Posts Tagged Tiny House

Response To Tiny House Listings’ Tiny House Insurance Post

A while ago I did a post on the topic of Tiny House insurance, which you can read here. I have not forgot about that article and have been doing a lot of thinking around it as of late.  Then I saw the wonderful post done by Laura Moreland over at Tiny House Listings and in the end she said that she hoped to start the conversation.  So I thought it would be fun to do a response to her post!

Like Laura, I am not an insurance expert, so there is a lot to learn about the field, but I’ve done a good bit of research on this and I certainly know tiny houses, so take it for what it is worth.

One thing that Laura pointed out, as I did in my last post, was that there isn’t a real viable option for insuring tiny houses.  I have had a rare few tell me they were able to get insurance through a traditional insurance company by doing this or that.  Regardless of how the did it or arranged it, I’ll be honest, I don’t trust it.  I think if those few folks had to make a major claim they’d never see a dime; I say that not to be ugly, but to make the point that insurance companies will take one look at the tiny house, realize that they should have never said yes to it in the first place and then find a way out of paying.

The one point of contention I will take up with Laura’s post is her logic on how much a tiny house should cost to insure.  She stated

In terms of my home [900 square feet], 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.

The point is a fair one in some respects, but I thought I’d propose an alternative line of thought:Insurance companies work on the premise of risk management, to be viable you must take in more money than you would expect to pay out.   They operate on the assumption that if they can have a pool of people, that only a certain percentage of them will make a claim.  In an ideal world you’d have a large pool of people who are very unlikely to submit a claim.

So essentially when you have a person you want to insure you must be able to determine the risk that insuring that person brings, meaning the likely hood they will submit a claim, how often and for how much.  The higher the risk, the higher the cost of the insurance.  Insurance companies determine this risk by developing actuarial tables that will predict the likelihood that someone will make a claim.  It’s a pretty complex process and based off of really big data sets.  The complexity and level of detail that goes into this means that insurance costs vary wildly from location to location, as well as on a ton of other variables.

So the line of thought I’d propose on price is that the cost of insurance for a tiny house should not be based off of value solely, but that of the assumed risk and that you should be collecting more money than you pay out.  I think many insurance professionals would agree with this statement.  So the question now is, how much risk does a tiny house bring?  I think if we were honest about it, the answer is a lot.  It is after all why traditional insurance companies won’t insure us, because we are too risky of a proposition.

So while the cost of a tiny house is much less, the risk is much higher.  So the costs to insure it will still be pretty high.

This isn’t what a lot of people want to here, but I have a few solutions to this that could help make swallowing this pill a bit easier, but also help keep tiny house insurance premiums lower.  The two things we’d want to achieve is to minimize risks so that the group as a whole can cover their members appropriately while being able to ensure stability for the future; second we want to weed out potential bad apples that will abuse, extort or try to game the good intentions of insuring tiny houses.

Be Transparent

I am a true believer that you need to be honest in your dealings with people and when it comes to someone’s home, there is few 44262008807272831LfIY43STcthings in this world that we care about more (of course the people matter more).  So the mantra trust, but verify is key here.  We need to build a system that is very transparent because we need to earn the trust of our members.

However we choose to structure this, we need to be crystal clear about it.  Even though I propose a non profit model, even though it should be transparent, even though this project would have the best intentions, there are some realities and decisions about those realities that will need to be made.  Things like the points I propose below are good examples.  So we need to be practical, but we also need to be really clear up front and make sure people can easily understand the minimal fine print.  If we can do that, then people can make informed decisions about if they want to join or not.  If I have learned anything from blogging it is, be honest about who you are and what you stand for and own it.

Enact standards

In order ensure that the tiny houses that are insured aren’t poorly built, we need to develop some sort of standard.  The idea being that since tiny houses are often DIY affairs, you need to be sure people aren’t making honest mistakes that could have dangerous consequences.  I don’t think this would have to be a huge set of standards, but there are some key areas of focus that we could advise on which would address safety and structural issues.

Now many people will not like to hear me proposing what amounts to building codes, but I think that if we don’t do it ourselves, someone else will at some point; I think we’d rather help determine the direction than a profiteer or politician.  Next is that these should be accessible, meaning free and easy to understand.  The should also be community driven and reviewed, meaning that people from our community help steer this process, then open it up for feedback from the rest of the community.  It should also be used a teaching tool, not as a way to penalize people; the goal should be to empower first time builders and ensure safety.

