Builders Risk Insurance for a Construction Loan on a Mobile Home?

Question

We are trying to buy a new Mobile Home which will be converted to real property. We are working with a very well known bank institution and have been approved for a construction loan. They are telling me that Builders Risk Insurance needs to be purchased before they can give us a final approval on the loan. I called the local insurance companies and they insist they do not cover it for Mobile Homes. I brought this to the banks attention over a month ago, yet they are still telling me I need to get Builders Risk Insurance. What do I do? Supposably the mobile home builders don't cover the Builders Risk Insurance or the contractor, so it's up to me. How does this usually work? Is the buyer usually the one responsible for this?

Well we call them mobile homes here, but it is a Manufactured home.

Answer 1

I've never heard of a Builders Risk policy on a mobile home, because the actual CONSTRUCTION happens in a factory - regardless of the kind of foundation you get for it.

Your BEST bet, is to hire a general contractor, who's going to be doing the work. The GC should have in place, a "blanket basis" builders risk policy, on a reporting form, so that every month he adds new projects, and deletes the ones that are completed. That's you ONLY chance, IMO, to get any form of builders risk coverage - but as it's in the GC's name, it will probably NOT satisfy the bank. You're going to have to go to a different bank, probably one that the builder recommends. Unfortunately, because it's a much higher risk loan (on a mobile home), the rate will probably be higher than a conventional construction loan.


What MOST people do, is have everything run through the builder or the GC, and let THEM worry about the insurance/bank issues - that way, you aren't responsible until the title is transferred over, after the building is complete.

I'm assuming that you're talking about a true mobile home, NOT a manufactured home, or "prefab" home.

Answer 2

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RE :Builders Risk Insurance for a Construction Loan on a Mobile Home?
We are trying to buy a new Mobile Home which will be converted to real property. We are working with a very well known bank institution and have been approved for a construction loan. They are telling me that Builders Risk Insurance needs to be purchased before they can give us a final approval on the loan. I called the local insurance companies and they insist they do not cover it for Mobile Homes. I brought this to the banks attention over a month ago, yet they are still telling me I need to get Builders Risk Insurance. What do I do? Supposably the mobile home builders don't cover the Builders Risk Insurance or the contractor, so it's up to me. How does this usually work? Is the buyer usually the one responsible for this?
Update: Well we call them mobile homes here, but it is a Manufactured home.
Follow 6 answers

Answer 3

It would be interesting to know what state you are in. Zurich offers a builders risk product that will cover mobile/modular/manufactureds. Keep in mind they come in one year policies with no available refunds, so they are quite costly for the amount of time that it takes to set a home. Try giving them a buzz. 866-279-8253

Answer 4

As long as your credit is good you should be able to find a bank that will lend you money. Basically start visiting banks. You might have better luck at smaller chain banks. The larger ones can afford to say no to just about anyone. Some of the smaller banks will loan to anyone with good credit who has a reasonable chance of completing a resellable property. Rules vary from bank to bank.

Answer 5

Builder's risk insurance covers perils such as fire, wind, theft and vandalism and many more.
It typically does not cover perils such as earthquake, flood or wind in beach zones unless the policy has been specifically endorsed to do so. Coverage is typically during construction period only, and is intended to terminate when the work has been completed and the property is ready for use or occupancy. Surely, this will help you further: http://buildersrisk-insurance-info.rainynews.com

Whatever you decide, I hope you are doing the right thing!

Answer 6

The website below is a great resource for anything about home purchase, refi, and insurance:

http://homearama.blogspot.com

I would definitely check out the link for Surepoint.com, they were a huge help when I bought mine.

Good Luck!

Answer 7

The insurance companies are right. Your loan officer is clue-less. Talk to his or her supervisor.