Insuring a home on a disappearing lot – shifting ground part 3

Many homeowners dream of owning a beach house. A relaxing and blissful place to get away with friends and family on a regular basis. While a coastal home is certainly an exciting venture, risks remain. One notable concern for homes on the coast is erosion. The long-term damage caused by coastal erosion can be difficult to see due to its slow, seeping nature. In this article, we explore the impacts of coastal erosion and the insurance options for homeowners looking to protect their beach houses.

Coastal erosion basics

Coastal erosion is the process by which waves, currents, tides, wind-driven water, waterborne ice, or other impacts of storms wear down or carry away rocks, soils, and/or sands along the coast. The U.S. Climate Resilience Toolkit notes some staggering statistics regarding coastal erosion. First, coastal erosion leads to approximately $500 million coastal property loss per year, including damage to structures and loss of land. Second, to mitigate coastal erosion, the federal government spends an average of $150 million annually on beach nourishment and other shoreline erosion control measures. Over the long term, coastal erosion causes geological changes to the structure and geography of shorelines.

The below photo is an example of long-term coastal erosion.

Storm erosion, however, is different from long-term coastal erosion. While a storm may cause erosion, statistics indicate that following a storm, even strong storms, the coast generally recovers to a condition consistent with its 100-year history.

US coastal erosion risk severity

Much of the United States faces some level of coastal erosion risk. Some estimate over 1,500 homes face the potential for damage due to coastal erosion. The below map, issued by the United States Geological Society, details the varying levels of coastal erosion severity in the country.

Insurance limitations

A typical homeowners insurance policy provides coverage for a home against typical perils such as fire, wind, storms, hail, etc. Land erosion, like most types of earth movement, is excluded from typical homeowners insurance policies. Water damage, such as flooding, may not be covered under a homeowners insurance policy, but there are options for insuring coastal homes against flood damage. For coastal homes in flood zones, flood insurance is widely available. Flood insurance covers losses associated with erosion when that erosion occurs from a storm; however, it does not cover long-term or gradual erosion. Long-term or gradual erosion is a very difficult risk to ensure because it usually occurs slowly over time. For homeowners in coastal areas at risk of long-term erosion, flood insurance should help alleviate some concerns related to coastal erosion. With no flood insurance though, coastal homeowners have little help to pay for erosion losses so homeowners should consider building a retaining wall to secure the land on their property.

Coastal erosion is a real risk that both current and potential coastal homeowners must consider. Geotechnical surveys can help homeowners gauge the level of risk associated with a property, however, homeowners should know the long-term risks associated with a property may not be readily apparent. Homeowners insurance and even flood insurance have limitations to coverage for erosion damages to a coastal home. Preventative measures can help give homeowners more peace of mind. By understanding the unique risk of coastal properties, homeowners can keep their dream coastal home from turning into a nightmare due to unexpected erosion.