Insuring Your Tiny House
In This Chapter
- Learning about insurance options available for tiny houses
- Discovering the best insurance solution for your tiny house
- Knowing what questions to ask your insurance agent
- Making sure you don’t end up with the wrong policy
Until recently, obtaining insurance for a Tiny House On Wheels (THOWs) was virtually impossible; consequently, many tiny housers simply went without coverage and hoped for the best. Insurance companies seemed only mildly interested because they struggled to find answers to three important questions:
1. Was there enough interest for THOWs insurance to warrant the effort?
2. What the heck was a tiny house anyway?
3. How were they going to write a policy for something that hadn’t even existed until a few years before?
However, with the explosion of new tiny houses came a surge in interest, motivating insurance companies to invest their resources toward finding solutions. It took some time and an impressive amount of effort, but thankfully, coverage options exist for nearly all types of tiny houses out there today.
In this chapter, we provide an insurance term primer, cover what options are best for each type of tiny house, and discuss how to find a great insurance agent.
Insurance solutions for THOWs are complex and often involve the marriage of two or more standard types of coverage. For example, when a Tiny House On Wheels (THOWs) is parked on a piece of property, a normal homeowner’s policy covers it. However, as soon as that tiny house is hooked up to a tow vehicle, the homeowner’s policy no longer applies and you must have a THOWs policy.
TINY TIP
Finding insurance for tiny houses on foundations is a breeze. Just look for normal homeowner’s policies in your local market. The challenges surrounding insuring tiny houses only comes into play when they’re built on wheels or on skids.
Add to this complexity the fact that not all THOWs insurance solutions are available in every state, and you might soon begin to feel overwhelmed. Fortunately, there are a couple of great insurance brokers out there dedicated to providing solutions for even the most unique tiny house builds.
Homeowner’s Insurance Policies
Homeowner’s insurance is a standard policy that protects a house, its contents, and the property it sits on. It also provides liability coverage for any injuries incurred by other people visiting your place. Homeowner’s policies are now available for THOWs through some insurance companies. This coverage can sometimes extend to tenant-occupied tiny houses as well.
The main exclusions for THOWs in homeowner’s policies are earth movement (damage incurred while in transit) and theft of the tiny house itself. Because houses on fixed foundations can’t typically be stolen and taken off site, no clauses exist for stolen structures in standard home-owner’s policies.
A homeowner’s policy is ideal for those individuals parking their tiny houses on their own property. If you plan on moving your tiny house from place to place, you’ll need to add one of several available policies (more on this below) because any homeowner’s policy becomes void the moment your tiny is hooked to a tow vehicle.
Some insurance carriers are starting to write stationary THOWs under their park model/manufactured home programs. If your THOWs qualifies, this is a viable and comprehensive option (without theft exclusion). Some programs even offer a trip endorsement for a one-time or limited-time frame.
RV insurance options are bountiful. The policy you choose depends upon a variety of factors, including how often you use your RV, what type of RV you own (class A, travel trailer, Tiny House RV, and so on), and if your RV is your full-time residence. RV insurance is like automobile policies in that they offer collision, liability, and add-ons such as protection of personal belongings, roadside assistance, and the like.
RV insurance is required in every state, though the amount of coverage required varies. If you live in your RV full time you’ll need to secure additional full-timers coverage. Not all companies offer this option, so be sure to ask around until you find one that does.
TINY WARNING
If you have an RVIA-certified tiny house and plan on towing it a lot, make sure that your policy has you listed as an RV, not a manufactured house. Manufactured housing policies only allow you to move once or twice per year during relocation by adding a rider for the time you are in transit. Also, be sure to verify whether the RV insurance covers full-time residents, because many policies don’t.
A self-built tiny house isn’t eligible for RV insurance; only RVIA-certified tiny houses bearing the RVIA seal qualify for this insurance. Some insurance companies are opening up to certification from other organizations as well. In your application process, you’ll need to present proof of certification before your policy is approved.
Inland Marine Insurance Policies
Inland marine insurance covers property that’s mobile in nature. This can include everything from a contractor’s trailer and tools, to a Tiny House On Wheels (THOWs). They’re sometimes known as “floater” policies and have been on the market for many decades.
