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Who Can Insure My Coastal Commercial Property?

If you own a commercial property in a coastal area, you may have a hard time finding an insurance company that will cover it. A number of factors, from frequent severe storms to rising populations and property values, are forcing many insurers to back out of coastal areas. Yet location-related risks are one of the top things to consider when buying commercial property insurance.

All of this can leave you wondering not only who insures commercial property in coastal areas, but also how you can get a good rate in the current landscape. We’ll cover all of that and more in this article.

What is coastal commercial property insurance?

Commercial property insurance for coastal properties specifically refers to insurance coverage designed to protect businesses located in waterfront areas. These areas face additional risks like hurricanes, tropical storms, flooding, and wind damage, which are common exclusions on other types of property insurance. Companies who insure commercial property coastal areas typically offer policies that cover:

  • Windstorms: Windstorm coverage is a critical component of coastal commercial property insurance, covering damage caused by hurricanes, tropical storms, and other wind-related events.
  • Floods: Standard commercial property insurance policies don’t cover flood damage, so businesses located in flood-prone areas may need to purchase separate flood insurance.
  • Named storms: Named storm deductibles are higher deductibles that apply specifically to losses caused by named storms, such as hurricanes. These deductibles are usually a percentage of the property’s insured value and can significantly impact the cost of coverage.
  • Additional perils: Commercial insurance for coastal properties may provide protection against other perils commonly associated with coastal regions, such as hail, lightning, and erosion.

Do I need coastal commercial insurance?

If you own a commercial property that’s close enough to a coastline that it could be damaged by wind, flooding, or other weather events, the answer is yes—you need to find providers who insure commercial property in your area and get coverage. Some common coastal commercial properties that need insurance are:

  • Hotels and apartment buildings: Properties located directly on or near the coast, such as hotels or resorts and apartment buildings, are very vulnerable to damage from hurricanes, storm surges, and coastal erosion.
  • Vacation rentals: Don’t forget insurance for your vacation rental property. Even if you’re not a full-time landlord, you still need to protect yourself against property damage, legal liability, and loss of rental income.
  • Marinas and yacht clubs: Marinas, yacht clubs, and boatyards face unique risks related to storm damage, including damage to docks, piers, and boats caused by high winds, waves, and flooding.
  • Restaurants, bars, and retail shops: Beachfront and coastal businesses need insurance to help protect against property damage, business interruption, and liability claims arising from storm-related incidents.
  • Office buildings: Similar to restaurants and retailers, office building owners need protection for building repairs, loss of rental income, and liability for injuries to tenants or visitors.
  • Manufacturing facilities: These properties may need coverage to protect against damage to expensive equipment and inventory, as well as liability for environmental contamination.

Challenges With Coastal Property Insurance

Today’s coastal property insurance market is dynamic. Policy rates, terms, and conditions constantly change as companies who insure commercial property evaluate their ability to provide coverage. Here are the top challenges in the current market.

Underwriting Complexity

Coastal property insurance is a specialized niche that requires a lot of expertise and experience. Insurance companies who offer coastal property insurance have to deal with complex factors, such as:

  • The location, construction, occupancy, and exposure of each property
  • The frequency and severity of natural disasters
  • The availability and affordability of reinsurance
  • The regulatory and legal environment

These factors can vary significantly from state to state, and even from county to county, making it difficult to price and underwrite coastal property insurance. Insurance companies also have to balance the risk and reward of insuring coastal property, as they may face large losses in the event of a catastrophic event, such as a major hurricane.

Growing Demand And Rising Prices

Another challenge of coastal property insurance is the growing demand for insurance in coastal areas and the increase in property values. More and more commercial properties are located in areas that are vulnerable to natural disasters. However, the supply of insurance capacity hasn’t kept up with demand. In addition, the rising price of property makes buildings more expensive to repair or rebuild, increasing the amount of money insurance companies pay out for commercial insurance claims.

All this means that many insurance companies have reduced or withdrawn their coastal property insurance offerings in recent years due to high losses and low profitability. This has created a gap between the amount of insurance that coastal property owners need and the amount of insurance that’s available in the market.

Things Are Getting Better In 2024: Lower Rates, More Competition

The situation isn’t all doom and gloom for coastal property insurance: 2024 has brought some positive changes for companies who insure commercial property that could benefit property owners in the long run. One of the biggest signs things are improving is that the reinsurance market performed well over the past year.

Reinsurance is the insurance that insurance companies buy to transfer some of their risk to other companies, and it plays a crucial role in determining the availability and affordability of coastal property insurance. When the reinsurance market is healthy and profitable, it means that there is more money and more carriers willing to provide reinsurance coverage to primary insurers, which in turn allows them to offer more capacity and better rates to their customers.

Who insures commercial property on the coast?

So, what can you do if you own a coastal commercial property and need insurance coverage? Fortunately, there are still some insurance options that can meet your needs and budget. We recommend these insurance providers for coastal property owners, and can help you get and compare quotes for each:

CrossCover

CrossCover is an experienced underwriter of both inland and coastal property insurance. They offer great rates, quality coverage forms, and fair deductibles. Their claims handling is fair and they’re a great choice for any coastal property owner.

AmRisc

AmRisc is a general underwriter that specializes in coastal property insurance. The company has access to multiple insurance carriers and reinsurance markets, and can offer customized and flexible solutions for your coastal property insurance needs. AmRisc can also offer higher limits than most insurance companies because they operate with a unique structure.

Velocity Risk

Velocity Risk specializes in various types of excess and surplus (E&S) insurance for commercial properties in catastrophe-prone areas. Their rates are very good, they have a really great coverage form, they’re easy to work with, and they offer comprehensive coverages such as flood insurance on their policies.

Looking for companies who insure commercial properties?

If you own commercial property on the coast, you need additional insurance that covers storm damage, flooding, loss of income, and business interruption – yet in the current market, it can be harder than ever to find a policy that’s both comprehensive and affordable. LandesBlosch is here to help. We’ve been finding our clients the right insurance for over 100 years, in every type of market and economic climate. Contact us today to get quotes from top companies who insure commercial properties on the coast and mitigate risks to your business.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.


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