Coastal Home Insurance Explained – A Q & A with Bill Burbine, Vice President of Personal Lines Insurance

Planting your roots in the quaint coastal communities of Massachusetts, Southern New Hampshire and Connecticut certainly has it’s perks, including easy access to beautiful beaches and parks, picturesque walks, and fresh seafood, just to name a few.

However, despite all the wonderful activities and mouth-watering benefits the coast has to offer its residents, it is critical that you also recognize, understand and prepare for the not-so carefree side effects of coastal living, including increased risk of damage to your home from flooding, coastal erosion, and wear and tear from harsh weather conditions.

Your cherished home is located in a unique area and therefore, has very specific risks that a traditional, inland home does not. As a result, it’s critical that, as a coastal homeowner, you consider a vastly different type of insurance to protect your special property – and it’s called coastal homeowners insurance.

While traditional homeowners insurance is not always the easiest thing to understand, coastal home insurance is even less straightforward. In fact, we’ve received hundreds of questions over the years from coastal homeowners, just like you, who need help better understanding this complex coverage.

In order to ensure that even more homeowners can get the important information that we’ve been sharing with our clients for years, we decided to pose some of our most frequently asked questions to Fred C. Church’s very own coastal home expert, Bill Burbine, Vice President of Personal Lines.

After you read his plain and simple, yet detailed, answers below, we are confident that you will feel more knowledgeable about coastal home insurance and be crystal clear on the key things to look for in a home insurance partner.

Q: Why does my coastal property need additional insurance?

Bill’s Answer: Coastal homes in New England, while beautiful, are extremely vulnerable to storms, and therefore, more at risk to flooding, water and severe windstorm damage. Therefore, they require additional coverage beyond what comes standard with a traditional homeowners insurance policy. Insurance policies for coastal homeowners include separate deductible types which provide additional coverage against harsh weather, like hurricanes, high winds, and named storms.

Q: How does the deductible for my coastal home vary from a traditional homeowners insurance policy?

Bill’s Answer: A traditional homeowners policy tends to include a straightforward dollar deductible for any weather-related disasters. Whereas a coastal homeowners insurance policy is written with what’s called a percentage deductible.

This is, understandably, a very confusing concept to many homeowners. Therefore, I always make a point to show clients how the percentage deductible works compared to a standard policy by using examples like the following:

  • If you are an inland homeowner, or if you live more than two miles from the coast, and have, for example, a $1,000 standard deductible, in the event of a claim, you would be responsible to pay $1,000 out of pocket before your insurance policy kicks in.
  • If you are a coastal homeowner, or live within two miles of the coast, your insurance policy may include a percentage deductible which is based on your home’s total insured value. This means that if your home is insured for $500,000 and you have a 5 percent deductible, the first $25,000 would be an out-of-pocket expense for you as the homeowner.

Another key difference between a traditional home insurance deductible and a coastal home insurance deductible, is that they are often referred to as either a hurricane deductible or a windstorm deductible.

Q: What is the difference between a hurricane deductible and a windstorm deductible, and how is the deductible type and amount determined?

Bill’s Answer: There are two available deductibles for coastal homeowners that a standard homeowners insurance policy does not have, and they are called hurricane and windstorm/hail deductibles – and while they may sound similar, they are very different.

  • A hurricane deductible, as the name states, applies solely to the damage caused by a hurricane.
  • A windstorm or wind/hail deductible applies to any kind of wind damage.

Which one of these deductible options is available to you is governed by two key things: (1) the regulations in the state in which your property is located and (2) your home’s proximity to water, including the ocean, a lake, pond, or stream.

It’s important to know that each state has their own unique classification, or definition, for a hurricane. We have included the classifications for Connecticut, Maine, Massachusetts, New Hampshire and Rhode Island below.

  • If you live in Connecticut, a hurricane deductible is available, however, some insurance policies actually mandate, or require, this deductible. Meaning that your insurance carrier will not sell a policy without this deductible in place. If you are a resident of Connecticut, and are unsure if your policy includes this deductible, contact us today for a complimentary policy review.The Connecticut hurricane deductible takes effect when the National Weather Service (NWS) declares a hurricane that records winds of 74 miles per hour or more. This deductible remains in effect for 24 hours following the termination of the last hurricane warning issued for any part of the state by the NWS; or 24 hours after the hurricane is downgraded from a hurricane by the NWS.
  • If you live in Maine, a hurricane deductible may be applied only when the NWS issues a hurricane warning where the insured home is located. The deductible remains in effect for 24 hours after the NWS’ last hurricane warning for that particular area of the state.
  • If you live in Massachusetts, you have the ability to secure insurance two ways: (1) through the state’s Fair Plan or (2) a private insurance carrier.If you opt to purchase insurance through the Fair Plan, you would be subject to a windstorm/hail deductible, which again covers any and all types of wind damage. Most private insurance carriers allow coastal homeowners to choose between a windstorm/hail deductible or a hurricane deductible. Your insurance specialist will be able to talk you through what the difference in those deductibles will look like and how they will affect you, your home and your specific insurance policy.
  • If you live in Rhode Island, you can apply a hurricane deductible of no more than 5 percent of your home’s insured value. It is important to point out that a flat dollar deductible may be available to some coastal homeowners instead of, or in addition to, a percentage deductible; however, the total deductible amount cannot exceed 5 percent of the home’s insured value.Similar to Maine, a policyholder’s hurricane deductible only goes into effect when the NWS issues a hurricane warning for where the insured home is located and only remains in effect for 24 hours after the last warning for that particular area was issued.

