Coastal community homeowners are feeling the pressure of rising property insurance—and lawmakers in the Northeast are addressing the growing problem.
In Rhode Island, at a recent House committee meeting, the commission created to examine the impacts of climate change and insurance affordability looked at how the state plans for climate change, such as floods and hurricanes.
“Insurance tends to be something you sign up for and then forget, but how do we get out to consumers if they don’t have flood coverage in their home insurance policies,” Ernie Shaghalian of Butler & Messier Insurance Agency in Pawtucket recently told the panel of legislators, scientists, and policy experts.
Shaghalian said most new insurance policies on homes within 3 miles of the state’s coastlines are either more expensive than elsewhere in Rhode Island, or nonexistent.
“Homeowners insurance is honestly becoming one of the more polarizing topics we’re discussing right now,” Tyler Bernadyn tells Realtor.com®. The Rhode Island real estate broker was referring to his conversations with buyers, owners, investors, and vacation property owners—virtually everyone involved in home sales.
“In the past five years, I’ve personally noted homeowners insurance prices rise 25% to 40%,” Bernadyn says. “To be honest, I think it’s going to get worse before it gets better.”
There’s also the case of insurance carriers pulling coverage. State Farm is not actively issuing new policies in Massachusetts and Rhode Island.
(Realtor.com)
The company came under fire in January during the California wildfires, and it was revealed State Farm and nearly a dozen other carriers stopped writing new policies or limited coverage in high-risk areas.
On the national level, a Senate budget staff report released in December 2024, titled “Next to Fall: The Climate-Driven Insurance Crisis Is Here, and Getting Worse,” provided a list of states with the highest insurance policy nonrenewal rates.
Florida, Louisiana, North Carolina, and California ranked as the top four, with Massachusetts and Rhode Island making the list at Nos. 5 and 8, respectively. Connecticut, Mississippi, Oklahoma, and Hawaii also made the top 10.
How homeowners insurance issues are harming Northeast home sales
Bernadyn says that homeowners insurance costs are among the most important issues facing his clients these days.
“Unfortunately, the era of ignoring insurance costs or having conversations about them, those days are behind us. Now it’s a much deeper conversation,” he says, remembering fondly when the ability to get a loan was one of the most important issues facing homebuyers.
Homeowners coverage is almost always a major requirement for lenders to finance a property sale, but now, with skyrocketing insurance premiums, many would-be buyers find it impossible to cover monthly payments on the home, as well as insurance payments.
Many experts cite climate change and the uptick in weather-related catastrophes as a major contributor to the risk factors. More hurricanes, fires, and other natural disasters translate to higher risk, as well as a higher number of damage claims.
“Rhode Island is increasingly vulnerable to hurricanes, nor’easters, storm surges, and rising sea levels,” explains Bernadyn. “As insurers become less tolerant of this elevated risk, they’ve either exited high-risk markets altogether or raised premiums to account for the likelihood of costly claims.”
Also, inflation comes into play. As property values rise, so does the cost to repair and replace a home. The rising cost of materials and labor affects an insurer’s bottom line. Those costs are being passed on to the homeowners and homebuyers.
Bernadyn notes that he’s already seen the uncertainty about tariffs affecting construction prices.
“Builders and distributors are worried about tariffs,” he says. He’s already received news of vendors currently raising their prices to deal with inevitable future price hikes.
There is some relief
“As a local real estate professional who lives and works in Newport, I see these trends not as a reason for panic, but as calls for preparation,” says Bernadyn. “That involves being aware of insurance costs, flood zone implications, and the total cost of living in some of our most beautiful (and vulnerable) neighborhoods.
“It also means encouraging homeowners to be proactive. Taking time to invest in and care for your home can go a long way when it comes to both protecting your property and keeping insurance premiums manageable,” he continues.
He suggests routine maintenance like trimming overgrown branches that can damage your roof and siding, cleaning gutters to prevent ice damming, ensuring downspouts extend away from your foundation, waterproofing your basement, and installing a sump pump or drainage system can help reduce the likelihood of future claims.
“I don’t see this trend of increased insurance costs changing, but I do think there are things that homeowners can do to help their homes hold their value and mitigate insurance costs,” he says.
“We haven’t gotten to the point where lots of people are moving out, like in Florida,” notes Bernadyn. However, we have arrived at a place where people can’t afford to move, exacerbating the local housing crisis, he adds.
