3 Factors to Consider When Insuring Modular Home Construction

3 Factors to Consider When Insuring Modular Home Construction

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5 min

At some point in your road travel, you’ve probably seen fully-built home sections strapped to a flatbed truck on their way to a permanent location.

Did you know it’s a revenue opportunity for you? That’s right. You can insure modular home construction with Zurich builders risk insurance.

Modular construction is a popular home building option, especially in a market with an ongoing skilled labor shortage.

If you want to get a piece of the insurance pie for these fast-moving projects, there are three things you should keep in mind when insuring modular home construction with Zurich builders risk insurance.

1. It’s a modular home, not manufactured or mobile.

There’s a difference between mobile, manufactured and modular homes. This distinction matters because, of these three, you can only insure modular construction with a Zurich builders risk policy.

Modular homes consist of pieces or sections, that are created in a warehouse. Once finished, the sections are delivered to the building site, where builders will assemble and attach it to its permanent foundation, then a contractor will finish it out.

As for mobile or manufactured homes, the only real difference between the two is when they were built. According to the U.S. Department of Housing and Urban Development (HUD), the structure is considered mobile if it was factory-built prior to June 15, 1976, and one built after that date is a manufactured home.

For the purposes of insurance, Zurich considers mobile and manufactured homes as the same. From their perspective, the most important part is how it’s created in the warehouse. Manufactured homes are built on top of a non-removable steel chassis that enables them to be transported from the warehouse or factory to another location. Even if the manufactured home is at some point placed on a foundation, such as an existing basement, it still has the capability to be moved. For that reason, it’s ineligible.

Let’s say we’re comparing a modular home to a manufactured home. Unlike modular construction, a manufactured home requires no land preparation or finishing, and occupancy can begin immediately.

While modular homes are typically built to conform to city and state building codes, manufactured homes built after June 15, 1976, must adhere to HUD building codes.

2. Modular offers benefits over site-built construction.

Under the US Assure Builders Risk Plan insured by Zurich, modular construction is treated just like a site-built project. That means all the coverages you would expect in a standard Zurich builders risk policy could be offered.

However, modular construction is typically less expensive than its site-built counterpart, and offers much shorter construction timelines.

Depending on who’s responsible for moving the sections from the warehouse to the job site, property in transit could be an important coverage for policyholders. With a Zurich builders risk insurance, it’s already built into our standard policy and coverage up to $25,000 or 5% of the completed project value, whichever is greater, is available.

With better quality control, less construction waste, and typically superior materials, modular homes can be a great option for homeowners. Unlike traditional new construction, modular may not have contract change orders depending on the terms of the building agreement. As a result, the total completed value rarely increases during construction. But, make sure they’re aware that the majority of their construction choices, including finishes, must be decided up front and cannot change. Unlike stick-built construction, change orders for modular construction are less likely, if they’re even possible at all.

3. Applications require unique information to obtain a quote.

In addition to the details you’d need for a bricks-and-sticks project, you’ll need to gather a few more pieces of information for the builders risk application. Make sure you know the answers to the following questions:

1. Who provides the transit?
2. How many homes will be transported to the job site?
3. What’s the design or plan number?
4. What’s the manufacturer’s website?
5. Does the manufacturer put the 4 sides together, then will the builder finishes?

When you submit a builders risk application online for modular construction, the account will be placed on hold for further underwriting review. So, the more information you provide upfront, the more efficient the review process will be.

There you have it! When the next modular construction project crosses your desk, you’ll know what to do.

To help you determine which coverages you can secure for your next builders risk client, download our Coverage Summary by Policy Type Chart.

This is intended as a general description of certain types of insurance and services available to qualified customers. Any description of policy provisions is meant to give a broad overview of coverages and does not revise or amend a policy. Refer to the policy coverage form for a complete representation of the scope of coverage, terms, conditions, exclusions and more. The policy is the contract that specifically and fully describes your coverage. Some products may not be available in all states and may only be offered on a non-admitted basis. Product availability is subject to change.

Coverage Summary by Policy Type Chart

Beyond the extensive offerings standard to our Builders Risk Policy insured by Zurich, additional coverages and optional endorsements can be secured depending on the project or policy type. Download this guide to assist you in analyzing these options in order to provide the most robust coverage for your builders risk client.

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