Lets end the insurance woes!

Lets end the insurance woes!

Let me begin by saying that I know NOTHING about insurance and yet I am about to rant about it. In truth I am tackling this subject despite the fear of seeming like a half-wit. It is my hope to getting some dialogue going. Maybe there are people wiser than I who have developed thoughts on this subject? I am hoping if I just put it out there to the universe… or at least to the readers of Tiny House Listings, that there will be some ideas and dare I say… solutions.

It is no secret! Tiny housers are in the cold in terms of insurance and this is clearly a bad state to be in for a lot of us. Proof of this was clear when one of our community lost her tiny home in a barn fire last year. Funds were collected but I am not sure how well this went, really. The truth is that it would be awesome if something formal were put in place to protect our modest lifestyle.

I sincerely believe that the time has come that there are enough of us, that we can do something to help ourselves. Moreover, we must do something to help ourselves.

Obviously insurance is not working for us, so the question is could we start a tiny house protection collective? Our own resource pool to help any among us who experience a total loss due to fire, flood, tornado or whatever else happens, is in my mind the solution that we seek.

For me, personally I also own a regular 900 square foot home. The value of my home and contents is about 4 times that of my tiny house. I carry insurance because I am worried about total loss. I believe that it is pointless to make a claim on insurance unless there us a devastating loss because it is not worth the spike that you will pay to your crooks… um insurance providers afterward.

In terms of my home, I pay roughly $800 for insurance a year for the house and contents. It stands to reason then that I would expect to pay $200 a year to insure THO because as it stands, it is roughly ¼ of the value.

Based on the $200 a year model I think an emergency resource pool would work. I am not speaking about a dent in the wall or other small and large damages. What I think could be covered is at least is something if there is 100% loss of your tiny house. If myself and 199 other Tiny Housers all agree that this is a fair amount of money and to invest into a devastation pool we would have 40,000. This in my estimation is enough money to rebuild 2 houses. True… 20K would not perhaps cover everything, but it would be a good start even for those who built very fancy houses. Certainly 20K, is a whole lot better than nothing, which is what many of us (including me) are now guaranteed.

If we were fortunate to have a year where there were no fires, no tornadoes and no whatever it is that can totally consume a house, then we would have a little pool wherein our resource pool would increase with the next input of funds. After a while, one can imagine that we ourselves could legalize in some way our own protection collective.

The drawbacks I can imagine are:
· The pool of coverage is, of course, fully dependent on the number of people who would be willing to put their funds forward.
· Trusting the administrator with your money

In terms of addressing the first drawback, I imagine that the worst thing that could happen is to be a singular member. If this happened based on the model put forward, you would invest $200 and if you had a total loss you would only get $100 back… but since I would also be interested in doing this, the moment that there is one other person to is interested I would also invest, so this would mean that you would get your $200 back. In the second year, you may wish to continue or not, if you do then you would be insured for $400 and so on… even with myself and one other person year after year our protection would grow, however it would only increase by the amount of your own investment. However, even with as few as five people who are willing to move forward, after five years (with no claims), the coverage would grow to $5000!

In terms of the second drawback, clearly, I could write here for hours about the qualifications and honesty, of (submit x administrator here) but I have the sense to realize that it does not matter what I put forward. The truth is, that trusting a stranger with your money requires a leap of faith.

With this said, it would be best, if this was taken on by a group of people who live in a community which has at least 10 tiny housers who would be interested in managing a project like this. With ten, investors there is already enough interest to make it worth while, am I right? Plus, requiring more than one signature on any outgoing money is a good way to protect us from being absconded of our funds.

What I am saying is that this article is a poll of sorts for the tiny house community. Question one: Would you be willing to pay $200 outright to have a tiny house protection collective?
Do you have a group of tiny housers who live close by who would be interested in managing a collective that would protect other tiny housers?
Please write to me at lauramoreland@tricolour.queensu.ca answer both questions and please include your name. If there are a few on board we may just have a true tiny house solution after all! One outside of the mcBox of course!

This plan might not be perfect, but in my mind the worst thing that could happen is to have no plan at all.


Laura Moreland is a contributing writer for Tiny House Listings.  She lives in a tiny woodland cottage near Kingston Ontario with a pack of dwarf dogs.  Her woodsman ensures that she never accept apples from old ladies.  You can learn more about Laura through her website “Tiny House Ontario” here.

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25 Comments → “Lets end the insurance woes!”


