Looking to insure a coastal property? Here’s what you need to know.


Peak hurricane season is upon us in New England (mid-August through late October) and the National Weather Service predicts above-average hurricane activity this year.

Now might be a good time to think about coastal property insurance. Here are a few things to know:

Cars drive through flooding on Oakville Street in Lynn after Tropical Storm Elsa hit the area.Christiana Botic for the Boston Globe

Q. Can insurers refuse coverage for coastal properties?

A. Yes, and they may be doing it more often (stats are hard to come by). An insurance policy is a contract between two consenting parties. The insurer wants profit: more premiums than claims paid. If an insurer thinks your home is too risky, they can say no. No law obliges insurers to take out or renew a policy. And there’s no law forcing you to insure your home, although if you have a mortgage, your lender may require it. (In contrast, auto insurance in Massachusetts is mandatory.)

Q. Does this mean that some properties are not insurable?

A. Most states, including Massachusetts, have passed laws creating “insurers of last resort.” They are mandated to insure properties that are excluded from the private market, with the risk shared by all state insurers. Details on the Massachusetts FAIR Plan can be found online. The FAIR plan insures up to a maximum of $1 million in replacement costs. About 10% of homeowners premiums in the state are paid under the FAIR Plan.

Q. Why are insurers particularly concerned about coastal properties?

A. Climate change is blamed for a dramatic increase in damaging weather, and the coast often bears the brunt of it. The National Oceanic and Atmospheric Administration says there have been 332 weather disasters each causing $1 billion or more in property damage since 1980, or nearly eight a year. Last year alone there were 20 and over the past three years the annual average number of such storms was 19.

Hurricanes that pound the ocean and punish coastlines are, by far, the costliest disasters. (Hurricane Bob in 1991 caused more than $1 billion in damage in Massachusetts, while in 2011 Tropical Storm Irene did nearly as much damage.) Half of the 10 worst hurricanes nationwide in the past 30 years have occurred in the past five years. Detect a pattern here?

Q. Can my insurer cancel my policy when a severe storm is forecast?

A. No. Under state law, your policy must remain in effect until its expiration date unless you fail to pay for it, commit fraud, or disclose risk. An insurer, however, is free to refuse to renew your policy, but only after giving you at least 45 days’ notice before expiration. (Note: If you decide to purchase separate flood insurance in preparation for a storm, you may be out of luck. Flood insurance takes effect 30 days after purchase.)

Q. How do insurers define “coastal”?

A. Each insurer has its own internal guidelines, but typically it’s five to eight miles from an ocean, lake, or river.

Q. How do franchises work on coastal properties?

A. Deductibles are the amounts you pay out of pocket before the insurance takes effect to cover the remaining cost of repairs. Many coastal property policies have two types of deductibles, one for damage from fire, theft, lightning and other causes (often referred to as the “all other perils” deductible) and one for caused by the wind.

Insurers generally set the deductible for wind damage higher than that for “all other risks”, in recognition of the devastating effects of a windstorm. (“How old is your roof” is one of the first questions an agent will ask.) My “all other perils” deductible is $500, while my deductible for wind and hail is $1,000 , which is quite low, probably because my house is near a bay, as opposed to facing the open ocean.

A house on Ballston Beach left in a precarious position has been moved to a temporary location at 127 South Pamet Road, right next to where it stood on stilts for years. It was in danger of collapsing after more erosion ate away at the beach and cliff dunes during the January 30 blizzard. John Tlumacki/Globe Staff

Q. Are there other ways to set deductibles?

A. Yes, some insurers set the deductible for wind damage not as a lump sum (like my $1,000) but as a percentage of home coverage. These deductibles are generally applied to the riskiest properties. A percentage-based deductible comes into play when triggered by a specific event, usually when the damage is caused by a “named storm”.

A “named storm” is a storm that sustained winds of at least 39 miles per hour, which is the threshold for the National Weather Service to name a tropical storm or hurricane, for example, storms tropical “Elsa” and “Henri”. both of which made landfall in New England in 2021.

A friend who lives on the coast told me that her wind deductible was 2% of the amount of coverage on her home, or $750,000. This means that if his home is damaged by a named storm, his deductible is $15,000. Her home is “south facing,” which is less risky than a “north facing,” she told me.

A deductible can be up to 5%. And, remember, insurers have enough data to help them determine the risk on a house-by-house basis.

Q. Are all home insurance premiums increasing?

A. Inflation is driving up premiums in general, as home replacement costs have skyrocketed along with the cost of building materials (around 20%). Many insurers have also increased their rates, albeit at a much more moderate pace (less than three percent among the state’s largest insurers).

Q. What about flood damage to my home?

A. This is important: your home insurance policy does not cover damage caused by flooding. You must purchase it as a separate policy. For many years, insurers simply did not offer it because they deemed it too risky. But today, insurers have better tools to assess risk and set premiums accordingly. Yet many insurers are reluctant to insure against it.

Q. If I can’t get private flood insurance, where can I go?

A. The federal government provides the National Flood Insurance Program.

I have a problem? Send your consumer concern to sean.murphy@globe.com. Follow him on Twitter @spmurphyboston.


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