What About Your Utility Systems?
Article
When purchasing a manufactured home community, experienced investors focus considerable pre-purchase due diligence on the community's utility systems. This infrastructure is a large part of the value of most properties. Major problems associated with utility systems can quickly destroy a community's value.
As such, it is important to consider the utility system when you are insuring your community. You should determine what portions of the utility system the park owns, and what portions are owned by a utility provider. Also determine the cost to replace park owned utility systems. Community utility systems include power pedestals at home sites, street lights, power poles, water pumps/wells, sewage tanks, sewage pumps, and other sewage plant equipment. Next, determine the susceptibility to damage and malfunction inherent in each. During the past year, park owning clients of Mobile Insurance have had tornadoes strip away power pedestals, lightning destroy electrical stations, fires melt and collapse underground utility lines, and mechanical breakdowns cripple sewage lift stations. These weren't small losses. Ask your insurance agent to help you assess your risk.
Most park utility systems are less susceptible to damage than park owned buildings, signs, fences, and other improvements. Therefore, the cost to insure them is usually less. For example, most park owners can insure every power pedestal in their park for less than the cost to replace just one. When insurance isn't a good choice, consider funding long-term capital improvement accounts so you are prepared when cash is needed. Plan ahead and protect your investment. If you haven't already, consider implementing a utility infrastructure risk management plan.
Kurt D. Kelley, JD
President
Mobile Insurance