  1. Liz

    Jul 12, 2013

    If the pot grows every year, and/or money is invested, there would be a return on it eventually. So you could even get people involved who do not own a tiny home (yet). Then they would get a yearly dividend. Mutual insurance companies exist, so this must be do-able. Perhaps someone who knows about this will come forward, and/or more research needs to be done. Good idea.

    Reply

  2. Joyce

    Jul 12, 2013

    The tiny houses that are built on wheels (can they not be insured like an RV is?) and those that are placed on a foundation (can they not be insured like a regular home?). I own an RV (travel trailer) which is in a full time campground (does not travel over the road). I have insurance on the RV through the same company that insures my home (1200 sq. ft.). Before that house I had a much smaller home (700 sq. ft.) and it was insured by the same company. I would think that even if you have a tiny house if it is on a foundation, it could be insured like I stated above and those on wheels could be insured the same as an RV. If one company did not want to insure a tiny home, I would think there are others that would. It would be easier than the plan you propose. Maybe an insurance producer would like to share his/her knowledge about this issue.

    Reply

    • Laura

      Jul 16, 2013

      Yes the houses on wheels can be insured as RVs. Many are. This is why I did not include accidents in the article. I see now by your query as well as the many others that I should have clarified this point.
      Kind regards,
      Laura

      Reply

  3. Keith G

    Jul 12, 2013

    This is basically a mutual insurance or self insurance fund you’re talking about. Such plans do exist, but they’re NOT unregulated. There are licensing issues, tax issues, incorporation issues, someone would have to determine membership rules so there’s fairness among the 100 sf / $10,000 house dwellers and the 500 sf $50,000 dwellers, what you do with the “extra money” has to be made clear up front as does what happens if there’s not enough.

    It sounds like you’re saying that you currently have no insurance; are you saying that insurers won’t offer a policy to tiny house dwellers currently? No one should be in a home of any size without some kind of insurance. Especially one that’s mobile. Everything could be lost, quite easily I’d think.

    Reply

  4. cheryl

    Jul 12, 2013

    Just remember that tiny houses on trailers and on foundations are very different, legally.

    A tiny house on a trailer is considered a homemade RV, and will most likely need to be inspected by an agent who deals with motor vehicle insurance, before they’ll write the policy – but it is possible to get one insured. They write policies on park model RVs all the time.

    A tiny house on a foundation that is not permitted, and does not confirm to code? Legally it would probably be considered a shed, not a house. While I personally have never heard of anyone getting insurance on a shed, if they don’t also have a home on the same property – that doesn’t mean it couldn’t be done.

    Reply

    • Cahow

      Jul 14, 2013

      cheryl nailed it in to using the word “home-made”, regarding most of the tiny houses that I’ve seen featured here and at Alex’s site. I also receive the Tiny House LIstings on tiny homes for sale and let me tell you: by seeing the actual photographs of some properties, I wouldn’t insure 90% of them if I were an agent! Half-baked construction, jerry-rigged propane lines/electric lines; the entire structure made of wood and usually located in woods (forest fires, anyone!?) Also there’s the philosophy among SOME tiny houser’s that they don’t want any Gub-mint person snooping around their site or construction so how in the world could you get insurance on a structure that you don’t want anyone knowing about? From what I’ve read at so many tiny house sites, people build tiny homes on wheels to escape building codes. How can anyone expect to then get insurance for something “homemade” and not legal?

      And then there’s the hard-core preppers who intentionally create new structures to look like hell so that “their property taxes are kept low.” On an off grid site I’m a member of, one man in Pennsylvania scavenges torn down sheds and barns for building materials and with great intent, makes his NEW sheds/outbuildings “off the square, gaps, door frames that don’t square up,” etc., so that the buildings look ancient and he’s charged less taxes. HOW in the world do you insure THAT?

      Like most things in life, you can’t have it both ways: you can’t fly in the face of codes and regulations that safe guard YOU and society but then expect other rules and regulations to benefit you. Pick a side and stay with it. (and Laura, the “you” is not aimed personally at you, it’s the universal use of “you.” )

      Reply

  5. Ralph Sly

    Jul 12, 2013

    I would think to lobby some of the insurance companies, RV clubs, and roadside insurance companies would be the place to start. I for one would only invest in and insurance company with some standards and equity behind it. Take a major flood (this happened in Alberta not too many years ago) of a campsite or condominium site (which is what many have been talking about doing lately), where there were several of these home. What could a little fund solve there. Tough subject, question and quest. Google RV insurance companies and a ton come up, but then, your into having your unit inspected, some kind of registry comes in to play. You can’t have it all folks but this dose work with Manufactured Homes of the Mobile Home description. The additions we put on those is no different than some of these TH’s you all build.

