According to NOAA’s Office for Coastal Management, the total length of the US shoreline is 95,471 miles, including the continental US, Hawaii, Alaska, and US territories. The Eastern Seaboard, including the Atlantic and Gulf areas in Florida, represents a significant percentage of the total. Homeowners, condo owners and associations, and apartment landlords along the shoreline require the special protection found only in Coastal Property Insurance Programs.
What is Coastal Property Insurance & Who Needs It?
Coastal Property Insurance Programs combines several types of property insurance necessary to protect homes, condos, landlords, and rental management businesses of all sizes. They share similar unique risks due to their proximity to the shoreline.
The increased ferocity and number of hurricanes and recent weather disasters have insurance markets responding with changes to mitigate future losses while covering current disastrous events. Changing conditions ramp up complications for carriers and their homeowner, condo owners, condo associations, apartment owner customers, and rental management businesses of all sizes.
In dynamic markets, policy rates, terms, and conditions change as carriers evolve and evaluate their ability to provide coverage for their clients. Frequently visiting the Program Business blog will help you keep informed of shifting market situations.
Types of Coastal Property Insurance
In this report, we’re unusually mixing personal and commercial lines because of the unique connection consumer and commercial property owners near the shore have. They need property insurance protection for their home, business, or both that covers risks standard inland property coverages exclude.
This guide to Coastal Property Coverages highlights the primary policies found in coastal property insurance programs. If you are active in the coastal insurance market, you simultaneously deal with personal property and commercial property. Here are coverages found in comprehensive coastal insurance programs.
Standard Property Coverage
Standard property coverage provides basic liability insurance. It protects against lawsuits stemming from injuries to people or damage to property of visitors to insured property. Such policies usually have similar features, with a slight variance in coverage and price between policies.
Typically, property insurance covers damages from perils such as fire, wind, hail, snow, ice, lightning, and more. Additionally, property insurance covers losses to the structure and its contents, including furniture, flooring, cabinets, and personal possessions due to vandalism and theft. The coverage extends to sheds, detached garages, buildings on the property, studios, workshops, gazebos, and other outdoor structures. Exclusions in standard property insurance include routine wear and tear, water damage, earthquakes, floods, and wind damage in coastal areas.
Habitational insurance insures commercial, residential property owners, including apartment buildings, condominiums, and multi-unit dwellings. A usual comprehensive habitational insurance program provides insurance policies for property, general liability and excess, and environmental impairment liability coverage.
Policies vary, with some coverage included. Others offer endorsements to extend protection for signage, water damage, glass, rental income losses, accounts receivable, equipment breakdown, E&O, and D&O fees for condo associations.
Commercial property insurance protects property owners and landlords from fire, theft, and natural disasters for losses to apartment buildings and complexes and additional property structures such as garages, offices, health and meeting facilities, common areas, fences, swimming pools, and storage buildings.
Business Owners Policy (BOP)
A BOP bundles commercial general liability insurance with property insurance to protect the insured’s physical and intangible business assets, including losing valuable papers and documents such as titles and lease agreements. It also covers costs to repair, recover, and replace equipment and losses to electronic business data due to hacking or a computer virus.
Replacement value coverage is one method to cover the costs to rebuild or repair a home or apartment building. It replaces stolen and damaged belongings, both without deducting the depreciation of the property. It is typically preferred over actual cash value (ACV) coverage that deducts property depreciation in the loss settlement valuation. ACV insurance is less expensive because it provides less protection and more significant out-of-pocket expenses to insureds.
General liability insurance protects home and condo, and commercial property owners from legal actions arising from injuries to visitors on the property or damage to a visitor’s property while they are on the premises. A tree branch hitting a visitor’s car while parked in the apartment’s parking lot is covered, as are slips and falls and other injuries visitors might sustain on the property.
In a business policy, smaller operations will get liability protection through a BOP, while larger businesses require a standalone commercial general liability policy that offers more detailed and specific protection. Liability for home and condo owners is part of a package of coverages designed for their needs.
Hurricane and Flood Endorsements
Coastal property insurance coverage for businesses and homeowners excludes losses due to hurricanes and flooding. In coastal areas, the potential losses due to those perils are extreme compared to inland property risks. Policy endorsements are available for property owners to protect against such threats. Flood insurance is a national program administered by the NFIP and sold through local agents. Hurricane and wind damage coverage in coastal areas is often underwritten through state government programs.
Windstorm insurance, as hurricane insurance is also known, is available by adding it as an endorsement to homeowners or property owners’ policy. Or by insuring for wind-only coverage through specialized private insurers; or applying for last-resort Beach Plan or FAIR Plan insurance through state-administered insurance pools. The latter usually requires proof the insured has been declined by three carriers before they’ll insure your property.
Some coastal states provide wind coverage without requiring proof of decline from the voluntary market. Beach Plans and FAIR Plans are more costly than policies from standard insurers, but they make qualifying for state-insured windstorm insurance programs easier.
Coastal Property Insurance Costs
The average annual cost of a standard homeowners policy is roughly $1,000 per year with a $1,000 deductible. Flood insurance in some coastal areas in Florida runs up to $10,000 per year, while much less in other coastal areas such as the Carolinas.
Costs of other types of coverages depend on whether the policy covers a homeowner or a commercial, residential property and what is included in coastal property risk management plans. Because commercial properties cover everything from small, one-unit operations to large multi-unit apartment complexes in different geographic areas, so it’s impossible to provide commercial property insurance costs accurately.
Best Coastal Property Insurance Programs
The optimal place to start your search for the best Coastal Property insurance programs is ProgramBusiness.com. Uniquely, the platform serves both sides of the insurance distribution system for specialty programs by connecting carriers, MGAs, wholesalers, and program administrators with general local agents seeking Coastal Property insurance coverage for their insureds.
A prime example is Apartment Insurance Consultants (AIC). It combines 35 years of underwriting experience with strategic insurance solutions through its transactional brokerage platform. AIC’s carrier partners are among the world’s most financially stable insurance companies. It provides innovative insurance programs to apartment owners and managers with broad insurance coverage at competitive rates by leveraging group purchasing power.