replacement coverage for other structures Shelley Ford asked 1 year ago
replacement coverage for other structures

Our home owners insurance policy states the following “Buildings under Coverage A or B at replacement cost without deduction for depreciation, subject to the following….” Coverage B is “other structures.” We had a 1963 mobile home that was completely destroyed in severe winds on January 7, 2023. It was a guest house. The insurance company determined it’s value using a vehicle valuation company. However this was not a vehicle. It was a home and we spent about $40,000 in hard costs to upgrade it plus about 1200 man hours. Finding another pre-owned mobile home is next to impossible. They are for sale in mobile home parks but it is required that they remain in the mobile home park. Bottom line, the insurance company has valued the mobile home at $60,700.00. We just want confirmation from someone other than the insurance company what “replacement coverage” means. They admit that they would replace our primary home or the barn both built 60 years ago with a new home if that’s what was destroyed. However they say they do not have to replace the mobile home with a new mobile home because it was hauled in on wheels.

1 Answers
Selina Clark Selina Clark Expert answered 1 year ago

Thank you for reaching out Ms. Ford. The insurance companies can certainly create a lot of confusion and frustration when you have a claim. Let’s address “Replacement Cost” first. Replacement Cost is what it would actually cost to repair or replace your home to pre-loss condition. Depending on the policy limits, some homeowners would have enough coverage to either make the necessary repairs or rebuild from a total loss. However, most homeowners do not have enough coverage for catastrophic events which is extremely disheartening. For example, if you have a dwelling policy limit of $200,000, and the estimate you receive to rebuild your home is $300,000 (Replacement Cost) you would not have enough. However, all insurance carriers/adjusters should advise you of all the additional coverages that you may have on your policy in an effort to reduce your out-of-pocket expenses. There are additional coverages/endorsements such as Option ID (Increased Dwelling) for both Dwelling and Other Structures, Additional 5% Debris Removal, Option OL (Ordinance & Law for Building Code upgrades), Option ID Additional 5% Debris Removal for both Dwelling and Other Structures, and Trees, Shrubs & Landscaping. Specifically in your case, if your carrier has not mentioned Debris Removal, ask them the amount of coverage you have for the removal of the mobile home debris.

Typically, the value of a mobile home would be done by an appraiser who specializes in mobile homes. They would consider factors such as the age, size, condition, location, features, and comparable sales in the area to determine its value. The fact the insurance company determined its value utilizing a vehicle valuation company could in all actuality have been a benefit. For peace of mind, you could reach out to an appraiser in your area and advise them of the scenario, just to see if they would provide you with a ‘ballpark’ number for a 60-year-old mobile home that you invested a lot of money and hard labor in. At that point, if it exceeds the valuation provided by your insurance company, you could share this with your adjuster and determine if it’s worth paying the appraisal fee (used to be approximately $500-$750). Since the insurance company already paid for the valuation report, they will tell you if you want another appraisal, it’s most likely going to be at your expense.

The comment regarding the adjuster telling you they do not have to replace the mobile home with a new mobile home because it was hauled in on wheels is disturbing. You also mentioned they admitted they would replace the primary home or the barn which were built 60 years ago with a new home it they were destroyed. Again, they mean ‘up to your policy limits.’

There are some questions as far as what type of policy you had for the mobile home; what were the policy limits; and is it only an Actual Cash Value policy? From your explanation, it appears the carrier is considering the mobile home an “Other Structure.” There is typically a policy limit which equates to 10% of your Dwelling limit. Again, if your Dwelling policy limit is $200,000, then the Other Structure policy limit would be 10% ($20,000). This is of course unless a homeowner advises their insurance agent to increase the limit. Please understand this is all contingent on what type of policy you have.