    I just had an audit on my revenue house insurance and found I was on a $500 deductible, anyone putting in a claim for under a couple of thousand is a fool because of the way the rates change when a claim is filed. I raised that considerably and my rates came down with more coverage on goods, building and liability of injury to others.

    Insured for over 50 years and I had one motor vehicle claim (some one else drove my car) [never again will that happen] and my insurance rates went up. I use AMA roadside insurance and my rates stay the same. (it was expired for 6 months and they renewed it and still towed my trailer at 3 times the price of my premium) There has to be something, it just has to be looked into by those who need it… but be prepared to have to do some building by some dictated specks and register. That is only fair to the company with the gold when you need it. Either that or build what you can prepare to replace and remember, if you unit is sitting beside my house or building and it takes fire and burns mine down. Who is my insurance company going to sue. Sure, I will get paid out but you my friend are in deep do do.

    This is something to think about before you are generous and let someone park a TH on your land. If you allow it then you are taking on some responsibility, maybe you can have the TH added to your policy. As a past president of a fire fighters association, I can tell you, when we went out to fight a fire, insurance companies get a bill for that. Our big red truck got paid for the service of stomping out fires.

    Reply

  6. p. gifford

    Jul 12, 2013

    I have spoken to all the local insurance agents. None will insure my tiny home. The problem seems to be that it is “home made”. If I had a manufactured motorhome, or trailer there would not be a problem. I have lived in my little home for 8 months now, and not found an answer to this problem.

    Reply

  7. Marsha Cowan

    Jul 12, 2013

    I was offered insurance through the same auto company that insures my car, and the insurance costs the same as my car. However, while I drive my car every day a lot, I have yet to take my tiny house on the road or even to a new spot, so paying the same insurance for it as for my car (that is only liability, by the way, not collision–but I could also get collision). Even if I got collision for my tiny house, it would not cover any of the natural disasters that that often plague a house, just accidents.

    However, a person can insure anything. You can insure a storage shed in your yard, a tool shed, a chicken coop, etc., so i am sure that most home insurance companies would also insure a tiny house, but you would have to make sure that you knew exactly what the insurance was covering in specific language, and it may cost you more than a regular house.

    My suggestion, if indeed, living the tiny life is so financially liberating, is to put aside all your extra money into a savings account each month with interest for those times when you may need to make repairs. Then you would have what you need when you need it.

    Reply

  8. Penny

    Jul 13, 2013

    Whoa, everybody back up the bus……. I am reading these posts and my initial thought was oh yeah we need insurance, but then the light bulb went off. The whole idea of this movement is to be some what if not entirely self sufficient, right? If you downsize and live modestly why do you need insurance? Why give your money to someone else to manage? What did we do before insurance??? We rebuilt. If we were lucky someone(s) would help. I feel (emphasis on I) that if you live smart YOU can put money back to rebuild in the case of emergency. I apologize if this is a rant, (lots o coffee today) but we as a society have become to reliant on “the system” to help us, helloooowww, the system is broken and only we can fix it (fight it??) Ok, I feel better now.

    Reply

    • Slrig

      Jul 14, 2013

      Penny: I didn’t read your post as a rant at all. I think you’re one of the few realistic people who’s posted on this subject. As someone above wrote, you can’t have it both ways…anti society and pro society. I sometimes wonder at some of the thoughts of the more radical tiny house people. they want society to go back to the horse and buggy but they sure do love their internet, satelite dish and solar panels. Well, you can skip all of that if society does go back to 1910 rural america. Better resurrect the passenger pidgeon for your air mail delivery.

      Reply

  9. Tracy

    Jul 13, 2013

    I am planning and designing a Tiny Home. I do not intend to have one flammable thing on board. Solar, wind, electical brand new…..no gas of any kind. I am not planning on getting insurance..it is 120 ft and that requires no building code. Not at all worried. :)

