When purchasing or building a modular home, insurance is one of the most important considerations. Homeowners want to know whether their property will be covered in the same way as a traditional site-built house, and lenders require proof of adequate coverage before financing can be approved. Understanding how insurers view modular construction helps buyers make informed decisions and protects their investment.
Modular homes are built in sections within a factory, transported to the site, and assembled on a permanent foundation. Because they meet the same local and state building codes as site-built homes, most insurers treat modular homes as standard single-family residences. This means they typically qualify for an HO-3 homeowners policy, which covers the dwelling, personal belongings, liability, and loss-of-use.
While modular homes are generally insured like traditional houses, there are a few unique factors to keep in mind:
Builder’s risk coverage: During delivery and assembly, a builder’s risk policy is essential to protect against damage before the home is complete.
Permanent foundation requirement: Insurers require modular homes to be permanently affixed to qualify for standard coverage.
Upgrades and features: Documenting upgrades such as solar panels, metal roofing, or impact glass ensures they are included in the policy valuation.
Flood insurance: Like site-built homes, modular properties are not automatically covered for flooding. Separate flood insurance must be purchased if the home is in a designated flood zone.
One of the advantages of modular construction is that insurance costs are often comparable to or lower than site-built homes. Because modular homes are built to strict codes in controlled environments, they may even exceed quality standards, which can positively influence coverage terms.
A frequent misconception is that modular homes are insured like manufactured or mobile homes. (Find out more about how these homes differ by clicking here.) In reality, modular homes are distinct because they are permanent structures built to the same codes as traditional houses. This distinction ensures they qualify for standard homeowners insurance, offering broader protection and more affordable premiums.
Insurance is a critical step in the modular home journey. Buyers should secure builder’s risk coverage during construction, confirm permanent foundation requirements, and document upgrades to avoid undercoverage. With these steps, modular homeowners can enjoy the same protections as site-built properties, ensuring peace of mind and long-term security.