The usual factors that affect homeowners insurance for other properties also apply in the case of waterfront homes. However, there are special considerations that you should give more weight if you are dealing with a waterfront home; here are some of these special considerations:
If you are still paying the mortgage for your waterfront home, then it is not just you who will determine the kind of insurance you should purchase for it; your lender will also have a say on the issue. This is because it is in the lender's interest to minimize the risk of damage to your house. Mortgage lenders know that waterfront homes face unique threats that homes in other locations don't face. Apart from the obvious risk of flooding and storm damage, waterfront homes are also prone to rotting and rusting on account of the high humidity. This means your lender may require a high coverage limit.
The High Risk of Flooding and Storms
Waterfront homes face a high risk of flooding and storm damage compared to properties in other areas. At the same time, standard home insurance neither covers storm insurance nor flood insurance. This means you need a separate flood insurance coverage if you own a waterfront home; ditto for storm insurance. In some cases, you may be able to get one or both coverage as an endorsement to your standard home insurance. Whatever the case, they will increase your effective cost of home insurance.
The High Cost of Land
Waterfront properties are typically more expensive than dry lot homes, and there are several reasons for this. For example, many people are sentimental about living near water; this created high demand for such properties and high demand equals high prices. Waterfront homes also tend to attract handsome resale values, and any home with a good resale value will attract a high price.
However, the fact that a waterfront home is likely to attract a higher price compared to a dry land home doesn't mean that the latter is also expensive to construct. You can use the exact same materials to construct both houses in the same style and size, but the waterfront home will still attract a higher price.
If you aren't careful, you can end up insuring your waterfront home at a cost that far exceeds its reconstruction cost. Therefore, before buying coverage for your waterfront home, calculate the value of the construction and use it for insurance purposes so that you don't insure the land.
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