HOW DOES HOUSE INSURANCE HELP YOU
I was recently asked by an Insurance Agent WHY I wanted Home Insurance. At first I was shocked, because the question came in an email response and text is so non-emotive. I am a very literal person. I thought I kmew why I wanted insurance. I’ve been robbed a couple of times, and had the city sewage clean-out malfunction, flooding my basement with a foot of sewage. I was glad I had insurance then.
I have lived in homes I owned (with a mortgage) for most of my life. I have had HOME INSURANCE on ALL of those homes.
So I decided to research WHY other people get insurance.
In my search, I was surprised to learn that Home insurance is not legally required in Canada if your house is fully paid for, but you will need to purchase home insurance in order to get a mortgage, or any loan leveraged on the equity in your home.
Mortgage companies won’t lend you money if there is a chance they could lose their investment by an act of nature. If you are applying for a mortgage in order to purchase your home, your lender will require you to obtain house insurance before the closing date. Although making the mortgage payments is your responsibility, your lender has a stake in your property and they want to make sure you have properly insured your home to protect their investment.
HOW DOES HOUSE INSURANCE HELP YOU
1. Damage to your home.
Your home is almost always your most valuable asset and insurance will help protect it from fire, lightening, explosion, smoke, weather, vandalism, and theft among other potential sources of damage to the inside and outside of your house.
Insurance may also cover living expenses if your home is damaged so much as to be uninhabitable. This almost never extends to damage caused by neglect and/or lack of maintenance.
2. Damage to your personal property.
If your home is damaged by anything covered in your policy, your possessions are usually also covered up to a certain limit. If your policy covers personal belongings, your personal property is also covered when you travel. Not all home insurance policies cover PERSONAL property. Make sure to check on that.
3. Personal property stolen from your car
may also be covered by your home insurance policy, IF your home insurance policy includes personal property coverage. Make sure to check on that.
4. Liability
One reason you might not think of right away for carrying insurance is liability. Home insurance generally includes liability coverage in case someone gets injured on your property and takes legal action against you. This may extend not only to your home, but anywhere you go. If you are liable for someone’s injury, you may be covered by your home insurance policy even if it does not happen in your house. Make sure to check on that.
5. Accidental damage to someone else’s property is a good reason to carry liability insurance.
If a fire were to start in your home and spread to a neighbor’s house, the damage to their house would be partially covered by the liability provision of your home insurance policy.
6. IF you live in a condominium, you will need personal insurance to covers the inside of your unit and storage locker.
The outside of the building and common areas are usually covered by the condo company’s insurance. Your personal Condo insurance will cover damage to your unit and your personal belongings and damage to other units if it is caused by something that happened in your unit, such as a fire. It may cover living expenses if you need to move out while your condo is undergoing repairs. If you are getting a mortgage to buy a condo you will be required to have insurance before the closing date.
7. IF you are a tenant in a building that belongs to someone else, there is Tenant Insurance.
Tenant’s (or renter’s) insurance covers your personal property if you are renting, possessions in your car, damage to the building where you live/work, and injuries that happen in your unit. Living expenses may be covered if you need to move out while your unit is being repaired. Your landlord may require you to have renter’s insurance.
So those are the types of insurance and the basic rundown on what insurance covers.
Home insurance is meant to compensate your loss from unexpected events such as fire and theft. Events like earthquakes and floods probably will not be covered and you usually need to add additional coverage to your policy. These add-ons don’t usually cost that much. Make sure you choose a policy that makes sense for your needs and understand exactly what it covers.
HOW DOES HOUSE INSURANCE HELP YOU
What is not covered by home insurance?
Predictable events and maintenance issues are not covered by insurance. If damage could have been prevented by proper maintenance of your home, it will not be covered. Anything that is not specifically listed in your policy will not be covered, so make sure you add any coverage you think you will need, such as earthquake or flood, if you live in areas which experience these.
Who is covered?
Home insurance provides liability coverage for you, anyone who lives in the home with you, and guests. It may or may not cover personal property.
Not having home insurance means you must be comfortable with your savings covering any potential scenario where damage is caused to your home or someone else’s, or a third party is injured. If you don’t have savings enough ($2 million) then you need to consider having home insurance.
Moving from a larger property into your very own small home can be a relief — and even a dream come true. It certainly has been for me.
You’re downsizing your stuff and simplifying your life, after all. Meanwhile, you are (probably) lowering your expenses, too. The equity in the home I sold, allowed me to liquidate all my debt from my married life, and financed the build of The Dragons Nest.
But, as you settle into your smaller home, there’s one factor to consider — you should get insurance, even if you own your small House outright and also own the land it’s parked on!
But, what type of homeowners insurance should you buy? And how much will it cost?
How much does it cost?
If a home is 1/10 the cost of a traditional home, the insurance should be 1/10 the cost as well, right?
Well, not exactly.
For starters, it’s important to note there is no cut and dry formula that dictates how much you’ll pay for home coverage.
Grenz of Tiny Home Insurance said his firm and others take on the risk on an individual basis, and use more than one factor to determine insurance policy costs. “There are a lot of variables that go into it, depending on where you live,” Grenz said. At the end of the day, “the average cost of tiny home insurance is probably around $600 USD per year,” Grenz noted, adding that pricing can still be all over the place.
What type of tiny home insurance should you buy?
Part of the reason for fluctuating costs is the fact that tiny homes are built — and used — differently. Also, you can buy several different types of coverage for your tiny home, depending on its use.
If your tiny home is on wheels and you plan to move it, you’ll need an insurance policy to cover your tiny home plus a trip endorsement or separate policy when you move it. This might fall under RV insurance.
