Tiny House Insurance: How to Insure Your Tiny Home

Tiny houses are becoming increasingly popular in the United States—after all, these little homes are inexpensive, energy efficient, and simple to maintain. They also provide a simpler existence, as there is no room for clutter or unnecessary items (Marie Kondo would be proud).

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Even though tiny houses are, well, tiny, they can still cost tens—or even hundreds—of thousands of dollars, so it's a smart idea to insure your investment. Here's all you need to know about tiny home insurance.

TAKEAWAYS IMPORTANT

• The average size of a tiny house is between 100 and 400 square feet.
• A tiny house can be insured, but the type of policy you get will depend on how the house was built and how you use it.
• It's a good idea to consider insurance before building a tiny house so you know what possibilities you'll have.

What Is the Definition of a Tiny House?

A tiny house is exactly what it says on the tin: a very compact home. While there are no legal size restrictions, small houses often range in size from 100 to 400 square feet. 1 According to data from the US Census Bureau, the median size of newly constructed single-family homes in 2019 was 2,301 square feet.

Tiny houses are either mobile (and hence mobile) or stationary (and thus immovable). The type of insurance you require is determined by this distinction, as well as how you use your home.

Tiny House Insurance for RVs

If your tiny house is on wheels and you plan to travel around a lot, RV insurance may be the best option because it covers your home both while it's parked and while it's being transported. Because RV insurance is meant for travelers, it offers features that other types of insurance don't, such as collision coverage. The small house must meet the Recreational Vehicle Industry Association's standards in order to qualify for RV insurance (RVIA).

These forms of coverage are usually included in basic RV policies: 

• Collision—If your small house is damaged in an accident with an item or another vehicle, regardless of fault, collision coverage kicks in.
• Comprehensive coverage—Also known as "other than collision," this covers situations that are out of your control, such as theft, vandalism, fire, falling objects, weather-related incidents, and animal collisions.
• Liability—It aids in the payment of property damages and injuries caused by you.
• Uninsured/underinsured motorist coverage—This protects you if your small home is damaged by someone who does not have insurance or has insufficient coverage. It assists in covering the costs of damage to your tiny house, personal injuries, and missed wages if you are unable to work.
• Personal property—This covers your personal property in the event that it is lost, damaged, or destroyed, as the name implies.
• Medical payment—If your tiny house is involved in an accident, this helps cover medical expenditures for you and your passengers.

Because not all insurance companies give the same range of coverage options, double-check your policy to ensure it includes the protection you require. If it doesn't, use endorsements or a separate policy to fill up the gaps. If your policy does not include personal responsibility, for example, you might get a low-cost renter's insurance coverage that would cover both your personal property and your personal liability.

Tiny House Policies for Mobile Homes

A mobile (or manufactured) home insurance coverage might be your best bet if you plan to move your tiny house only a few times a year (or not at all) and it was built by a NOAH-certified builder.

A complete mobile home insurance coverage works similarly to normal homeowners insurance in that it protects your home, personal belongings, and liability claims. Mobile home insurance, unlike RV insurance, does not cover your home or your valuables while your tiny house is being transported.

You'll need a transit endorsement for that. The coverage must be in effect before you transport your small house, which means you must notify your insurance company ahead of time so that your policy can be updated.

A named peril policy is another choice for mobile home insurance. These are low-cost insurance that only cover the causes of loss specified in the policy—nothing else. This means that if your small house is damaged by a risk not covered by the policy, you will be responsible for any repairs. As a result, while a named peril policy can save you money, the additional risks may not be worth it.

Specialists in Tiny House Insurance

There are a few small organizations that specialize in tiny-house insurance, and the number is expected to grow as the popularity of tiny homes grows.

Traditional and alternative living structures, such as DIY units, off-the-grid cottages, micro homes, storage container homes, park models, custom RVs, and accessory housing units, are all covered by these companies (ADUs). Some firms provide tiny house building insurance, and the majority of them will cover tiny houses that aren't built to RVIA requirements or aren't NOAH approved.

Because these firms specialize on tiny houses, they tend to have the most alternatives and flexibility. You should be able to receive the exact coverage you need for your tiny home after a little back and forth with a representative.

Is Tiny House Insurance Necessary?

If you financed your tiny house with a mortgage or another type of loan, your lender may require you to get insurance (the same way lenders do for traditional homes and cars). And, just like a typical RV, most states demand liability coverage if you travel your tiny home.

Otherwise, you are not required by law to insure your tiny home. Still, because a tiny house is a significant financial commitment, it makes financial sense to insure it.

What Is the Cost of Tiny House Insurance?

Tiny house insurance does not have a defined pricing. It is determined by a number of factors, including:

• Construction, size, value, and RVIA/NOAH status of your tiny home
• Your personal belongings are worth a lot of money.
• What are your plans for the house? (e.g., parked in a tiny house community or on the road 52 weeks a year)
• You get the coverage you want, plus any add-ons you desire, such as a travel endorsement.
• Your previous claims history
• Your credit score and history

RV insurance is typically more expensive than mobile home insurance because the former insures the home while it is in transit, which exposes it to far more risk than if it were simply parked somewhere. Of course, the price is determined by the coverage levels and deductible you select.

Final Thoughts

Tiny house living isn't for everyone, but those who embrace it can benefit from lower living costs, the freedom to relocate and try new places, a lesser carbon footprint, and the opportunity to live off the grid. Just remember to do your homework and purchase a solid insurance coverage to safeguard your property—and your way of life—before you start living in your tiny home.