Every aspect of our world is changing, and that applies to the homeowner insurance market too. Why? Homeowners are changing their home purchasing behavior. For example, fewer and fewer young people are buying traditional single-family homes as they enter the job market. Baby Boomers are downsizing to a non-traiditonal home, going from suburban McMansions to condominiums, or going on the road to live in a recreational vehicle (RV). Sometimes young people are doing the same thing!
As you may know, people of all ages are choosing from among a greater variety of home styles and options than ever before, ranging from your typical single-family stick-built home to an RV as a full time living option to the new trend toward tiny homes―a hybrid of sorts between an RV and a stick- built home, but with a very small footprint.
Here’s a quick look at various non-traditional home types―beyond your traditional stick-built single-family home―and the insurance requirements they command.
Manufactured, modular and mobile homes
Manufactured or Mobile homes differ from stick built homes in that their components are assembled in a factory. And, they are set on a permanent chassis, which makes them very different from stick-built homes. That being said, manufactured homes are typically insured under specialized policies that provide coverage unique to the exposures of this type of dwelling. Modular homes are also built in a centralized location but are assembled on-site and once complete are indistinguishable from site built homes. Modular homes are written on a standard homeowners policy.
Insuring condominiums can be a bit tricky, because they’re not “standalone” homes in the sense that there are parts of the property held in common with others (including adjoining walls and common areas, for example). The master policy held by the condominium association dictates what the owner’s coverage must be.
Here are examples of master policy types:
- Original specification or “Single Entity Coverage” is a type of master policy where the association is responsible for common elements, limited common elements as well as unit property. Any unit improvements and betterments as well as your personal property should be covered by your individual condominium policy.
- Bare walls master policies limit the association responsibility to the common elements and limited common elements. This leaves your individual condominium policy responsible for unit property, any unit improvements and betterments and personal property in your unit.
- All in or “all inclusive” master policies typically differ from original specifications in one significant way; in addition to insuring common elements, limited common elements and unit property, associations are also responsible for unit improvements and betterments. If your condominium association has an “all inclusive” master policy, you would only be responsible for insuring your personal property.
The new phenomenon of tiny homes presents some unique insurance concerns, which depend primarily on who constructed the home, and how. Some tiny homes can be insured under a standard homeowner policy, while others may need to be insured through an RV policy. A key differentiator is whether the home is stationary or will be moving about.
RVs are insured differently than other dwelling types, even if the homeowners intend to live in them full time. The key differentiator here is these homes are intended to be mobile, so they are subject to specific risks.
It’s not the home, it’s who’s living in it
But what about boomerangs? No, not insurance for your souvenir from spring break in Australia. Rather, how do you provide coverage for “boomerang” children who leave home and then move back into their parent’s basement?
In these situations, the new occupant will typically be covered by the parent’s homeowners insurance, as they qualify as a resident relative. However, be sure homeowners check their policy language and make sure any unique exposures are taken care of individually. For example, let’s say an adult child played guitar for a garage band and brings along a $10,000 antique Fender guitar. They will probably want to have that insured separately. Or, sell the guitar and move out of their parent’s basement…
Whatever choices homeowners make in terms of the type of home they purchase, as an insurer, you play a pivotal role in helping them make the right choice in homeowner insurance.