The ‘Tiny Life’ offers an alternative to high-interest mortgages and overwhelming amounts of consumerist clutter. Unfortunately, insurance issues are a downside of the lifestyle. Insurance for a tiny home can be complicated because traditional, single-family home insurance policies may not be a fit. Tiny houses can look so different that they may be placed in a variety of different categories. Is it an RV? Mobile home? An ADU? This question can be answered on a case-by-case basis depending on the builder, location, and mobility of the unit.
This is a challenge— without adequate insurance, a tiny home can be exposed to a variety of risks, including theft, fires, and liability. Having a policy that checks the boxes is not enough. Without adequate insurance, a tiny home can end up costing equally, if not more, than a traditional home. In this article, we examine the various aspects of tiny home insurance and help you understand policies, costs, and strategies so you can avoid a high-priced insurance catastrophe while achieving your lifestyle goals.
Unique Risks and Challenges in Insuring Tiny Houses
Insuring tiny homes differs from insuring traditional homes because the risks involved are different. Insurers typically rely on actuarial tables built from decades of data regarding traditional homes. Tiny houses are a new phenomenon to underwriters, presenting insuring challenges and leaving owners without adequate coverage.
Mobility and Insuring Tiny Houses
Almost all homes on wheels, including tiny homes, face risks associated with vehicles, including collisions, the entire unit being stolen, and damage occurring during transit. However, because the tiny house serves as a primary residence, it is required to also have liability coverage as a home would. Unfortunately, traditional home insurance policies explicitly exclude damage that occurs during transit, resulting in a large gap for owners of mobile tiny homes.
Insurers and Certification Problems Regarding Insured Risk
Insurers evaluate risk based on insurance industry building codes and standards. Insured risk for traditional homes occurs when an inspector verifies home wiring and plumbing. Tiny homes, particularly DIY models, may not have such verification. Insurers, lacking those certifications for the Recreational Vehicle Industry Association (RVIA) or the National Organization of Alternative Housing (NOAH), consider the home a liability risk, as poorly done electrical wiring may cause fire hazards.
Theft and Depreciation
Tiny homes on wheels can lose value just like vehicles, unlike real estate which typically appreciates. Insuring risk also has a unique problem with theft. It’s not just the risk of losing a TV. Someone can hook up a trailer and drive away the entire house. Standard insurance policies will not cover the theft of the home unless the owner adds a special endorsement.
Tiny House Insurance Policies
Since there is no one “tiny house insurance” solution, owners have to make do with existing types of coverage. What type of insurance is available will depend on the house’s construction and classification.
1. Recreational Vehicle (RV) Insurance
When the tiny house is mobile and RVIA certified, the most appropriate insurance is often RV insurance.
Who it’s for: Travelers and THOW owners with RVIA certification.
Coverage: It covers the structure and belongings during travel and while parked. It also includes liability coverage.
Caveat: Standard RV policies are designed for vacationers. If you live in your tiny house year-round, you must request a “Full-Timers” endorsement. This adds personal liability coverage similar to a homeowners policy, protecting you if someone gets hurt on your property.
2. Manufactured (Mobile) Home Insurance
For tiny homes that are permanently parked or placed on a foundation, manufactured home insurance (form HO-7) is a strong option.
Who it’s for: Tiny homes on foundations or semi-permanent setups.
Coverage: Comprehensive coverage for the dwelling, other structures (like a shed), personal property, and liability.
Caveat: These policies generally do not cover the house if you decide to move it. You would need a separate “trip endorsement” for transit coverage.
3. Specialty Tiny House Insurance
Recognizing the gap in the market, niche insurers like Strategic Insurance Agency and programs through Foremost have developed specific tiny house policies.
Who it’s for: DIY builders or owners of non-RVIA certified homes.
Coverage: These are typically “monoline” policies that may only cover the dwelling or liability. However, premium policies now mirror standard homeowners policies with coverage for theft, fire, and falling objects.
Caveat: Strict eligibility can still remain. For instance, Foremost’s program typically requires units to be valued below a certain threshold (e.g., $150,000) and may still require some inspection or certification.
4. Builder’s Risk Insurance
This is a necessary temporary policy for DIYers.
Who it’s for: Individuals who are building their tiny home.
Coverage: This policy covers materials and tools, as well as the structure, for theft, vandalism, and fire during the building process. This policy will expire once the building is complete, and you will have to switch to a permanent policy.
Factors affecting tiny house insurance costs
Insurance for tiny homes costs less overall than insuring a traditional house because they have smaller replacement values. However, insurance for tiny homes carries a higher risk, so premiums will be higher relative to the value. You can expect to spend between $400 and $1,500 for coverage annually.
Certification Status
Certification is the biggest cost driver. If a home is NOAH or RVIA-certified, it can be viewed as safe and insurable, allowing a major carrier to offer lower premiums. On the other hand, a DIY home that isn’t certified will likely require you to go to the “surplus lines” market, where insurers charge much higher premiums to account for the unknown risk.
Location and Usage
Location and usage affect how much you will pay for insurance. A home that stays parked at a secure, gated community will be less expensive to insure than one that drives 5,000 miles a year. Driving a lot increases the chances of accidents, and homes can get vibration damage.
Location and usage also affect how much you pay for insurance. A home parked in a secure, gated community will be less expensive to insure than one that drives 5,000 miles a year. Driving a lot increases the chances of accidents, and homes can get vibration damage.