Other than that, you can buy several different types of policies to cover your tiny home.
1. You can buy an RV policy, a manufactured home policy or a custom homeowner’s policy — all of which may be perfect for your tiny home.
2. You may need a different type of policy if you rent out your tiny home as an Airbnb versus if you live in it full-time.
Overall, Grenz says the best way to find out the best coverage for your needs is to speak with an agent who specializes in coverage for Tiny Homed so they can give you advice based on your unique needs.
Four main factors usually dictate how much you’ll pay (and how difficult it might be) to secure tiny home insurance:
1. where your home is at,
2. whether it’s stationary,
3. who built it
4. how you use it.
“If you don’t need the transit coverage, you have more options,” Grenz said. “Insuring a tiny home that doesn’t move is a lot cheaper as there’s a lot less risk involved.”
Because buying a tiny home usually means downsizing, keeping your possessions at a minimum will also help you save. You need to know the replacement value of the possessions you have decided to keep.
You can also shop around with different insurers to find the best rate, but Grenz pointed out that it’s essential to “make sure you buy tiny home insurance from a reputable firm.” You don’t want to go with an insurance agency that doesn’t truly offer the right coverage for tiny homeowners. Be proactive and make sure you’re buying from an agent or firm that knows how to cover tiny homes.
The above, which Grenz describes, is the insurance system in the USA, where many states have adopted laws making living in a Tiny Home year round legal.
HOW DOES HOUSE INSURANCE HELP YOU
In Canada, while it is not generally enforced, it is still illegal to live in a Tiny Home on Wheels in most instances, especially a DIY self-built Tiny Home that is not officially certified. In many municipalities you can’t secure building permits or inspections for Tiny Homes, especially the ones on Wheels.
Sooke, on Vancouver Island has just instituted a bylaw specific to Tiny Houses on Wheels, on the permit and inspection process and requirements. While daunting, building to their bylaw ensures your Tiny Home is built to code, and makes it easier to insure!
Don’t put off getting insurance until a disaster is looming. You can’t get insurance overnight for ANYTHING. Be proactive.
Plan ahead, choose a tiny home insurer wisely and make sure you have the right type of coverage for your needs, so that you can ensure your new tiny home life will go smoothly in the event of a fire, earthquake or a tree falling on your roof!
My experience in Canada, getting Tiny House Insurance was very interesting. I have friends living in Tiny Houses who have insurance policies, and didn’t think it would be as involved or as time consuming!
Very few insurance companies in Canada will insure Tiny Homes, and of those, even fewer will insure self-built/DIY uncertified ones on wheels.
Though MOST Tiny Homes are better built than most RVs, it’s actually easier to get insurance for an RV, even though the risk to the insurance companies is greater for loss with an RV. There is a general bias against Tiny Homes on Wheels by all the regulating bodies at almost every level of government in Canada. In this the USA is leaps and bounds and constitutionally ahead in so many States already.
Having arranged insurance for a mobile home or two in my life, I was prepared for the process to differ from what regulators consider to be a * real* dwelling — a building on a solid permanent foundation, crawl space or basement, built by contractors and certified by municipal building inspectors.
I already had experienced the differences with mobile homes. The insurance companies usually require photos of all sides of the unit, including the roof. The unit needs to be permanently blocked on levelling supports, and have permanent skirting enclosing the underbelly of the structure. The unit must carry a mobile home certification, usually acquired at/by the manufacturer, and in some cases may need to be inspected and recertified depending on the units age.
Owners of Tiny Houses on Wheels (THoW) are asked to comply with all of the above, and if they have been built by a certified Tiny Home Builder, they will be more readily insured than a Self-built THoW.
HOW DOES HOUSE INSURANCE HELP YOU
The two insurance companies who my insurance broker found, who insure Tiny Houses in BC Canada, are Premiere Marine and Lloyds of London.
Here is a link to the website of Premiere Group, where you can find the downloads for the Application they use. https://premiergroup.ca/products/tiny-home-primary-and-seasonal-residence/
I insured through Lloyds of London, for just over $700 CDN a year. Most of the Tiny House dwellers I know are insured with Premiere Marine. Their rates are pretty much the same. I liked the overall reliability and ease of the claims process with Lloyds of London. I also had been insured through them with my previous home, which meant I had a level of comfort and familiarity with the policy.
Even so, during the process, I was surprised it took a few of weeks to get responses back from the various insurance companies.
Lloyds of London required I have the plumbing and electrical installations inspected to ensure they were to code. I hired two local Red Seal Certified professionals to do the assessments, and was confident The Dragons Nest would pass with flying colours, and it did.
I am a careful individual and know my home is well built. In fact it is built to the highest code standards in place in 2020. I am not likely to ever have a claim, but as I mentioned, I’m glad I had insurance the few times it has come in handy.
Any broker can contact one of the two insurance companies I’ve mentioned above. They all require electrical and plumbing assessments by certified Red Seal Electricians and Plumbers.
My insurance agent is:
Anita had never done a policy for a Tiny Home before I asked her to take me on. She was amazing and worked tirelessly to find me a broker. She is my insurance goddess and you can tell her I said so!
ANITA McKINNON, CAIB
Personal Insurance Account Manager
T 250.724.3241 | W schillinsurance.com
Schill Insurance Brokers Ltd
4907 Argyle Street
Port Alberni, BC V9Y 1V6
#tinyhomeinsurance
Please post your Home Insurance experiences in the comments below.
SEE ALSO : HOW DOES INFLATION AFFECT HOME PRICES
HOW DOES HOUSE INSURANCE HELP YOU
