Considerations When Insuring a Coastal Home

A coastal home may be your dream home, but there are factors to consider when it comes to buying home insurance. In order to have the coverage you need, it's important to educate yourself on the implications and risks involved with insuring this type of home before purchasing a policy.

High Premiums

Consider the high cost of protecting a home located in a hurricane-prone area against wind and flood damage. It comes down to your home insurance premiums costing you more than if you lived in a home located inland.

Homeowners living in 18 states along the Gulf and Atlantic Coast pay a combined total of about $4 billion more to protect against hurricane winds than do homeowners who do not live along the coast. Premiums continue to rise as a result of the cost of claims insurers paid out in claims for devastating storm damage in recent years.

As a result, some insurance companies are rewriting or canceling current policies in the riskiest coastal areas. Fortunately, many states have what they refer to as insurers of last resort. If you can't get home insurance through a private company, your state may back an insurer that will provide coverage.

Future Storms

Insurance companies often charge higher premiums in coastal areas so that the company can survive severe hurricane-damage claims in the future. When setting premiums, insurers use computer models that provide worst-case scenarios of future storms. This allows the companies to build up their reserves to cover paying for policyholders' losses in the future. Therefore, what seem like high premiums now could be what saves you financially in the future.

Increased Insurability

When it comes to making coastal home insurance costs more manageable, insurers often consider a newer home as being safer and stronger in the face of storms. When building or renovating a home, be sure to follow the building codes for your area. Although homes located in high-risk areas now require stricter standards, it can be to your advantage to include upgrades that surpass the minimum code requirements.

You can add features to your home that an insurance company will view as decreasing the risk of costly damage. Installing metal straps or clips that connect the exterior walls to the roof can prevent it from blowing off in a storm. Features such as storm shutters and panels and/or impact-rated windows and doors can lower your premium or qualify you for a discount.

Additional Considerations

When buying coastal home insurance, avoid skimping on coverage, as storms that bring high winds and flood waters have the potential to completely destroy your home. Although it may be a smart move to inquire about the rates and coverage options of more than one insurance company, buying the cheapest insurance is not always the best buy when it comes to protecting your home and its contents.

Coastal homes also require more than the traditional home insurance coverage. In some locations, you may need to purchase multiple policies. In addition to standard home insurance, you may need separate wind and flood coverage. For more information about your options, contact resources like Farmers Insurance Group.