Finding Insurance Deals for Coastal Homes

It pays to shop around for homeowners insurance if you're buying a new waterfront home or you're looking for coverage because your insurer has dropped you. (If you're buying a new coastal home, start by checking its CLUE report to see if previous owners filed a lot of claims that could make it tough to get coverage.)

Coverage rules can vary significantly from company to company. For example, some insurers in southern Maryland won't cover a property within 2,500 feet of the Chesapeake Bay, while others will reject an applicant only if the house is within 1,000 feet of tidal water. And, says Brad Reeves, an independent agent in Leonardtown, Md., some insurers will reject all applicants within a certain county or zip code.

By all means, contact some of the large homeowners insurers, such as State Farm. But you may also want to work with an independent agent who focuses specifically on your area (you can find an independent agent at www.iiaba.net) and can check out several options.

For example, says John T. Cook, an independent agent in Myrtle Beach, S.C., Myrtle Beach homeowners can generally buy windstorm coverage through the state's wind pool and the rest of their coverage through a private homeowners insurance company. Or they can buy all of their coverage through a so-called surplus-lines insurer, such as Lloyd's of London. Such policies tend to be less expensive, but surplus-lines insurers aren't subject to the same state rate regulations and may be subject to bigger premium increases. Cook offers both choices to homeowners and explains the pros and cons of each.