A smaller footprint yields lower costs when it comes to protecting a tiny home through home insurance. Nationwide, it costs about 106 percent more to insure a 2,100-square-foot home than to insure a tiny home, according to a study conducted by cost comparison analytics company ValuePenguin.
In general, the most expensive states to insure a tiny home are ones where natural disasters occur frequently. In Oklahoma, the priciest state to insure a tiny home, it costs about 242 percent more to insure a 400-square-foot home than across the remaining U.S. states and District of Columbia. That hefty price costs Oklahomans about 4 percent of their household incomes.
After Oklahoma, Tennessee, Kansas, Texas and Colorado are the priciest places to insure a tiny home.
Insuring a 400-square-foot tiny home takes an average of 1 percent of the U.S. median household income, whereas insuring a 2,100-square-foot home costs an average of 3 percent of a household’s median income.
Credit: ValuePenguin
ValuePenguin analysts noted that selecting a percentage-based deductible, rather than a cash-based deductible on a home insurance policy could help tiny homeowners save even more. This may be a particularly important factor to consider for tiny homeowners in natural disaster-prone areas. Since tiny homes have such a smaller footprint than the typical home, they are at much higher risk of sustaining significant damage during a tornado or other severe weather event.
The median sale price per square foot of a tiny home can range between $106 and $154, maybe a 400-square-foot home cost between $42,396 to $61,416, according to data from the U.S. Department of Housing and Urban Development (HUD).
Therefore, a cash deductible of $500, for instance, takes up a much larger percentage of the value of a tiny home compared to a standard size home. S0, tiny homeowners who opt for a percentage-based deductible have more to gain while paying less than their standard home counterparts. A tiny homeowner who opts for a 2 percent deductible will be paying between $848 and $1,228 for their deductible, according to those tiny home prices from the U.S. Department of Housing and Urban Development. However, a standard homeowner with a $250,000 policy backing a larger home will pay $5,000 on their 2 percent deductible.
Opting for that 2 percent deductible, instead of a cash amount of $500 can also help tiny homeowners get a discount on premiums. Paying a 2 percent deductible instead of $500 typically yields an annual discount of 9 percent, at a national level, according to ValuePenguin’s analysis. But higher savings can be found in many places, like North Carolina, for instance, where a deductible discount can amount to 19 percent.
Credit: ValuePenguin
As it happens, some of the places where tiny homes are highest in demand is also where tiny home insurance is most expensive.
According to Google Trends, Alabama and Arkansas saw the largest search volume for tiny homes between August 2020 and July 2021. Both of these states fall into the top ten most expensive places to insure a tiny home, largely because of their propensity for tornadoes and the costly damage they can cause. In these two states, it typically costs about $1,200 to insure a home with a policy that has a $500 deductible, which is 68 percent pricier than the national average.
Other high-demand, high-insurance cost states for tiny homes include Oklahoma (tied sixth for demand and first for cost), South Carolina (tied sixth for demand and ninth for cost), Tennessee (ninth for demand and second for cost), Colorado (tied 15th for demand and fifth for cost), Kentucky (tied 15th for demand and sixth for cost) and Texas (17th for demand and fourth for cost).
For many tiny homeowners in these eight states, opting for a higher deductible often does not translate into savings on a premium either. The average premium reduction across these states when a homeowner elects a higher deductible is only 7 percent.
Credit: ValuePenguin