Inland marine insurance covers your tiny house but doesn’t provide any liability coverage. That means if your actions while towing your THOWs cause personal or bodily harm, you’ll be on the hook for any bills. If you go with an inland marine policy, you’ll need to get liability coverage from another source. Inland marine policies often exclude personal belongings so renter’s policies are often added to protect the contents of the tiny house.
Automobile Insurance Policies
Auto policies protect your car and provide liability coverage in the event of an accident caused by a mistake on your part. By law, all states except for New Hampshire and Wisconsin require a minimum of liability insurance on the policy. Other states require car owners to include add-ons, such as uninsured motorist and/or personal injury protection policies in addition to the liability coverage.
When it comes to towing a travel trailer or tiny house, many automobile insurance carriers will allow you to add an endorsement to your policy for this purpose. You must call your provider and make sure that you have this option on your plan. This endorsement will provide you with liability coverage in case you accidentally damage another person’s property or cause physical harm. However, it will not cover your tiny house itself or any of its contents. A renter’s policy combined with an inland marine policy make up for that shortcoming.
DEFINITION
An insurance endorsement is a document attached to an insurance policy that amends the policy in some way. It can add, take away, or alter the scope of coverage under the original insurance policy.
Renter’s Insurance Policies
Renter’s insurance provides many of the perks of a homeowner’s policy but it doesn’t extend coverage to the actual structure itself. Rather, it offers liability protection as well as protection of personal belongings from events such as theft, fire, vandalism, and more.
One cool benefit of renter’s insurance is that your belongings are covered no matter where you are in the world. If something is stolen on your European vacation, your renter’s policy will be there to help. It should also pay for temporary living expenses if your dwelling becomes uninhabitable due to a catastrophic event.
When selecting your policy, you’ll have the option of choosing between Actual Cash Value (ACV) coverage and Replacement Cost Coverage (RCC). RCC covers your contents at current market value and doesn’t take depreciation into consideration. That means if the two-year-old computer you paid $1,000 for is stolen, you’ll receive $1,000 from your insurance company to replace it. ACV, on the other hand, values your property at what it’s worth today. With this coverage, you might only receive $500 for that same computer because its current value is less than what you paid for it. The cost difference between these two policies is often insignificant, so go with the RCC option if you can afford it.
Insurance Options for Each Tiny House Type
Many tiny housers have no plans of ever moving their homes while others intend on living the nomadic lifestyle for years to come. Depending on where you fall on this spectrum, your insurance options will differ. Let’s go over the potential scenarios and look at what choices are available in each.
RVIA-Certified Tiny Houses
Some tiny housers reside in RVIA-certified tiny houses and they have it the easiest when it comes to insurance. RV insurance companies have existed for decades and they’ve mastered their domain. The application process is simple, coverage options are plentiful, and the premiums are affordable.
Many RVIA tiny house manufacturers have negotiated special deals with RV insurance companies. Also, many have done all the research so you can spend your hard-earned time kicking your feet up in a hammock rather than shopping around.
There are a couple of relatively new tiny house certification programs—PWA (Pacific West Associates, Inc.) and NOAH (National Organization of Alternative Housing, Inc.)—that some insurance carriers are beginning to recognize in the same light as RVIA standards.
TINY WARNING
If you want standard RV insurance, you will need to purchase a RVIA-certified tiny house. There is also the potential that an RV insurance company will recognize a tiny house certified by a third-party organization. At any rate, there will need to be some form of certification for standard RV insurance coverage.
Make sure your potential carrier offers full-timer’s coverage if you intend on living year-round in your Tiny House RV. Also, if you plan on moving it more than once or twice per year, make sure that your insurance carrier doesn’t list your tiny home as a manufactured home. A manufactured home policy requires endorsements each time you want to move the home, and the policy only protects the structure while it’s parked in one place.
RV insurance policies are a complete solution that provide coverage for your tiny house structure, belongings, liability, uninsured/underinsured drivers, collision, medical, and even roadside assistance. The policy stays with your tiny house when you’re parked at your favorite hidden beach cove, and it moves along with you when you’re off to the next adventure. There is no need to notify your agent each time you pick up and move.
