According to the Manufactured Housing Institute, the 8.5 million mobile/manufactured homes with about 20 million people living in them comprise about 6.4% of the U.S. housing sector. Affordability is key: about 70% of all new single-family homes sold for under $125,000 are manufactured. And they’re especially popular in warmer climates–for example, about 18% of South Carolina’s homes are mobile or manufactured.

We spoke with Scott McDermott, product manager, residential products at American Modern about the unique vulnerabilities in this housing sector. Click on the following pages for a Q&A with McDermott on market trends and tips for agents writing this coverage.

What are the major trends impacting the mobile home insurance market?


While there has been a slight uptick in new sales in a few geographical areas, shipments are down dramatically from peak levels, and there is no indication they will return. According to the Manufactured Housing Institute and U.S. Census Bureau, shipments were up from 51,606 in 2001 to 54,891 in 2012. Peak shipments were 81,907 in 2008.

According to the Census Bureau, in 2012 the average sale price for manufactured homes ticked up for the first time since 2008.

Due to the fact that there are less newly produced units, the average home age is increasing. This is impactful because there is a higher loss frequency with older units, primarily with weather-related losses such as wind and hail.

As the market has tightened in cat-prone areas along the coast that have a higher chance to experience hurricane losses, the mobile home insurance industry is focusing more attention on managing exposure and maintaining an even distribution of exposures across the U.S.

As premium rates are increasing, higher deductibles and sublimits are also becoming more common.

What role has recent severe weather had on this market? Are there any geographic considerations that agents should keep in mind?


From American Modern’s perspective, our parent company Munich Re has helped us have a stronger understanding of the impact cat and severe thunderstorms potentially have on our portfolio. This helps us to evaluate our accumulation of risk in areas with greater susceptibility to cat and weather losses. 

From an agent’s perspective, I would anticipate a more volatile market, particularly if we continue to experience adverse weather trends.

What are the most difficult challenges agents are facing for mobile home insurance?


Agents may see fewer carriers interested in providing mobile home insurance. However, there are still a number of carriers committed to the mobile home market that see this as an opportunity. The challenge for these carriers will be to continue to look for innovative ways to keep the product line profitable and still affordable for mobile home owners. 

Another key topic for agents and insurers in this area is loss mitigation. Especially in older mobile homes, it’s important that the owner understands proper maintenance tactics. Basic things like remembering to seal the roof when needed, inspecting for loose or missing flashing around the home, or being able to assess whether or not the home is properly anchored to the ground can make a big difference in limiting the potential severity of damage. It’s not just what the person can do during a severe storm, but what little inexpensive things can be done to limit the more common types of loss. Agents can provide value here by providing this expertise to existing and potential clients.

Manufactured home coverages are similar to those offered in homeowners policies. There are comprehensive  package programs that include coverage for the  home, personal property, liability coverage, and additional living expenses. There are also more flexible programs where customers can purchase the specific coverages they want at a potentially lower price. Some popular optional coverages for both are trip collision coverage, mechanical breakdown coverage, and replacement cost coverage. Pricing then varies by what the customer selects.

What is your outlook for the mobile home insurance market in 2014?


We anticipate a slight increase in sales, but no immediate return to the number of units sold prior to the recession. 


What tips would you give agents to increase the number of mobile home policies they write?

McDermott: It’s important to be very targeted with their marketing campaigns. Find specific parks to target and develop relationships with owners and the people who live there. 

Provide owners with information to help manage their property: maintenance, coverage options and loss prevention tips, for example. Also take the time to educate them on their current policy by explaining what is typically covered and what is not. 

Meet and greet as many homeowners in the park as you can. Sponsoring a barbeque in their park can go a long way to building key relationships.

Consider networking with other mobile home service providers (dealers, lending institutions, real estate agents) that cater to the mobile home marketplace in your marketing efforts.