If you own a mobile home, insurance is an important way to protect your investment. However, mobile homes present risks that are impossible to avoid, no matter how much insurance you have. In some cases your insurance company may declare your mobile home a total loss, which begins a process that combines elements of total losses for insured homes and automobiles.
Determining Total Loss
Insurance companies define a total loss as a situation in which the value of your claim exceeds your mobile home's policy limits. For example, if your mobile home is worth $20,000 and you have insurance for its full value, a storm may cause damage that would cost $30,000 to repair. Because the cost of satisfying your claim would be more than your insurance policy limit, the insurance company will declare your mobile home a total loss.
In the event of major damage to your mobile home, you must first contact your insurance company to verify that it is in fact a total loss. When your insurance company completes an inspection and repair estimate, you will learn that your claim is a total loss and receive a check based on the value of your insurance policy maximum limit. This is money you can use to purchase a new mobile home or spend in any way you choose. Several factors can reduce the amount you receive, even in a total loss.
One thing that can prevent you from receiving a check for the full value of your mobile home's insurance policy maximum limit is your deductible policy. Some insurance companies do not charge you a deductible when your mobile home is a total loss. Others will subtract your deductible from the policy maximum before issuing you a check. The deductible is the same amount as the standard deductible you would pay before your insurance contributed to any other claims.
Salvage value is another factor in the amount you receive for your totaled mobile home. Each insurance company has its own policy for handling salvage. In general, you will have the choice to take a check for your policy maximum and allow the insurance company to remove your mobile home from its location, or take a reduced payment but keep the damaged mobile home. If you choose to keep the mobile home, you can choose to repair it yourself or sell off its materials and contents for salvage, keeping any money you make in the process.