MH 04 04–MOBILEHOME LIENHOLDERS SINGLE INTEREST

(November 2023)

 

This form addresses the separate and equally important financial interest in the covered property held by a lender or other third party. It provides protection for the lienholder against the impairment of its financial interest in the mobilehome that may be caused by various sources such as collision or upset of the mobilehome, by conversion or by embezzlement or secretion of the mobilehome by the named insured.

If the mobilehome is repossessed from the named insured, the coverage reimburses the lienholder or dealer for the expenses directly related to transporting the mobilehome from the point of repossession to the seller's location.

In situations where it is unlikely that the insured will relocate the mobilehome, this protection is unnecessary. The dealer or lienholder could probably locate and repossess the property from the location described on the policy.

Agreement

Under the form’s agreement, the lienholder appearing in the mobilehome declarations is protected against loss to covered property involving any of the following:

Example: MobAmDream-Builders finance a loan for June and Slim Harrison. Two months into the policy term Slim falls behind on his payments. By the fourth month MobAmDream-Builders declare a default and repossess the mobilehome. Slim is startled to see his home being transported down the street. He smiles as he witnesses it swing wide during a turn and smash against a light pole. That damage to the mobilehome while in transit is covered only for the interest of MobAmDream-Builders.

 

Note: Parties who have a financial interest due to a valid assignment may also be protected by this form.

Recovery

The scenario for claims payment under this coverage is very exact and extreme. Review all of the following to determine when recovery is possible and the duties that must be performed.

a. When the policy term begins, the named insured must be current on the mobilehome payment. The named insured cannot be more than 30 days past due on any loan (not just the one for this particular lienholder) for which the mobilehome is collateral.

b. The lienholder cannot settle any loss on the mobilehome and expect repayment from the insurance company without written permission from the insurance company.

c. When there is a covered loss to the mobilehome and the insurance company requests the lienholder to save, preserve or recover the mobilehome, the lienholder’s reasonable expenses to do so will be reimbursed by the insurance

d. The mobilehome purchaser MUST have defaulted on the payment due. (This would be after the policy inception date but prior to the expiration date.)

e. The lienholder MUST have repossessed the mobilehome.

f. The purchaser/borrower MUST have abandoned the mobilehome because of a loss covered under this policy (not limited to only the causes of loss on the MH 04 04 endorsement).

g. If the loss is due to conversion, embezzlement or secretion the lienholder MUST make reasonable efforts to locate the purchaser in an attempt to collect overdue payments. If those efforts fail, it must make reasonable efforts to repossess the mobilehome.

 

Example: MobileDream Ltd. is a lender that specializes in mobilehome loans. It is listed as a lienholder for a doublewide mobilehome belonging to the Timpsies. After the Timpsies make payments for a couple of months, no other payments are made over the next seventh months. MobileDream discovers that the Timpsies' mobilehome has been moved from the location listed on the loan papers and the mobilehome policy. MobileDream files a claim with the policy's insurance carrier. The claim is denied as MobileDream did not make any efforts to locate the Timpsies to recover any due payments or to find and repossess the property.

 

Lienholders Duties

The lienholder is required to notify the insurance company when a loss occurs to the mobilehome but only if that damage could interfere with the lienholder’s interest. The lienholder is then responsible to protect it from additional loss and if the lienholder does not act, the insurance company will not pay for any further damage caused because of the lienholder’s lack of action.

Date of Loss

The date of loss is the day on which the lienholder has complied with all of the requirements in the Recovery section.

Limits of Liability – Settlement Options

There are four different settlement options and only the smallest one is paid:

a. If the loss is due to a transit collision or upset the settlement is based on the cost to repair or replace the mobilehome.

b. The impaired unpaid balance which is not more than 60 days past due. All carrying charges, interest and insurance is subtracted from that balance in computing this settlement amount. The lienholder’s interest is impaired if the value of the mobilehome following the loss is less than the lienholder’s interest.

c. The actual cash value on the date of loss

d. If the loss is due to conversion, embezzlement or secretion and the mobilehome is located within 60 days of the loss date, the cost of transporting it to either the lienholder or the insured’s address is the settlement amount. The cost to repair damage to the home is not part of this option.

Insurance Company - Settlement Option

The insurance company has four different manners by which it can meet its settlement obligations:

(1)   Pay money

(2)   Repair or replace the mobilehome

(3)   Return the property along with payment for damage provided it is done before the damage is repaired or having aid for the loss.

(4)   While abandonment by the insured is not permitted, the insurance company can take any or all of the mobilehome after paying the value that has been agreed upon or determined through the appraisal process.

Payment of Claim

In an unusual twist, when payment is made under this one coverage under this endorsement, the amount available to pay claims for other coverage is reduced by that amount.

Examination of Records

This permits the insurance company to examine the lienholder’s books and records that would be relevant to this coverage.

Cancellation

If this endorsement is cancelled by request of the insured, there is no return premium available. If the endorsement is cancelled by the request of the insurance company, a pro rata return premium is paid.