Tiny Houses are classified as less than 500 square feet, and they can be mobile or planted. The “tiny house movement” is gaining momentum, but many insurance companies do not know how to classify these unique dwellings. The first thought is to compare them to RVs, but these are not for recreational use; they are built with different materials, the same sturdy materials used for houses. There are also HUD restrictions for living in a RV for an extended period of time. One could possibly classify these homes as a dwelling; however dwelling policies are written to the cost of the space, and many of the tiny houses being built fall short of the lowest estimate used for these types of policies (which is a huge attraction for potential owners). If one builds a house on a trailer (another appealing aspect), that’s a completely different set of uncertainties to face.
There is a company in Portland, Oregon which has taken the leap and started insuring tiny houses. They have worked with United National Insurance Co. to create a tiny-home package, which treats the home as a dwelling with a trip endorsement if the home is on wheels. Foremost Insurance has also been dabbling in tiny homes and writes them through its recreational casualty group, which treats the structure as a travel trailer. Overall, the insurance industry is learning together how to classify tiny homes and protect them against unique exposures, such as theft (of the entire home!) and vandalism. As long as the market grows for tiny homes, insurance companies will continue to evolve policies and regulations to make room for these structures.