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THE FINE PRINT

Live near the coast? There’s insurance for that.

Cars drove through flooding on Oakville Street in Lynn after Tropical Storm Elsa last year.Christiana Botic for The Boston Globe

I recently renewed my homeowners insurance, but before I did, I asked my agent for a quote from the insurer that has my auto insurance. Most insurers offer a sizable discount when you “bundle” your home and auto insurance together (as high as 25 percent), and I wanted to give it a try.

But my auto insurer declined to give me a quote for homeowners insurance. Why? Because my house, located a block and a half from an ocean bay, was considered too risky due to its “coastal proximity,” even though flood waters have never reached my home in more than 30 years.

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And a friend recently told me she got the same “thanks, but no thanks” treatment when she asked for a quote from an insurer, even though her house is on fairly high ground about a mile from the ocean. Why? “Because we’re considered coastal,” she told me.

Peak hurricane season is upon us in New England (mid-August to late October), and the National Weather Service is predicting above-average hurricane activity this year.

This might be a good time to think about coastal property insurance. Here are some things to know:

Cars drove through flooding on Oakville Street in Lynn after Tropical Storm Elsa hit the area.Christiana Botic for The Boston Globe

Q. Can insurers refuse coverage of coastal properties?

A. Yes, and they may well be doing so more often (statistics are hard to come by). An insurance policy is a contract between two willing parties. The insurer wants profit: more in premiums than paid out in claims. If an insurer thinks your house is too risky, it can say no. There is no law requiring insurers to write or renew a policy. And there’s no law saying you must insure your house, although, if you have a mortgage, your lender may require it. (By contrast, auto insurance in Massachusetts is mandatory.)

Q. Does that mean some properties are uninsurable?

A. Most states, including Massachusetts, have passed laws creating “insurers of last resort.” They are mandated to insure properties that are shut out of the private marketplace, with the risk shared by all insurers in the state. Details about the Massachusetts FAIR Plan can be found online. The FAIR Plan insures to a maximum of $1 million in replacement costs. About 10 percent of homeowners premiums in the state are paid under the FAIR Plan.

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Q. Why are insurers especially concerned about coastal properties?

A. Climate change is blamed for a stunning increase in damage-causing weather, and the coast often gets the brunt of it. The National Oceanic and Atmospheric Administration says there have been 332 weather disasters causing $1 billion or more each in property damage since 1980, almost eight per year. Last year alone, there were 20 and in the last three years, the annual average number of such storms was 19.

Hurricanes that whip up over the ocean and punish coastlines are, by far, the costliest of catastrophes. (Hurricane Bob in 1991 caused more than $1 billion in damage in Massachusetts, while in 2011, Tropical Storm Irene did almost as much damage.) Half of the 10 worst hurricanes nationally in the past 30 years have come in the last five years. Detecting a pattern here?

Q. Can my insurer cancel my policy when a big storm is forecast?

A. No. Under state law, your policy must remain in effect to its expiration date unless you fail to pay for it, commit fraud, or fail to disclose risks. An insurer, however, is free to decline to renew your policy but only after giving you at least 45 days’ notice prior to expiration. (Note: If you decide to buy separate flood insurance in anticipation of a storm, you may be out of luck. Flood insurance takes effect 30 days after purchase.)

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Q. How do insurers define “coastal”?

A. Each insurer has its own internal guidelines, but, typically, it’s three to five miles from an ocean, lake, or river.

Q. How do deductibles work on coastal properties?

A. Deductibles are the amounts you pay out of pocket before insurance kicks in to cover the remaining cost of repairs. Many policies on coastal properties have two kinds of deductibles, one for damage due to fire, theft, lightning strikes, and other causes (often called the “all other perils” deductible) and one for wind damage.

Insurers typically set the wind damage deductible higher than the “all other perils” one, in recognition of how devastating a wind storm can be. (”How old is your roof” is one of the first questions an agent will ask.) My “all other perils” deductible is $500, while my deductible for wind and hail is $1,000, which is fairly low, probably because my house is near a bay, as opposed to facing open ocean.

A house on Ballston Beach left in a precarious position was moved to a temporary location at 127 South Pamet Road, right next to the spot it stood on stilts for years. It was in danger of collapsing after more erosion ate away at the beach and cliffside dunes from the Jan. 30 blizzard. John Tlumacki/Globe Staff

Q. Are there other ways of setting deductibles?

A. Yes, some insurers set the wind damage deductible not as a flat amount (like my $1,000) but as a percentage of the coverage on the house. These deductibles are usually applied to the riskiest of properties. A percentage-based deductible kicks in when triggered by a specific event, typically when damage is caused by a “named storm.”

A “named storm” has sustained winds of not less than 39 miles per hour, which is the threshold for the National Weather Service giving a name to a tropical storm or hurricane, for example, tropical storms “Elsa” and “Henri,” both of which made landfall in New England in 2021.

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A friend who lives on the coast told me her wind deductible is 2 percent of the coverage amount on her house, which is $750,000. That means, in the event her house is damaged by a named storm, her deductible is $15,000. Her house is “south-facing,” which is less risky than one that is “north-facing,” she told me.

A deductible may go as high as 5 percent. And, remember, insurers have enough data to allow them to determine risk on a house-by-house basis.

Q. Are all homeowners insurance premiums going up?

A. Inflation is driving up premiums generally, as the replacement costs of homes have skyrocketed along with the cost of building materials (about 20 percent). Many insurers have also increased their rates, although at a much more moderate rate (less than 3 percent among the state’s largest insurers).

Q. What about flood damage to my house?

A. This is important: Your homeowners insurance policy does not cover flood damage. You have to buy it as a separate policy. For many years, insurers simply did not offer it because it was considered too risky. But today, there are better tools for insurers to gauge risk and set premiums accordingly. Still, many insurers are reluctant to insure against it.

Q. If I can’t get flood insurance privately, where can I go?

A. The federal government offers the National Flood Insurance Program.


Got a problem? Send your consumer issue to sean.murphy@globe.com. Follow him on Twitter @spmurphyboston.