Tiny homes are dwellings that typically have 100 to 400 square feet of living space. Some of them are mobile, but we will be discussing tiny homes used as short-term rentals in a fixed location on land also owned by the tiny home owner.
There are currently more than 1.4 million tiny homes in the U.S. They’re popular because they’re affordable and easy to maintain. They can make a good vacation rental home, and they must be insured to protect your investment — like any other second home.
Insuring a Short-Term Rental That’s Also a Tiny Home
Is Different
Standard second home insurance is not the right insurance product for a tiny home. The simplest vacation rental home insurance scenario with tiny homes is when the home is certified by the National Organization of Alternative Housing (NOAH).
NOAH-certified structures must meet certain standards of safety, structural integrity, and energy efficiency.
A NOAH-certified tiny home typically qualifies for a mobile or manufactured home policy. Such a policy will cover the dwelling itself, personal property, liability, and loss of use as follows:
- Dwelling coverage may pay to repair or replace the physical structure of a tiny home if it is damaged.
- Personal property covers anything the homeowner owns inside the home, up to a set limit, in the event it is lost or damaged in a covered incident.
- Liability coverage comes into play if the homeowner is responsible for someone else’s injuries or damages and offers coverage up to the policy limit.
- Loss of use coverage may pay for temporary living expenses like meals and lodging in the event the home is damaged in a covered loss and is temporarily uninhabitable.
Frequently, a tiny home is purchased, already built, and then transported to its fixed location. In these situations, the homeowner will need to add a transit endorsement to their policy. This will cover the home during the transportation process.
As with other second homes, if you plan to offer your tiny home as a short-term or long-term rental when you aren’t using it, you will need to purchase short-term rental insurance or a landlord policy.
Factors Affecting the Cost of Tiny Home Insurance for Short-Term Rentals
As with traditional vacation home insurance, many factors affect the cost of tiny home insurance, including:
- Credit history
- Insurance provider
- Home value and location
- Square footage
- Presence of NOAH-certification
- Deductible level
- Whether it will have to be transported to the fixed location
Your wisest course of action if you’re considering buying a tiny home to use as a vacation or short-term rental is to talk to an independent insurance agent with experience in covering second homes.