Professionally-Built Non-RVIA-Certified Tiny Houses
Many folks don’t want to build their own tiny house, but they also don’t want to be confined to RV standards. The primary reason for this is that most areas that are constrained by zoning also have strict limits on how many days an RV may be parked in one spot (30 days on average). Instead, they want a THOWs that abides by most (if not all) conventional construction building codes. In these situations, builders are often hired to complete the job.
Typically, finding insurance options in this scenario is not difficult; policies are available in most states. If the THOWs will be kept on your own property, the solution is as simple as a homeowner’s policy from one of the tiny house insurance providers. This coverage will extend protection for contents, the tiny house itself, the property it sits upon, and liability.
If you plan on living in your professionally built non-RVIA tiny house on rented property, you can get a homeowner’s policy, which includes coverage for the dwelling, personal property, and includes liability coverage.
With this policy, you don’t need to remove the wheels/axles or place the THOWs on a permanent foundation as far as the insurance coverage is concerned. The policy catalogs the tiny house as a primary residence and has no prejudice against it being on wheels, or that it is so small. Rates are quite reasonable, especially considering that the policy isn’t a standard offering.
Most conventional insurance companies don’t offer this plan, but it doesn’t hurt to call and ask. If nothing else, asking for the policy tells your carrier that there is a demand for it. The more insurance companies hear about tiny houses and the need for coverage, the sooner those companies will get on board and start offering policies of their own.
If/when your professionally-built tiny house is ready to be moved to its next location, other insurance policies will need to be employed because a homeowner’s policy no longer applies the moment your tiny house is hooked up to a towing vehicle. In those situations, collaboration between an auto policy (for liability), inland marine (for the tiny house itself), and renter’s insurance (for contents) is often used.
Once your tiny house is settled into its new location, simply contact your broker and let her know the new address. Since premiums are based in large part on the distance of a residence from fire response services, it’s important they know exactly where you’re parked so that you get the appropriate coverage.
TINY QUOTE
“Spending my day looking for insurance is a great use of my time! Said no one, ever.”
–Author unknown
Fortunately, you don’t need to contact individual providers to stitch this together. Currently, there are at least two tiny house insurance brokers providing this suite of solutions for most states. Professionally built tiny houses receive easier approval for coverage than self-built homes because insurance companies see them as a lower risk. Policies aren’t available in every state so make sure that your next place of residence has the coverage you want before making plans to move.
Those of us who crafted our tiny houses with our own hands might have the hardest time finding coverage. Because insurers weren’t there to see the whole construction process, they really don’t know if the home was built well or not. The most important advice we can give you on this matter is to take photos of your construction process and document each step of the way. This is especially important during installation of your plumbing, gas, and electrical systems.
Some insurance companies require a signed inspection report from a licensed electrician; be sure to inquire if that’s necessary before you close off your wiring and electrical panel inside your walls. You’ll need to go through an on-site inspection process and most likely show that your electrical was installed safely. We had to go through this ourselves since hOMe was self-built. Thankfully, the process was all very reasonable.
Assuming everything checks out with the inspection, you should be eligible for coverage on your tiny house (whether you own or rent your tiny house and whether you own the land on which the tiny house is parked), liability, and contents.
TINY TIP
When filling out your insurance application, it’s important to include the labor that it took to build your tiny house, even if you did it yourself. That way, if there is total loss, you get the true replacement value, which includes the materials as well as the number of labor hours it took for you to build it.
Things become complicated when the DIY builder wants to move his THOWs often. In this scenario, look for an inland marine and renter’s combo. With that duo, you’ll receive coverage for the structure, its contents, and liability.
If you want the freedom of the road as well as a simple insurance option, but you can’t afford a professionally built tiny house, a tiny house shell might be the answer to your dreams. Chances are good that you’ll gain easier approval plus you’ll have the benefit of being able to hit the road weeks or months earlier than if you were building the whole thing from scratch.
DEFINITION
Several companies are now offering tiny houses on trailers that are framed, sheathed, and roofed. This saves the tiny house owner/builder, weeks—or even months—of work. Tiny house shells often are an attractive option for those without a lot of time on their hands or construction experience under their belts.
A new product on the tiny house scene is builder’s risk insurance. This option now allows the DIY market to insure their tiny house while it’s in construction. Builder’s risk insurance provides coverage in the case of loss, theft, or damage. It doesn’t provide liability coverage, but rather, protection of the physical structure itself.
