How Will Rising Sea Levels Impact Coastal Home Values?

If you insure clients who own coastal property, you may want to learn more about rising sea levels and how they could impact coastal home values in the near future. Though many coastal and waterfront properties are highly sought after and prized in the eyes of property buyers, changing climatic conditions may impact their safety and likelihood to flood in upcoming years, possibly affecting their worth. To give your coastal clients the insurance recommendations they need, here are the relevant facts about sea-level changes and coastal home values that you should become familiar with.

Homes Directly in Flood Paths or on the Waterfront Could See Diminished Values

Though there are several complicating factors involved, homes located directly in flood paths, in areas that have recently flooded, or that are waterfront and are prone to storms or hurricanes may find their values diminished over time. In short, the more likely a home is to succumb to rising waters, the more its overall resale value may fall. However, there are several mitigating factors to consider, including whether the home is equipped with safety mechanisms and whether the locality has taken any steps, like building floodwalls, to keep the waters out.

Equipping the Home With Safety Mechanisms Could Help Preserve Value

As a property owner, your client may be interested in preserving the value of their home even if some environmental factors may be out of their control. In this case, having a home equipped with safety mechanisms against floods could be helpful. Some steps you could recommend include:

  • Getting strong flood insurance
  • Putting the house on stilts and/or making sure there are no cracks in the foundation
  • Having the property checked for water damage and evaluated for risks regularly

Future Rental Value Could Be Impacted

Finally, it’s worth noting that your client may own coastal property used as a rental and not as a full-time residence. In these cases, a full inspection and risk assessment may be required to help your client decide whether to keep the property or sell it early. In cases where sea levels may lead to all or part of a property becoming damaged or flooded, future rental value could be seriously harmed, thereby diminishing returns on the property investment.

As your client’s insurance agent, it’s your job to inform them of factors that could drive insurance costs up or potentially jeopardize their property. Unfortunately, steadily rising sea levels could put coastal properties at greater risk in the near future. By understanding the climatic risks involved, you’ll be prepared to offer thorough, well-informed consultations and make prudent policy recommendations to your clients.

About AmSuisse

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