While this is the most current information for deductibles and regulations by state, these can, and do, change periodically. Therefore, it is imperative that your insurance agent keeps you informed of any and all updates or changes to ensure that you and your home are always properly protected.

Q: What additional insurance coverages should coastal homeowners consider?

Bill’s Answer: I always encourage coastal homeowners to consider the following three critical insurance coverages.

Coverage #1 – Ordinance & Law: This particular coverage covers the cost to rebuild a home that has been destroyed, as well as the cost to upgrade, ensuring it meets the most current building codes after the covered loss.

Wondering if this coverage is right for you? Ask yourself the following three questions.

  1. How old is your home?
  2. Can you financially afford the cost of reconstruction if your home had to be set back from its original foundation due to damages?
  3. Is your home located in a historical district, like areas of downtown Portsmouth, NH or along the water in Plymouth, MA? If so, can you afford the cost associated with restoring your home to its original historically approved condition?

So, if you live in a home that was built before 1970 and/or answered “no” to question #2 and #3 above, ordinance and law would be a smart investment for you to consider, and here are three reasons why.

  • Age of your home: If you live in an older home and experience a loss, you are more likely to have to upgrade your home to meet the current building codes as compared to living in a newer home that was recently built to code.
  • Cost to upgrade: In the event your home is fully or partially destroyed by a covered loss, ordinance and law will cover the costs of updating your home to ensure it meets the most up to date building codes.
  • Rebuilding expenses: If your home needs to be replaced, repaired or upgraded after a catastrophic loss, ordinance and law will help pay for those additional expenses.

Coverage #2 – Loss Of Use: In the event of a catastrophic loss that requires you to rebuild or repair your home, loss of use would place you and your family in temporary housing. However, it is important to note that how individual insurance carriers defines “temporary housing” can vary greatly from one company to the next. For example, some of Fred C. Church’s more premier insurance partners will generally assistance in the rental of another coastal property, similar to your own, for the duration of your claims process. Whereas other insurance carriers may classify a hotel or mobile housing solution as a “temporary housing” solution. As you can see, understanding the specifics of your individual policy and how your insurance provider will respond in a time of need is essential.

Coverage #3 – Flood Insurance: A standard homeowners policy, regardless of your proximity to water, does not include any coverage for flooding. Since heavy rain, rapidly melting snow, and severe coastal storms are the top three reasons for flooding in the U.S., and the frequency of flooding in New England has substantially increased over the past 70 years, purchasing proper flood insurance really should be “mission critical” for all homeowners, and not just those who live along the coast.

Q: What should coastal homeowners be looking for when selecting an insurance agent?

Bill’s Answer: Above all, I believe you should look for a team or an individual who prioritizes exceptional customer service. It is also important to seek an agent that truly understands and has experience in insuring coastal property in New England, like Fred C. Church. Our personal lines team has been insuring homes up and down the New England coastline for over 150 years, therefore we have the experience necessary to ensure that our clients are fully covered and protected.

Custom Coverage You Can Count On
If you’re looking for an insurance partner who can help you both understand your specific risks as a coastal homeowner and how a custom coastal home insurance policy can protect your valuable property, the experienced team at Fred C. Church is here to answer all of your questions.

Our local insurance advisors will first take the time to get to know you on a personal level. Once we understand you and your unique needs, we will present you with the very best coastal home insurance solution that minimizes your personal exposure to risk and maximizes your peace of mind.

At Fred C. Church, we work with several reputable insurance carriers that have insurance coverages specifically designed for the New England coastal homeowner. So, whether you live on the coast full-time or own a seasonal beach home, our team will work with our insurance carriers directly in order to provide you with the custom coverage you need.

When you partner with Fred C. Church, we make it our number one priority to ensure that you, your family and your coastal home are properly safeguarded. It’s true – now, sit back, relax and enjoy all the pleasures coastal living has to offer!

For more information about coastal home insurance or to set up your free personal risk assessment, contact us today.

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