Builder’s risk insurance might or might not include coverage for tools so be sure to ask your agent so that you know exactly what you’re getting. Also remember to ask if there are riders for special natural disasters if you’re in a high-risk area. Once your tiny house build is complete, your builder’s risk insurance terminates and you should move into whatever policy makes the most sense to you at that point based on the details previously discussed. This product is also available to professional THOWs builders.
Finding an Agent
Finding insurance agents who understand what tiny houses on wheels are, what unique challenges they pose, and how to insure them is becoming easier. Currently, there are two that we know of who deal specifically with tiny houses and can provide coverage in most states. We recommend that you reach out to them first since they’ve come up with viable solutions for nearly every type of tiny house out there and can make sure that you get the coverage you need.
- The first tiny house specific broker is Darrell Grenz of Darrell Grenz Insurance, Portland, Oregon (www.InsureMyTinyHome.com). Darrell has been an insurance agent since 2004, and has specialized in tiny house insurance for the last five years. He interfaces with several major insurance companies and can offer tiny house insurance for THOWs, THOFs, THOSs, self-builds, RVIA (and other certification programs), builder’s risk, rental/AirBnB/owner occupied, tiny house communities, earthquake coverage (in CA), and much more.
- The second insurance agency is Strategic Insurance Agency a unit of Burlingame Insurance Agency. Martin Burlingame has a passion for helping the THOWs community. His 12-year-old agency is located in Colorado Springs and focuses on providing affordable solutions for tiny homebuyers. His custom-built insurance program handles tiny homes that move across the country. He’s also able to quote DIY, travel trailers, secondary dwellings, rentals, AirBNB locations, and tiny businesses.
It’s worth stressing the importance of being up front with your insurance broker. Don’t hide the fact that you’re insuring a tiny house because if you submit a claim and the insurance company finds out that they weren’t covering what they thought they were, they’ll likely deny the claim. You’ll be out all those premium payments and be stuck with any repair, legal costs, and medical bills associated with the claim.
If you’d like to work with a non-tiny house specific agent, there are some questions you’ll want to ask to make sure you’re getting the right coverage. If they don’t fully understand what they’re dealing with, you could be the one that bears the consequences if anything goes wrong.
Start your conversation by asking if the agent has ever heard of tiny houses or “custom travel trailers.” If you aren’t completely convinced, ask tough questions. You’ll be armed with a fair amount of insurance lingo after reading this chapter, so apply all you’ve learned and put the agent to the test. The intention, of course, isn’t to make the agent feel badly about himself or herself, but rather, to make sure the agent understands your needs so that you actually get compensated in case you file a claim.
Be certain to ask the broker what states they are insured in (this is especially important if you plan on moving your tiny house quite a bit), if they have provided coverage for THOWs before, if they require RVIA certification, if they will insure self-built tiny houses, and what insurance companies they represent. Make sure that you’re not pushed into a product that doesn’t suit your specific needs.
TINY WARNING
If you decide to hire a professional hauler to tow your tiny house, ask them how much “on-hook” or “motor-cargo” insurance they have per vehicle. It’s not unheard of for a hauler to have insurance but not enough to cover your tiny house, or to have enough insurance coverage but have it spread out amongst all of their towing vehicles.
You’ll be asked specifics about your tiny house including its dimensions, its value, if it’s a full-time residence, if it’s RVIA-certified, if it’s on wheels, and whether it’s self-built. You’ll also be asked where your THOWs is parked, how old it is, how often you’ll be towing it, and what vehicle will be doing the hauling. You’ll get a pretty good sense by the time you’re done with this phone call or meeting about how much the agent understands your needs. If the agent and policy is a fit, and the premium matches your budget, you’ll be all set to go.
The Least You Need to Know
- Though Tiny House On Wheels (THOWs) insurance was virtually unavailable just a few years ago, a variety of options exist today.
- Which insurance package you get for your THOWs depends on whether it’s RVIA-certified, professionally built or self-built, and how often you plan on moving it.
- It’s important that you work with an insurance broker who fully understands your coverage needs so that you don’t end up with any surprises if you must file a claim.