High deductible policy and diminishing rates

To help reduce the cost of plan, I think we should have it designed in a way that people only make claims on major damage and total loss.  If you break a $80 window, it shouldn’t be a claim, because small claims will lead to the insurance fund getting nickled and dimed out of existence; we need to balance being their for people in times of needs and being sure that we can stick around as that protection for tiny house people for the long term.

So to achieve this I propose a high deductible, a level TBD and one that could be lowered as the co-op grows to have more members, which will have people in the insurance co-op will handle small things on their own, but sleep well at night knowing that if their house burns down, we are there for you.  The other thing we can do is to encourage people who don’t have any claims by reducing their monthly rate after a certain period of time.  So if you have been with the insurance co-op for a few years, your monthly bill will be negligible; this will encourage people to stick with the co-op long term, but also only make a claim when it is really needed.  I will also propose an unpopular point here, if you make a claim, your rates will return to normal rates for a pre-determined period; this too will help people make claims on only big things.

Trust, But Verify

With dealing with new members to the co-op I think you should always be trusting, but being that this would be a non profit (meaning for the public good) and that existing members are entrusting you to make decisions for the group to ensure that their tiny houses are protected, you need to do your due diligence  on vetting new members and ensuring claims are legitimate.  Again, this won’t be a popular point, but if I am going to say to someone, I got your back if things take a turn for the worst, If I’m going to say I am here for you, I mean it.  So again, I think if I am transparent about the process, that it will include checks and what those checks are, then you can make an informed decision to join or not.

Okay this turned out to be a lengthy post, I had to gloss over a lot, but here are some of the ideas I wanted to put out there for the conversation.

 

How Tiny Is Too Tiny?

P1000589When it comes to tiny houses when is small too small? 50 square feet? 100 square feet? 200 square feet? A lot of it has to do with individual circumstances, needs and number of people living in the space. After over a year in La Casita Cedric and I have come to the conclusion that as cozy as our home is, 98 square feet for two people and a stocky corgi is pushing some limits. We need more room in order to work on hobbies, store our bulk items and fulfill our need for independence. In the South it seemed a lot easier to fulfill these needs. We didn’t worry about freezing hoses, there was no need to store bulky winter clothes or gear and going outside was bliss in the winter months. Now that we live somewhere with a serious winter, we have more gear, more clothes and less and less space to put it in and as a tiny house fills, the more claustrophobic it feels. So how do you figure out how small is too small before you’re already living the tiny life? Here are few suggestion from our experience.

First, carefully consider needs. For example, we did not thoroughly considerstorage ideas the impact a tiny house would have on our social lives. We would host 30+ people a year in our apartment and threw lots of social events and fundraisers for different project we were a part of. While I’ve found lots of solutions to the issue of hosting events and entertaining, it’s difficult not having a place for family and friends to stay if they want to visit us up North. This has been one of the hardest parts for me and it wasn’t even something I considered as seriously as I should have. Also, my crafting time has diminished due to lack of space for supplies and the room to actually do projects. My advice is make a list of what is most important to your happiness in your space. Is it being able to cook delicious meals, soak in a tub, host potlucks or a space to do hobbies and crafts in? Number your list with 5 being most important and 1 being least. Make compromises from this list, tweak it as you build and use it throughout construction to remind yourself of your needs and how you plan to meet them.

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Five Tiny House Misconceptions

Here are 5 misconceptions that have cropped up while living the tiny life. Some were my own before moving in to a tiny house and some are what I’ve been asked over and over again.

Numero 1: Oh you live in a tiny house on wheels? It’s like a camper, right?

C’mon! Does this look like a camper to you?casita Once you mention wheels peoples’ brains seem to zone in on this comparison. It has to be one of the top 3 questions people consistently ask me when I try to describe living the tiny life.  First biggest difference between the two in my experience is a tiny house is usually built by it’s owners and is meant as a year-round residence. Secondly, a tiny house is a less toxic living situation than a camper which is usually made with a lot of plastic and glues that are harmful to one’s health. Lastly, you can tow a camper behind a car-I don’t know of a car than can haul a tiny house. At the very least, even the houses on the smaller end need a truck.

Numero 2: The tiny life is the simple(r) life!

