Why Coastal Builder’s Risk Insurance Is Critical for Properties Under Construction

As extreme weather events increase and contractors continue to build along the coast, Coastal Builder’s Risk insurance is critical to protect the investment. In this article, we explore the importance of Coastal Builder’s Risk insurance and how it can help.

Let’s take a quick recap of the 2022 hurricane season as it comes to an end. In August, the National Oceanic and Atmospheric Administration (NOAA) predicted 14-20 named storms, of which three to five would be major hurricanes. So far, there have been 14 named storms, with Hurricane Nicole, a Category 1 Hurricane, making landfall late in the season and battering the coastline of Vero Beach. Drone images showed beach boardwalks and coastal infrastructure washed away by hours of surging seas. You could see strewn debris and damaged hotels and homes at risk from erosion.

Nicole hit Florida a month after Hurricane Ian caused catastrophic damage to the cities of Fort Myers Beach and Naples and barrier island communities such as Sanibel Island. Estimated insured losses surpass $70 billion. RMS estimates the federal National Flood Insurance Program (NFIP) could see $10 billion in losses from storm surge and inland flooding from the storm.

“Ian was a historic and complex event that will reshape the Florida insurance market for years to come,” said Mohsen Rahnama, chief risk modeling officer at RMS, in a statement.

The severity of these and other disasters has exposed a harsh reality: We are not prepared for the extreme weather that is becoming more frequent due to a warming planet. Warm, tropical waters are the primary fuel source for hurricanes, with the oceans absorbing approximately 93% of the extra heat that enters the climate system due to human-caused greenhouse gas emissions.

People Keep Moving to High-Risk Areas

More people are moving to areas where climate impacts are more likely. According to real estate company Redfin, from 2016 to 2020, more people moved to high-risk areas like Florida, Texas, Arizona, and Nevada than to low-risk areas, drawn by cheaper housing, job opportunities, and warm weather. Florida, Georgia, South Carolina, North Carolina, and Tennessee are growing faster than the national average.

Insurance companies are having to pay out more claims as the number and severity of natural disasters increase. Many insurers have pulled out of high-risk areas, such as Florida and Louisiana, making it more difficult and expensive for residents and businesses to get coverage. However, this isn’t preventing people from building and moving to these areas.

Therefore, those opting to live in coastal areas must take measures to reduce their property risks. In addition, they need to purchase insurance and the right type of coverage. Having the right coverage applies to existing buildings and structures as well as properties under construction and those undergoing remodeling, with both of the latter needing Builder’s Risk insurance.

Coastal Builder’s Risk Insurance Available at Distinguished

Distinguished Programs offers a Coastal Builder’s Risk program for residential (single-family homes and multi-family units) and light commercial properties under construction in the coastal areas of Alabama, Delaware, Georgia, Maryland, Missouri, New Jersey, North Carolina, Rhode Island, South Carolina, and Virginia, and commercial-only properties in Texas.

Backed by an A-rated carrier, coverage is available for new construction, remodels, and betterments-only projects. TIV limits up to $20 million are available. The program provides coverage for all risks and includes theft and vandalism insurance. Several additional coverages are available as well – from debris removal to pollutant cleanup and removal, sewer and drain backup, and others.

You can submit, quote, and bind coverage for our Coastal Builder’s Risk program online using our broker portal.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

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