    Reply

  10. Loststix

    Jul 13, 2013

    I can not believe what I have been reading.
    The idea of tiny homes is to be away from needing money for your home every year.
    Your making another bill for yourself.
    If you built your TH beside my TH and you didn’t make your rocket stove right.
    And it caught fire and spread to mine.
    I would also have to take blame for the fire.
    let me explain.
    I let you build that close to me and with out any protection between us?
    I could of burnt my own house down and spread to yours as well.
    And I would feel a duty to help you rebuild.
    On the other hand if we both built the wall to protect or distance apart to save each other, I know you would have some where to lay your head and a neighbor to help you rebuild.
    I also would have the cost to rebuild a home again saved for a rainy day.
    Or materials gathered up to re build again.
    Build your TH to suit your environment, one for Texas not going to be the same as one for Oslo in Norway.
    So after 25 years of 200 dollars a year. So what happens to the 5000 dollars.
    What if some one makes a bad TH and burns down but they put in their money like every one else in the 1st year and cleans it out of funds and some else gets major storm damage? Where is the money to come from.
    There are some of us who build and cover are own expense’s in life.
    If you can not take responsibility for your own actions and action that you did not take to project yourself.
    That would be like walking across the road with out looking and some one knocks you down and you blame them for hitting you?
    We must take responsibility for our own life, that is the biggest thing I get from Tiny Homes.
    They are a gate way to freedom.

    Reply

  11. Melissa Kutsche

    Jul 13, 2013

    I was told by my auto insurance agent that as long as its “attached” to the hitch of your truck, then it would be covered under the comprehensive deductible. She went on to say “off the record”, that if something happens, just hook it up to your vehicle & call the insurance company. Then, your only out of pocket cost is your deductible. I my case, $500. She said if its on a foundation, then you could take out a separate policy. The cost to rebuild would determine the annual premium. I pay $300 a year for a 1100 sq. ft. home. So it shouldn’t be an outrageous amount of money.

    Hopes this helps!

    Reply

  12. Deb Flores

    Jul 13, 2013

    Has anyone tried to insure their Tiny House through Lloyds of London? Back in 1995 the area I live in in Texas (DFW) was devastated by hail storms and tornadoes – a common occurrence. But that year almost every single rooftop and car windshield in the area had to be replaced, including mine. The next year ALL insurance companies quit underwriting for this area. Lloyds of London came in and did the job at a very reasonable price. They are known for insuring just about anything, legs, hands, the queen’s jewels, astronauts, skyscrapers, but I never knew they insured something as common as homes, and automobiles. They seem to be interested in anything that is not mainstream. Since I don’t have my Tiny House yet someone should try and give them a call. I would be interested in what L of D has to say. http://www.lloydsoflondon.com

    Reply

  13. D. Whit

    Jul 13, 2013

    I am not a fan of the trailer houses but, I am a fan of small house living and alternative smaller living for the individuals that believe the smaller home is a way to save mortgage cash to use for other things in life, the idea of a simpler structure not being insured is a positive also.
    If my small build home burns down or drops in a sinkhole or gets blown away in a hurricane, I will have to pull from savings to rebuild. That is the trade off for saving liability insurance premiums over the years.
    Is it a roll of the dice ? Yes, and it cannot be an option for the majority since there will always be those that fail to realize their housing choices are a financial responsibility to their spouses and children. A home is about more than just keeping water off your head.

    Is this practical for everyone or realistic ? No.

    I think too many are trying to achieve Shangri La with basically cheap sheds that aren’t homes and aren’t that well built or practical and also want to have no costs in living in them. I want to hear more about persons that want to save more of what they work hard for instead of those that just want to be hip trendy squatters in a more modern shanty town and think that is progress.
    Insurance is a necessary evil for most without savings or building skills.

    Persons have to gauge many things proposed and presented in the tiny house field and media as being a true step forward or just being a reinvention of the wheel that does nothing progressive.

    Reply

    • F H

      Jul 16, 2013

      There probably are some Shangra La squatters interested in tiny houses. But to separate people into two camps (hard workers vs. Shangra La squatters) is folly.

      Opportunities to exchange hard work for money are no longer as available as they used to be. There are any number of reasons why individuals are excluded from the labor market and have no choice but to get through life by spending less instead of working harder/longer/smarter. The ability to work hard is one factor influencing the likelihood of success in the labor market, but market conditions/trade deals/political connections will often trump ability in the allocation of scarce paid work.

      The American social contract has been broken, and coping with this by living off-grid in a tiny house is an option. Much more appealing than continued and expensive failed attempts to break into a terrible labor market. If your choices are 1) retire early and live in the peaceful countryside in a tiny house, or 2) burn up your savings for several years of futile efforts to join the labor market, why wouldn’t you choose the first option?