Value and Amenities
If your home has high-end finishes, solar panels, and custom appliances, that will increase your home’s “replacement cost.” You want to be fully covered, but increasing the value of your personal property will increase your premiums. A common mistake, however, when trying to save money is to underinsure personal property, leaving owners vulnerable.
Tips for Finding Affordable Tiny House Insurance
Finding insurance coverage should not be a stressful experience. Here is how to lower a premium while having good coverage.
Build Documentation: When constructing your own home, hire certified electricians and plumbers, and document the entire process. Even better, pay for a NOAH inspection during construction. This ‘seal of approval’ grants access to primary carriers like USAA and Progressive, which are often cheaper than niche specialty brokers.
Policy Bundling: If you have to tow a vehicle, have auto insurance, and renters insurance, try to keep them with the same company. Progressive and State Farm, for example, provide bundling discounts that reduce your total by 10-15%.
Deductible Increase: If you have an emergency fund, you can keep your premiums low by raising your deductible to $1,000 or more. Foremost has a diminishing deductible program where your deductible decreases by 25% for every claim-free year, which can be an added incentive.
Home Safety: Insurers worry about theft. To show you are a lower risk, you can install a GPS tracker, wheel locks, and a hitch lock. These can earn you a discount.
Case Studies: When Coverage Matters
While tiny house insurance brokers keep the specific claims data close to the vest, we can use common claim scenarios to see how various policies operate in the real world.Scenario A: A Highway Mishap
The Situation: A couple is towing their THOW from Oregon to Colorado. A tire blowout causes the tiny house to sway and side swipe a guardrail, tearing off the siding and damaging the frame.
The Outcome: Because the couple relied solely on a stationary mobile home policy, the claim was denied. Mobile home policies typically exclude damage in transit. Had they purchased a “Trip Endorsement” or a comprehensive RV policy, the repairs would have been covered.
Scenario B: A DIY Disaster
The Situation: A DIY builder installed a wood stove incorrectly. A small fire broke out damaging the wall and ceiling.
The Outcome: The owner had a standard homeowners policy but did not disclose the wood stove or the DIY nature of the build. The insurer investigated, and the installation did not meet code. They denied the claim due to “material misrepresentation.” This illustrates the importance of honesty during the underwriting process and the need for a professional inspector.
Scenario C: The Theft
The Situation: A tiny house parked on a friend’s land was stolen while the owner was at work.The Outcome: The owner had a specialty tiny house policy with a specific endorsement for “Theft of Dwelling.” The home was covered by an insurance policy at a deductible amount, allowing the homeowner to build the house again. Without that specific endorsement, a standard policy might have only covered the contents (clothing, electronics) but not the house itself.
Expert Advice from Insurance Professionals
To get the best results, you need to speak the language of insurers. We acquired knowledge from industry coping guidelines and insurance agents.
“Don’t call it a Tiny House right away.”
As you engage with a major insurance carrier, start the discussion with a description of the structure. Is it a travel trailer? Is it a manufactured home? Insurance agents have to work with product codes, and if you use the descriptor tiny house, they may stick to the given product code and side of the line that says ‘we don’t cover that.’ In other words, saying, ‘I have a 300 sq. ft. certified travel trailer’ nets you a quote much more easily than saying tiny house.
“Document everything.”
“If you built it, prove it.” This means that you should document everything, including the purchase of 2x4s, screws, and appliances. In the event of a total loss, the insurance payout is based on the value of what is documented. If you can’t prove what materials were used, you will likely receive a settlement that is much less than the amount required to rebuild.
“Read the exclusions.”
Policies often have specific exclusions regarding \”off-grid\” living. If your house is not connected to public utilities, or if you only use wood to heat your house, you may not qualify for standard coverage. Always inquire about \”off-grid\” clauses, and specifically ask about the \”solid fuel\” clauses regarding wood stoves.
Future Trends in Tiny House Insurance
Tiny house insurance is a steadily evolving industry. As tiny house zoning regulations become more widely adopted, the insurance industry will have more data to create innovative insurance products.
The Expansion of Modular Certification
The industry is beginning to shift toward what is being called ”modular” certification. Since more tiny homes are being constructed in factories as opposed to backyards, they are being built with certifications that comply with traditional housing regulations. This should enable tiny house owners to access standard home insurance, decreasing pricing and competition within the insurance industry.
Climate and Location Specific Parametric Insurance
Numerous tiny homes are placed in remote, wilderness-rich locations and are therefore vulnerable to wildfires and storms. This is the main reason why the industry is currently looking into ”parametric insurance.” This type of insurance involves pre-defined criteria. If an event occurs, the policy pays automatically whether or not a physical damage assessment is completed. For instance, if the wind speed exceeds 80 mph in a policyholder’s zip code, the policyholder will receive a payout. This type of insurance would be beneficial to mobile tiny homeowners that require immediate payments in order to move their homes after a natural disaster.
The Consideration of Your Wishes
Living with less is a way of living that most people are not used to. Insuring a tiny home is a shift in traditional home insurance, and in this the policyholder must move away from the ”one and done” approach that most people prefer to have with their insurance. Instead, it involves a commitment to an active approach in customizing their coverage in order to properly fit their home.
Regardless of whether you select an RV policy for your nomadic lifestyle or a manufactured home policy for your backyard haven, the most important thing is transparency. Be honest about how your home is constructed, its location, and how you utilize it. Don’t allow the possibility of a claim being denied overshadow your minimalist lifestyle. By certifying your home and working with an experienced agent, you can safeguard your small investment from life’s big uncertainties.