Renters & Mobile Home Owners Vulnerable When They Don’t Insure Their Property

Mobile home owners and renters often choose to go without property insurance, potentially exposing them to catastrophic losses such as those suffered in Southern California’s weekend firestorms.

Nearly 500 manufactured homes and more than 80 apartments were destroyed in the fires. While it's unclear how many were uninsured, about 82,000 – or 25 percent -- of the state’s mobile homes don't carry insurance, according to a Sacramento Bee analysis of 2007 census data. Another 200,000 houses are uninsured, according to the report.

Nationwide, a 2006 poll by the Insurance Research Council found that 96 percent of homeowners had insurance while 43 percent of renters purchased insurance.

Most homeowners are required by their mortgage lenders to purchase property insurance, but those who either own their residence outright or rent may choose to go without insurance. In the event of this week’s firestorms, the decision can have tragic consequences.
    
“Going without property insurance is like gambling on your future – you could lose everything,” said Candysse Miller, executive director of the Insurance Information Network of California.    Renters should not mistake their landlord’s insurance policy on the apartment structure for insurance that will replace their belongings. Renter’s insurance policies will cover the destruction or theft of property, as well as additional living expenses if you are displaced by a covered peril. It also provides liability coverage up to the limit of the policy.
    
The average annual cost of renter’s insurance in California is about $250.

There are two basic types of renter’s insurance – Actual Cash Value, which pays to replace possessions minus a deduction for depreciation up to the limit of the policy – and Replacement
Cost, which pays the actual cost of replacing possessions, up to the limit of the policy.

Owners of factory-built housing have different insurance options available, depending on their residence’s construction. Mobile or manufactured homes typically are pre-built structures that are joined as a unit once on site, and not attached to a permanent foundation. Basic mobile home insurance is often written on an actual cash value platform, with upgrades to replacement cost with inflationary protections available.  

Owners of modular homes, where pre-built panels are joined to a foundation, are typically insured by a form of the traditional homeowner’s insurance policy.
   
IINC offers a number of free Web-based tools to help consumers track and evaluate their insurance and finances, including software to create a home inventory, track financial goals and create a wallet-sized insurance information card. For more information, visit the IINC Web site at www.iinc.org.

IINC is a non-profit, non-lobbying association dedicated to helping the public understand insurance and manage risk.