Update to this Update!
Check out our more recent post on Real Insurance for Tiny Houses on Wheels! The info below covers some good ground that will be useful for many, but do check out the newly emerging and more formal insurance policies for tiny homes on wheels.
By Dee Williams
On November 10, PAD hosted a one-day Tiny House Basics Workshop in Portland, Oregon. We pulled together a group of experts and nearly 40 students to discuss “sticky-wicket issues” like graywater management, codes, and insurance, among other things. It was a great experience and we’re hoping to make our next workshop even better, with even more in-depth discussions of what works and doesn’t in a little house.
This post is focused on one of our workshop topics that seemed to generate some of the greatest amount of discussion: INSURANCE. I first started digging into this issue in July of this year, after a fire that destroyed my friend, Kim Langston’s, little house.
Here’s what I learned: Insurance companies compare little houses on wheels to travel trailers that are used for long-term recreation. They also prefer a formal certification showing that the trailer has been properly made. If you look at an RV, you should find a little tag punched with a certification number: proof that the unit was built according to the National Highway Safety Standards.
Insurance companies have no problem offering insurance for certified RVs, assuming the unit is being used as designed. So what do you do if you plan to build an uncertified, homemade little house?
We recommend that you talk to your insurance provider about the following:
o Builders Risk Insurance – This type of insurance covers the structure during construction. It is typically only available for big construction projects done by licensed, bonded contractors (Kim’s little project wouldn’t have remotely qualified), but it doesn’t hurt to ask your agent about it. They may be able to insure your project depending on who’s doing the work, where they’re working, and how the project is financed.
o Trip Insurance – The DOT and Insurance Carrier will view your little house as a “load on the trailer.” The trailer is addressed through automobile insurance, but the load (your super-cute house) is not. So you need to ask about a separate trip policy for a load secured to the trailer.
o Renters Insurance – I haven’t found a Company that is currently willing to offer catastrophic loss insurance for uncertified, homemade little houses. I’ve heard from other little house owners that they’ve found insurance, but it seems they were lucky; that window of opportunity seems to have closed. Essentially, since the house isn’t certified as being properly built, the Insurance under-writers can’t rest assured that the house won’t blow up, meltdown or otherwise fall apart. And, there’s limited opportunities for subrogation – that is, there’s no big company to ‘go after’ if there’s a problem. So your little house on wheels is a risk for them. You might still get insurance, if you can demonstrate that the house was built to certain design specifications and was constructed by qualified technicians. It doesn’t hurt to gather that information and present it to your agent.
Even though catastrophic loss insurance is difficult to find for the structure itself, you can still get a renters policy that will cover your possessions in the little house. That policy can also cover you for liability if someone falls off the porch, or your house lights on fire and burns down the neighbor’s shed. And you can’t lose sight of the fact that you can create your own insurance fund out of the money that you’re saving by living in an energy efficient, mortgage-free tiny house.
There’s more to this discussion, and PAD is dedicated to continuing to chip away at this with insurance agents, underwriters and others. What ever you do, keep talking with your provider and be completely straight-forward with them. Remember, it is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company.
I have some suggestions for folks who are just starting to build — ideas that may help you get insurance after you finish building — and I’ll offer those in my next post.