      Reply

  14. Teri

    Jul 13, 2013

    One good soul in our neighborhood was motivated enough to organize us into forming a propane coop. She then made proposals to three different local propane service companies, guaranteeing our loyalty in exchange for a lower group rate. The best one offered us a cost/gal. just above wholesale, with free tank rental for a year and a couple more perks. Not only was the original group happy but we got several more members signed up to this good deal. Win-win for all.
    I don’t see why this model wouldn’t work for insurance coverage as well. If we TH owners signed up on a coop list, I’ll bet some insurance brokers might be approachable with hundreds (or thousands) of new loyal customers. We could design what was needed in this new “mobile tiny house” policy! Anyone game to try it?

    Reply

    • D. Whit

      Jul 13, 2013

      Teri, I think what you propose is admirable, but what needs to be understood with insurance is that premiums are nothing more than contract investments that need to show regular returns to make payments for claims and cover the expenses of the coop.

      The pool of policy holders would have to be immense to create the reserves necessary to get such a organization approved. Why reinvent what is already out there ?

      I am not a fan of insurance companies, but I will concede that modern actuarial science has a place in assigning risk and the risks present in trying to provide coverage for a large number of tiny houses would quickly bankrupt any company that specialized in their coverage if several catostrophic events occurred.

      Just writing the legal contract for a basic coverage policy for tiny homes would be daunting. Look at current mobile home policies and the underwriting to see how difficult it would be for another specialty policy.

      Once the munincipalities soften their stance on tiny homes and they become more prevelant, there will be a rush by the current insurors to provide coverage since there will be more rules and governance.

      Profit motivates investment and that is all insurance is at it’s very core, for better or worse.

      Reply

    • Brenda Barnes

      Jul 14, 2013

      Co-ops of all kinds are changing the world, according to YES magazine, which is a great idea-factory for improving life. We don’t need to do things from scratch. We can get copies of agreements others are using, and set it up as whatever it needs to be to be simple and legal, not to have to follow all the rules made for gigantic orgs that make setting them up so expensive. http://www.yesmagazine.org/new-economy/cooperatives

      Reply

  15. Jamie

    Jul 13, 2013

    Medishare has a similar structure though it is still a company (or nonprofit, not sure which). It’s a healthcare company structured much like the early Christian church where they shared their medical bills. Anyway, they’re basically a common-interest, potentially non-profit version of a regular insurance company that’s for people living a healthy lifestyle for their personal and the common good.

    So, I imagine a good way to do it is to start a nonprofit/NGO (that allows for some more legitimacy and regulation) that would require a board of directors for checks and balances, and then structure it like a normal insurance company but with a couple variations and certain benefits for those with less-risky situations (i.e. how many times they move the house each year, what type of material it’s made of (for fire/flood resistance), how much would be needed to rebuild, etc.).

    Reply

  16. Brenda Barnes

    Jul 14, 2013

    I’m in, if 198 others are.

    Reply

  17. F H

    Jul 14, 2013

    Starting an organization is not necessary. Pooling funds before-the-disaster is not necessary.

    Here’s how to avoid the hassle: find 20 tiny-housers who are willing to put aside a few hundred bucks a year in THEIR OWN savings accounts – accounts that they control. Only AFTER someone’s house burns down — and they post pictures online — do all the people who saved send their insurance money (as gifts) to the person suffering the loss.

    Anything more complex than this would have way too much overhead, way too much hassle, and would probably be less effective.

    Reply

  18. Henry

    Jul 15, 2013

    Penny, Tracy, Loststix and D. Whit–Right On! Risk is an inescapable part of life. Even people with insurance can be left holding the bag (see Katrina and other disasters where some insurance companies interpreted terms of their policies in order to evade or delay liability). Some people here have the view that DIY homes are generally shoddy. I have a different experience–owner-built dwellings are usually “over-built” with a desire for sound and safe dwellings. Insurance for rebuilding or replacing your possessions is not necessary, but it is desired by many (to each his/her own). It just seems odd that so many people with a desire to live smaller, more efficiently, and more self-sufficiently should accept the need for insurance as a given. To be fair, Laura Moreland wrote this article with an alternative to insurance companies in mind, and she explored an interesting idea; I just expected a broader scope from the title.

    Reply

  19. Darrell Grenz

    Feb 03, 2014

    I wanted to let you know that I can offer a comprehensive Tiny Home Insurance Program for most of the Western States. This program is offered via Lloyds of London and the premium is coming in around $500 a year. The program includes coverage for the completed dwelling, contents, and liabilty.

    Please let me know if you have any questions or would like a quote.

    Darrell Grenz Insurance Agency
    (503) 206-6736
    darrellgrenz@gmail.com

    Reply

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