Who will provide it? Where will it be performed?
- Are extended warranties available from the manufacturer? If so, what do they
cover and cost?
The manufacturer's warranty generally covers substantial defects in the following areas:
- Workmanship in the structure
- Factory-installed plumbing, heating, and electrical systems
- Factory-installed appliances, which may also be covered by separate appliance
manufacturer warranties
The manufacturer's warranty DOES NOT cover:
- Improper installation and maintenance (Make sure the person who performs the
installation follows the manufacturer's installation instructions.)
- Accidents
- Owner negligence
- Unauthorized repairs
- Normal wear and aging
It is vitally important to follow the manufacturer's maintenance and repair
instructions (contained in the consumer/homeowner's manual) to keep your warranty
in effect. Failure to do so could void your warranty.
The Implied Warranty
In addition to written warranties, you may be protected by certain "implied
warranties." An implied warranty is an unspoken, unwritten promise that a
product is fit to be sold and used for its intended purpose. For example, a
factory-built home should be fit to be sold and subsequently lived in. Implied
warranties protect you even if the manufacturer or retailer offers no warranty.
Most states allows "as is" sales that exclude implied warranties. However, some states
do not allow sellers to exclude or limit implied warranties. Check with your state
or local consumer protection officials to learn more about implied warranty
protections. If you're buying a previously owned home, ask if it's being sold with a
warranty or "as is".
The Retailer's Warranty: Extra Protection
A retailer may also offer a warranty on a home that will guarantee the home has a
HUD inspection seal and that optional appliances and equipment have been properly
installed. Remember, ask to see the retailer's warranty before buying to check on
what it does and does not cover.
While retailer warranties vary, they typically include:
- The terms of the warranty
- What you must do to keep the warranty in effect
- What you can reasonably expect from the retailer
- That the home has been installed according to the manufacturer's installation
instructions and local regulations
Retailer warranties do not cover problems that arise from:
- Owner negligence
- Failure by the owner to provide notice for service
- Unauthorized repairs
Appliance Warranties
All the appliances in your new home should be covered by warranties. In most cases,
the individual appliance manufacturers provide these warranties, along with use-and-care
manuals. In addition, some states require that the home manufacturer's warranty cover
the appliances that come with your home.
Read the appliance warranties and note the duration and terms. In addition, check
instructions in the warranties about how to get service. In most cases, the quickest
service can be obtained from the appliance manufacturer's authorized service centers.
Check the use and care information on the appliance warranties for a list of such
service centers or service agents. However, if warranty service is not available
from the appliance manufacturer or its servicer, contact your retailer for assistance.
The home manufacturer's warranty, if any, may provide warranty service for your
problem.
Again, you have the right to review copies of all warranties before you buy a home-right
down to the built-in can opener.
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