In the wake of the recent Kim’s Tiny House fire I found myself thinking about insurance options for Tiny Houses. Now I have heard many people speak about their efforts to get insured by traditional companies through various approaches. Many were not able to and the one who did are few and far between. Where I get hung up at is even if you were able to get insured from an insurance company and had a claim, I see it going only one way. Call me a pessimist, but I don’t think it is stretch that once that claims adjuster comes to your property, takes one look at your Tiny House, they will be on the phone working out a way to get out of paying. They will come up with some way out of paying, leaving you high and dry after being a dutiful customer.
Inherently a business makes money by increasing it’s income and decreasing it’s expenditures; the gap equals profit. So a for profit insurance companies ensures it profit by being efficient internally and minimizing the money paid to it’s customers. In a perfect world they could do this while maintaining ethical standards, but we have seen that is far too often, that is not the case. So what is the solution?
The old adage, if you want something done right, you’ll need to do it yourself. So what if we were to create our own insurance company, a non profit entity, maybe even a Co-Operative? A entity that was dedicated to Tiny Houses, that protected it’s people in a fair and just way.
Members would pay a monthly fee, which would be gathered into a non profit bank account, we could position the funds (or part of them) to earn a certain interest rate to ensure that we keep ahead of inflation, but it would be a extremely low risk option. I think it would be prudent to have a $500 (maybe $1000) deductible to minimize very small claims. By doing this, it would mean that who ever is running it isn’t spending hours processing dozens of claims for a $50 claims. So it saves the insurance funds from being whittled down in little chunks and save on a lot of costs of staff time.
What would be interesting is after a member has been with the insurance company for more than 3 or 5 years without a large claim, their rates could drop to half the original rate. The idea being that you have paid enough into the system that it has amassed to enough to cover a big claim. We would have to decide if their rate would rise if they were to submit a large claim.
The real trick is to get enough people involved so we could get some economy of scale, the large number of people we have, the quicker the fund could grow to a point where it could take several total loss claims. So that is some of my thoughts on how to approach this issue, protect our tiny houses and build a stronger community.
What your thoughts? Let us know in the comments![poll id=”7″] [poll id=”8″]