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Insuring an $86,500 prefab house

Just picture it, a prefabricated house that is manufactured and packed into a couple of crates and delivered with user-friendly installation instructions. And all for only $86,500.

IKEA, an international home products company, and Ideabox, a prefab design company in Salem, Ore., have collaborated to produce a modular home called the Aktiv. Ideabox  uses primarily IKEA products in the dwelling.

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“We’ve been building small-footprint and big-living modern houses for several years,” says Jim Russell, president of Ideabox. “We always appreciated what IKEA does.”

How much insurance do you need for a prefab house

Photo credit: Ideabox

Ideabox has seven other models of prefab homes, ranging in price from $20,000 to $155,000. The compact, 745-square-foot Aktiv design is a one-bedroom home with a patio, living room, storage closets, cabinets, countertops, and flooring.  

Insurance for prefab homes

So what does it cost to insure a modular home? Each case is different, but your cost could be less than insuring a comparable, conventionally built home, if the construction costs are lower, says Peter Moraga, a spokesperson for the Insurance Information Network of California.

Modular homes typically are insured under standard homeowner policies. The policy price depends on a variety of factors in addition to the cost of replacing or repairing the home, says Loretta Worters, spokesperson for the Insurance Information Institute.

“Most insurance companies treat modular homes the same way they do site-built homes,” she says. “In fact, usually these homes are built better because they are built under stringent quality control. They are never subjected to adverse weather conditions [during construction]. The sections move through the factory, with the company's quality control department checking them after every step.”

Worters says insurance rate variables include:

  • Square footage
  • Local building costs
  • Construction materials costs
  • Neighborhood crime rates
  • The likelihood of damage from natural disasters, such as hurricanes, tornadoes, floods and hail storms
  • The quality of your local fire department
  • The condition of the home’s plumbing, heating and electrical systems

It’s important to remember that the cost of home insurance is not based on fluctuating real estate market values or the price of the land the structure rests on.

For more information on home insurance, see Insure.com’s Home insurance basics.

“Getting homeowners [insurance] for our modular was no different than getting insurance for our previous home,” says Jim Rodgers, of Callicoon, N.Y. Rodgers, a teacher, who bought a modular home 12 years ago. “I just went down to my local insurance company and got a construction loan policy first. The truck came with four crates. It all went up in a day. It was finished by four in the afternoon.”

You might doubt that a house manufactured in a factory can be as sturdy as a traditional home. If you’re comparing it to a mobile home, it’s not the same thing.

“If a modular home is assembled at the house site, and walls are brought to the site to be nailed together, then it would be insured under a [standard] homeowner policy,” says Ron Moore, senior product manager for MetLife Auto & Home.

The nice thing about modular homes, notes Rodgers, “is that they meet or exceed code requirements like electricals or building codes for anywhere they ship them...My homeowners insurance is for full replacement value. If it burns to the ground, I’ll get what I spent to build it.”

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