Should We Be Redefining The Valuation of Manufactured Homes?

June 08, 2020

Manufactured homes are a popular, comfortable, and economical option for many families throughout the country.

One complication that owners of these dwellings sometimes experience is obtaining sufficient home insurance coverage as it can sometimes be difficult to determine an accurate valuation of the dwelling.

Without an accurate valuation of the structure, its owners may not be able to insure for what it will cost to repair or replace it if it becomes damaged or destroyed.

Unfortunately, it’s a problem that’s plagued the homeowners insurance industry for a long time.

It’s also one that demands rethinking, as the popularity of these dwellings remains steady while the homes themselves have become more high-tech and stylish over time.

How Is Real Estate Valuation Calculated?
Homeowners insurance agencies calculate policy premiums, limits, and benefits based on the value of the property being insured.

That valuation is usually determined by considering a number of factors such as:

  • Home style, size, and condition
  • Initial price paid
  • Location and community
  • Local property taxation rates
  • Inflation rates
  • Appreciation, or depreciation

Manufactured Homes - Real Property or Technical Vehicles?

Because manufactured homes are built off-site on steel frames with wheels that are used to drive them to a property site location, they were originally insured as vehicles and are still considered such in some states and by many home insurance companies.

Even though most of these structures are installed and never moved again, the fact that they have wheels and can be moved differentiates them from a home that is permanently built on a foundation and cannot be readily moved.

This is even so in cases where manufactured homes are installed onto permanent foundations simply because it remains possible to detach them from the foundation and move them on the wheels they do retain.

Do Manufactured Homes Appreciate or Depreciate?

One of the prime factors that affects the valuation of any home and the homeowners insurance policy required to protect it is whether it’s considered real estate like a site-built house or a vehicle like a manufactured one.

Even though real estate prices in certain markets may be on the rise and the appraisement of a manufactured home could rise with local values, if it’s classified as a vehicle it may also depreciate as do cars and trucks.

This depreciation works against the idea that most homes appreciate over time due to economic conditions, the cost of the land where they’re built, the cost of building materials, and more.

Revisiting Valuation Issues to Insure Manufactured Homes

For any home insurance policy to actually protect property, it’s essential that the value of that property be accurate in relation to repair and replacement costs, local real estate values, and other value indicators.

Where manufactured homes are still considered depreciating vehicles, this creates a large discrepancy as repair and replacement costs could end up being much higher than policy limits set based on appraised value.

If you own a manufactured home, you should discuss the concern of proper valuation with a homeowners insurance agency that specializes in these dwellings.

A knowledgeable company can help you secure the right policy that will adequately protect your investment in a manufactured home even if depreciation ends up being a factor in home valuation.

Need Manufactured Home Insurance in Bryan Texas?

Jones & Associates Can Help With The Right Policy!

Call (979) 599-7532 for More Info!