Okay, so by simple I mean the misconception I had before living in a tiny house that financial freedom would mean increased simplicity in my overall life. This has not necessarily been the case however. With less bills life has become more flexible for sure but simple not so much. Living the tiny life proves more complicated on the day to day for us due to the time it takes to perform chores and daily tasks, especially if you are without running water like we are. Staying organized is a constant demand, doing dishes takes more time and while cleaning is fairly simple, it has to be done a lot more often. Other complications include finding storage for possessions you don’t want to part with but won’t fit in your tiny house, renting or finding land to buy, setting up utilities and having space to do hobbies and projects. I’ve mentioned other difficulties in a previous post so I’ll leave it at that.

Numero 3: A tiny house means ultimate mobility!

Not quite…if you want to move a tiny house any significant distance plan on paying a tidy sum of money and movingexperiencing a fair amount of stress. At least that was our experience moving from South Carolina to Vermont. Having our own truck would afford us more flexibility and ease of movement but if ultimate mobility is what one seeks, I’d recommend an RV or one of these. Tiny houses are not meant to be moved all the time in my opinion and they don’t have the flexibility of movement that a RV or camper enjoys ( harking back to misconception numero 1).

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Four Years Of The Tiny Life

Today marks the 4th year that The Tiny Life has been in existence and I am floored at where we’ve been and how far we have come.  The moment it clicked for me was when I first stood in a tiny house, it was a random park in Philadelphia that we had converged upon to get to stand in this very tiny space.  While it was a small space, I remember standing inside that tiny house with 8 other people for hours talking about tiny houses.  It was something that most people had never heard of and I just came upon, but there I was.

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I left the tiny house later that day feeling so energized about the potential life that I could live in a tiny house.  Life had thrown me for a loop at that point and it gave me moments to reflect on where I wanted to go from there.  I realized that tiny houses circumvented a lot of the pitfalls I’d faced, relived a lot of the worries I had and would allow me to focus on things I felt were important.  So I thought I’d start a blog to catalog my design ideas for my own tiny house, the rest was history.  We’ve had millions come to The Tiny Life and I am overwhelmed at how the movement has grown and all the amazing people that are in it.

This year has been marked with me getting to meet a lot of other people in the movement, particularly other bloggers.  It has been a blast and really inspiring to see what others are doing and how many of them are doing things in the movement.  The number of tiny houses I have seen recently has exploded and so has the number of people that follow the movement.

This past year also was when I started building my own tiny house which has been a ton of fun and literally a dream of mine come true.  I should be done in a few months and I can’t wait to move into my tiny house!

So thanks for reading, we here at The Tiny Life hope you have enjoyed it as much as we have!

 

The Search For New Land – Part 2

A few weeks ago I posted about how I suddenly had to find new land to put my tiny house, the land that I was going to be on was suddenly sold by the owners I was leasing from, you can read it all in this post.

I wanted to follow up with the next stage and share how things are coming along, plus I got some new photos and spring has sprung here!  I recently met with the local power company and determined where I could get power run to.  At first I had wanted to be much deeper into the lot, but it would have cost thousands of dollars to get the power lines run there.  So I settled for a nice spot where I could have to power run for free.  The company would install up to 200 feet of underground line to my power box for free if I stayed a customer for 1 year and paid their minimum, which was $15 a month.

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The next thing that I went to check on was water connections.  I was afraid that the water line would be at the other end of the property and would have left me having to choose water or power, otherwise I’d have to pay thousands to get one of the extended to where I needed it.   Well I think I might have lucked out because the closest water line is 300 feet from where my house will be, so while I’ll be spending several hours hard labor digging a trench (even with a trencher) I’ll take it over spending thousands any day!

Step one was clearing a path for the power company to dig the trench and then the area I’m going to park my house.  So I had someone with a chain saw come through and cut a path that didn’t have to take out any large trees, but maximized the 200 foot extension deep into the woods.

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Next up is having a temporary power pole service put in.  It will be a 200 amp service (the smallest they’ll put it).  The panel will be mounted on two posts, with a ½” piece of plywood between them.  From there the box and the meter will be installed and then a 20 amp plug has to be installed (I don’t know why, but it’s required to pass code).  Additionally two copper grounding rods will need to be driven into the ground.

The trick here is that this will need to be inspected by the city, but my house isn’t there yet (on purpose), It will be pretty tricky because they might start asking questions.  I’m just going to have to come up with a story of why I need power at that site, then cross my fingers.

Right now I am getting quotes to get the 200 amp service panel put in, if you know anyone around Charlotte, NC that would be good or may be willing to do a barter of some sort (me building them a website/free advertisements/etc), let me know!

 

Read part three of this series by clicking here

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Read part three of this series by clicking here