I have a confession to make. Like many other people, I have an unhealthy obsession with watching HGTV. I turned it on this weekend, and a show came on called “Tiny House, Big Living.” The show highlights people who are building their dream home, with the catch being that the homes are so small that most of them are built on the frame of a utility trailer. As I began to watch this program, I started to see why tiny homes are becoming a trend in the United States. These people have little to no mortgage, mobility, and very simplified living. Who wouldn’t want all of those things? After the initial glamour wore off, the first thing I asked myself was, “How does tiny home insurance work?”
It turns out this question is not one that has a simple answer. This is mainly due to the mobility of these tiny homes. With traditional homeowners insurance, you are insuring a structure at one location; but what if that location changes to another city or state whenever the homeowner decides to up and move? The other problem is the construction. If it’s built on a trailer frame, does that classify it as an RV? Plus, many of these homes are do-it-yourself, and they rarely are constructed by a licensed contractor. One might argue to skip insurance all together, with the reason being it didn’t cost all that much to build. That argument might carry weight if it weren’t for the liability exposures. I don’t know about you, but this writer thinks driving a self-built home around on a trailer frame might be a bit risky! If by this point your dreams of owning a tiny home are starting to crumble, fear not my friends! There are a few different options out there.
The easiest solution is to build your tiny home on a permanent foundation. Most insurance companies I spoke with, and I say most because each one is different, said that if the home is on a permanent foundation, they will treat it like any other home, albeit a small one.
If having mobility is a must for your tiny home, you really have three different options. The first would be to have it constructed by a certified RV manufacturer, which can be located with a quick Google search. The next would be to build it yourself and then get it certified by the Recreation Vehicle Industry Association (RVIA). This tends to be the most difficult option, but their standards and procedures can be found at www.rvia.org. With either of the first two options, insurance companies would likely classify your tiny house as a mobile home, so your coverage would be the same as any other RV. The last option would be to purchase a Lloyd’s of London policy which provides limited insurance coverage. Currently they only offer policies in Arizona, California, Colorado, Nevada, Oregon, and Utah, but they are actively considering expanding to other states.
At the end of the day, becoming a part of the tiny home culture is a major decision that shouldn’t be ventured into lightly. Do your homework with builders, municipalities, and insurance companies to make sure you are not only in compliance, but properly covered. As for me, I’ll stick to watching them on HGTV.