My mobile home was damaged by Hurricane Ian, but is very repairable. It needs a new roof, repairs to carport and siding and 1 shutter. The insurance company valued the loss at 73.5% of the maximum policy amount, so has deemed the damage a total loss and is paying out the policy maximum. The mobile home is repairable and I am not sure what are the next steps. The policy limit is much less than the cost to replace my home with another mobile home. Can I repair the home? Do I have to surrender the title to the insurance company? Will my title be branded? Can I still get insurance after I make the repairs?
You indicated that the insurance company “valued the loss at 73.5% of the maximum policy amount.” But that is below the 80% threshold typically used by insurance companies and the state. Plus, in Florida a mobile home is not considered a total loss if the insurance company and owner agree to repair rather than replace (unless the cost of repairs exceeds 100% of the retail value).
Keep in mind the determination of a total loss is based on the cost of repairs in relation to the cost of the home’s value. It is not based on the cost of repairs in relation to the policy limit. As such, before making a decision you should make sure you have an offer in writing from your insurance company to address the following questions:
1) Is your insurer’s offer to pay the policy limit a business decision given the extent of the damage or because you were underinsured, or are they actually ruling your home a total loss?
If your insurance company has ruled your mobile home a total loss, that means they have determined the cost of repairing loss related damage exceeds the value of your home. In that case, they would owe you the lesser of the value of your home or the policy limit. You could be asked to surrender both the title and the salvage (your home!) and the insurer would notify the state and complete the required Application for Salvage Title / Certificate of Destruction. Many carriers will allow the insured to retain salvage; however, that may mean the carrier will deduct the salvage value from the settlement. Plus, there are a number of requirements and ramifications related to obtaining a Salvage Title/Certificate of Destruction that would affect you.
If your insurance company is paying the full dwelling policy limit as a business decision or because you were underinsured, rather than as a total loss determination, you likely will not run into issues with the title or salvage (depending of course on that relationship between cost of repairs and value of property). Make sure the adjuster clarifies whether they intend to take possession of the salvage and/or notify the state. Also, make sure you know the cost of repairs plus debris removal costs to make sure you receive full benefit of your policy. If the damage to property plus debris removal exceeds the policy limit, mobile home policies typically include an additional 5% of coverage. In order to collect this additional 5%, you do need to know the cost of repairs and the cost of debris removal.
2) Do you have a proposal from a contractor of your choice or are you relying on the adjuster’s estimate to establish the extent of the damage and the cost of repairs?
You should obtain a detailed proposal from a contractor of your choice so that you can make an informed decision regarding the repairability of your home. Insurance adjusters write estimates for damage that they can see and it is extremely common to find hidden and/or supplemental damage during the course of repairs. So, the adjuster’s estimate may not include all loss related damage. Additionally, you could encounter some unexpected building code related costs. These may not be covered by your policy (and thus not included in the adjuster’s estimate) but are costs you will incur if you opt to rebuild.
The question of whether or not you will be able to get insurance after the loss will also likely hinge on the type of damage and the extent of the damage. However, given the current state of the insurance market in Florida and the difficulty of obtaining insurance at all, you might indeed encounter problems securing affordable coverage if you decide the keep the home and make the repairs.
In short, before accepting the adjuster’s offer you should know both the cost of repairs and the pre-loss cost of replacing your home with one of like kind and quality. You also need to know the value of your home in its current state (salvage) as well as the carrier’s intention as it relates to salvage. Additionally, before deciding to retain salvage you should contact the Florida Department of Highway Safety and Motor Vehicles for their forms and requirements. Finally, talk to your insurance agent regarding the insurability of your home.