Is Home Insurance Required?

No home requires insurance. It is not legally mandated, as it is with car insurance. But without it, you’ll have to cover major damages and liability claims and lawsuits out of pocket. 

How Prefabricated (Modular) Homes Are Treated by Insurers

A prefabricated home, also known as a prefab or modular home, is regarded by insurers and lenders much like any other home. It may not have been built on the premises and it may have been cheaper than a conventional home. But the big differences end there. A modular home and a conventional home have more in common than not. They both will be built to code, they're both permanent structures, and they're both easier than a trailer home (or manufactured home) to customize. 

With that in mind, it stands to reason that a prefabricated home is subject to all the same insurance considerations as a site-built home: 

• Your lender will probably require that you carry home insurance until your home is paid off. 

• Once your mortgage is paid off, home insurance can be bought or canceled at your discretion. 

• Modular homes are covered under standard home insurance policies. So, you don't need to look for a specialty provider. 

Insurance Considerations for Modular vs. Manufactured Homes

Mobile, trailer and manufactured homes are another story entirely. Some people will use prefab and manufactured interchangeably, but they're two completely different categories. A modular home is shipped in pieces and assembled on site. It’s usually much larger than a trailer home, and it will not require any special insurance. In fact, your insurer probably won't even bother to ask if your home was prefab or built-on-site. 

Just make sure, when buying insurance, you correctly identify your home as either prefab or manufactured to ensure that you're getting the right policy for your home.

Frequently Asked Questions

Q: Is a modular home harder to insure than a site built home?

No. Once a modular home is assembled on a permanent foundation and built to code, most carriers treat it like any other house, and it goes on a standard homeowners policy. The difficulty people run into is usually a labelling problem rather than a coverage problem.

Q: What is the difference between a modular home and a manufactured home for insurance?

It changes which policy you need, so it matters more than the words suggest. A modular home is built in sections and assembled on a permanent foundation, and it is insured as a house. A manufactured or mobile home is built on a permanent chassis and needs a mobile home policy, which is a different product with different terms. Describing yours incorrectly can mean a claim gets questioned.

Q: Does my lender require insurance on a prefabricated home?

If there is a mortgage, almost certainly, and the requirement usually names a minimum dwelling amount and lists the lender on the policy. Once the mortgage is paid off the legal requirement goes away, though the exposure does not.

Q: Will a modular home cost more to insure in Houston?

Location does more work than construction method here. Wind and hail exposure, the age of the roof, your distance from a fire station and your claims history drive the price far more than whether the house was assembled on site. Two identical modular homes in different parts of Houston can price quite differently.

Q: Do I need separate coverage while it is being assembled?

Yes, and this is the step people skip. Between delivery and completion the structure is usually not covered by a standard homeowners policy. A builders risk policy covers that window, and it should be in place before the sections arrive rather than after.

Q: Does it cover wind and hail like any other house?

It is subject to the same Texas wind and hail terms as any other home, including a separate percentage deductible for wind and hail in many coastal and near coastal areas. Check that deductible as a dollar figure rather than a percentage, because on a windstorm claim it is a much larger number than people picture.