The insurance you have for your manufactured home community serves a different purpose than the insurance a resident has on their home. While some manufactured homes may be owned and rented out by the community, and thus covered on the community’s insurance policy, tenant owned homes are only insured on tenant mobile home owners policies. This means that if their homes or belongings are damaged, they could face significant out-of-pocket expenses unless they have mobile home owners insurance.
Why Is It Important for Residents to Carry Their Own Insurance at a Manufactured Home Community?
Residents’ insurance plans can help protect them in the event of major property damage, such as a fire. It’s sound financial management to insure property you can’t afford to lose Coverage often also includes temporary housing during repairs or replacement. This financially protects resident home owners. A resident may also have liability coverage that can protect them financially if someone were to be injured on their property.
This can be important for your business because without that financial safety net, residents may be forced to find other housing if they experience a total loss and can’t afford to repair or replace their homes.
What Does Resident Insurance Cover, and What Does Community Insurance Cover?
What your policy covers vs. what a resident’s insurance covers will depend greatly on the specific policy, policy limits, and exclusions. In general, residents’ policies will cover damage to their home and/or belongings and provide liability coverage if the damage or event is deemed their responsibility.. While a community owner’s policy will only cover community owned property, such as the office buildings, utility infrastructure, amenities, and property revenues, there are some instances where a community owner may be liable for damage to a resident’s home. This will be a situation where the damage is deemed due to the community owner’s negligence, such as a dead tree falling and badly damaging a tenant-owned home.
Should I Require Residents to Carry Their Own Insurance?
Whether or not you can require your residents to carry their own home insurance will depend on many factors, such as:
Can your resident obtain the coverage at a reasonably affordable rate?
Insurance rates vary dramatically depending on the area you are located. Adding $50 a month for insurance is more reasonable than requiring tenants to purchase a $500 a month policy in areas such as The Gulf or Southern Atlantic Coasts, where it is significantly more expensive to insure their homes. Premiums in the South and East Central US are often higher than those in the North or Northeast too..
Can you legally require insurance in your state and/or city? And are there restrictions on the type of insurance or coverage limits in your area or state?
Before adding any policy or requirements to your lease agreements, check local and state laws to ensure you are in compliance. Have an attorney review your proposed lease agreement to make sure everything is above board.
Do your insurance coverage requirements comply with fair housing laws?
When applying an insurance requirement, it must be enforced for everyone. Not enforcing the rule for all residents could be seen as discriminatory and violate fair housing laws.
For more tips on managing your manufactured home community and reducing risks, visit our resources page here and learn more in our blog here.