Tiny House Insurance: Auto/Towing and Homeowner's Protection
When looking for insurance, owning (and moving) a tiny house creates some unique challenges. Let’s talk about the 2 kinds of insurance most tiny housers will need.
Insurance for Towing
Let’s say you’ve just finished building your house and now you need to tow it to its final location (assuming it was built somewhere other than it’s final resting place).
Hire a towing company?
Some people choose to hire a professional towing company (many now have experience with tiny houses), which can be a great option. It helps put your mind at ease knowing someone with lots of towing experience will be behind the wheel of the tow vehicle, and, maybe best of all, all towing companies should be fully insured against any loss (check to make sure they are!). By hiring a professional towing company, you can skip the insurance difficulties altogether, and let others take care of that part for you, knowing your house is covered while getting from point A to point B. But this all comes at a cost – potentially thousands of dollars for a longer, multi-state move like we did.
If you already have full-sized truck (more about what kind of truck you’ll need), you can easily do the towing yourself. But be aware, if you do this, any time your house is on the road it won’t be covered by your regular auto insurance. If someone was to rear-end you and smash your house, you most likely not receive a dime for damage to house, without a very specific insurance that covers it. That being said, it is possible to insure a tiny house while towing.
We towed our house over 2300 miles from Iowa to Northern California (taking the far southern route in winter). And yes, we had auto insurance that covered the house fully while on the road. It wasn’t easy to get, but here’s how I did it:
Tricks of the Trade
First off, you’ll need an insurance agent. There is no chance I’d have pulled this off on my own. I needed someone who had a relationship with the underwriting company, who knew all the lingo, and who knew what NOT to say, to keep the insurance company from getting the wrong idea.
At first I was naive enough to think that I could do this myself by telling the insurance company that it was simply a load on a trailer that I wanted insured. But of course they’d ask what the load was, and unless I flat out lied, any answer I gave would lead to a bad place in their mind. So do not attempt to negotiate this with your insurance company on your own.
With a great insurance agent helping us (Neil Gritz, owner of the Insurance Resource Center in Fairfield, IA), here’s what we ended up getting. We had the house categorized as a modular home, insured as part of a commercial trucking policy. The technical name for the type of towing we were doing was referred to as a “mobile totor.” But it get’s more complicated.
Complications (well, insanity, really!)
Our truck (and trailer) had to be insured as part of the commercial trucking policy, and -- here’s the kicker -- in order to insure the house (or anything we towed, for that matter) WE COULD NOT OWN IT. This type of commercial policy is meant for towing other peoples' stuff for pay. So in order for the insurance company to go along with it, I had to assure them that I did not in fact own the house.
BUT I DID own it! So how was I to make this work? Simply put, I pretended to sell it to my parents. Technically, I did sell it to my parents.
I had an experienced builder perform an appraisal, wrote out a detailed sales agreement, had it signed and even notarized, and I had my parents make a down-payment -- all this with conditions laid out for the remainder of the cost to be paid on delivery to California. One we got to CA we simply agreed to cancel the sale, and I returned the down-payment made. But during that part of our journey, they were the legal owners of the house, so it could be fully covered under my commercial trucking policy.
It was a lot of hassle to get this type of tiny-house-covering auto insurance, but given the length of our trip, there was no way we were going to do it uninsured. I can’t say for certain what would have happened had we needed to file a claim (would the company honor our policy or find fault with the way it was set up?), but in the end we were lucky enough not to need it.
This worked for us, but I’m sure others have found other ways to insure their tiny houses while towing. Please share your experienced, as I’d be interested in learning about other options.
Once your house is sitting somewhere long enough for you to start living in it, then of course the goal would be to have it insured by a homeowners policy, just as would be done with a normal house.
To start, it’s quite simple (and hassle free) to get a renters policy. This will cover your possessions in the house (but not the house itself) were anything to be damaged or stolen. I recommend getting such a policy to be at least partially covered while you search for a more comprehensive homeowner’s policy. Many auto insurance companies do renter's insurance too, so you can just combine it with an existing policy (maybe even at a discount).
Like several other tiny house owners have done before (hOMe, PAD), we were finally able to get homeowners insurance through Darrell Grenz of of Darrell Grenz Insurance in Portland, OR. In certain states (Oregon, Washington, California, Utah, Arizona, Idaho, Montana, Colorado and Nevada), he has an underwriter willing to offer a homeowners policy specifically for tiny houses. The premiums come to about $500/year (or more, depending on coverage amounts). There is no legal gray area and no house-classification-fudging needed to make this work, but there are a few requirements:
You will need to provide the name of a licensed and insured electrician who did the electrical work on your house. If you did it yourself (or your electrician was not licensed) then an electrical inspection (which you must pay for) is required in order to get insurance. A general inspection is also required, though I hear it’s not too intimidating (they have not done this yet as we are just signing the policy papers now).
For those living in the aforementioned states, this is a really a great new development. With all the tiny houses out there now (or soon to be built), I think more and more companies will step up and start to offer something similar. There is a lot of money to be made (and tons of social, word of mouth advertising to be gained) by the first company to offer this type of insurance nationally. I'm surprised it is not available already, but with the new Tiny House reality TV shows and other national attention, that tiny houses are getting, I think it soon will be.
But do I need insurance at all?
Another thing worth mentioning is this: What about opting out of the insurance system altogether? Why not take a risk and live without insurance? Isn’t tiny house living about breaking out of the current housing paradigm? Well yes, and for some, this is a completely valid line of thinking. I’d be very tempted to go uninsured myself, but I did spend a considerable amount (of time and money) on my house, and am not yet at a place where I feel comfortable leaving it unprotected.
I know Dee Williams did not have her house insured for the longest time (and may not still). Her reasoning was that with all the money saved over the years on rent, that savings WAS her insurance policy. This is true (or could be for those able to build up a savings), but many may seek more of a safety net, and for you, I hope you found this post helpful.