Updated Dec. 24
It was 1991 when Hurricane Bob surged on the shores of Martha’s Vineyard, ravaging the landscape and damaging homes. But perhaps its most lasting impact was an increase in insurance for coastal home homeownership.
In the past 35 years, because of that famed hurricane and various nor’easters that have swept through since, many home insurance companies expect the Vineyard is due for another devastating storm. That vulnerability, on an Island with some of the highest property values in New England, has been an alarm bell for many insurance companies, who have reportedly been hesitant to provide coverage here.
As a result, insurance rates rose to record-breaking highs last year. Now, industry officials say they’ve seen local rates plateau and not necessarily surge higher, but the cost burden on the average homeowner continues to be substantial. And after large companies left in bulk last season, locals saw their rates soar.
“The rates are still very high, but we are not seeing the increases that we did last year,” Paula O’Connor, executive vice president of Mone Insurance, told The Times. “There are still some policies that are increasing and/or being non-renewed, but it is slowly improving for us.”
Joe Gervais, founder of Tashmoo Insurance Agency, and Richard “Rich” Soo Hoo, co-owner of Sterling Insurance, agreed. “I think the cost of home insurance continues to be an issue that Island homeowners struggle with, but I am starting to see some signs that the worst is past us,” Soo Hoo said.
In January, a national study found Dukes County has the third highest nonrenewal rate for policies in the country. Through surveys and interviews of Island residents, The Times found that locals saw skyrocketing rates of 30 percent to over 300 percent for their home insurance premiums last year.
Along with those findings, insurance agents spoke out about difficulties in the market, higher rates, and companies refusing to cover homes on the Vineyard last year, with a fear of large storms cited as a possible reason at the time.
“I’ve been doing this for 35 years … I’ve never seen anything like it,” O’Connor said to The Times last November.
But when no named storms or hurricanes swept through the Island, some of the intensity of the market subsided, and one company, Openly, even started insuring Vineyard homes after pulling coverage last season.
While agents said the toughest times may be over, they also pointed out that insuring homes on the Island comes with a host of difficulties, some of which may continue on a downward trajectory as climate change worsens.
“Times are still really tough, so when that premium bill comes, it’s still disheartening. It’s still stressful,” O’Connor said. She added that retirees on a fixed income and low- to middle-income families have had an especially difficult time navigating rising bills when the cost of living is increasing as well.
While some relief has come for commercial policies — O’Connor said she’s seen multiple renewals at a “flat” rate, meaning the same price as the year prior — year-round homeowners on the Vineyard have not seen the same level of ease.
And Island residents are insured by the Massachusetts Property Insurance Underwriting Association, commonly known as the FAIR (Fair Access to Insurance Requirements) Plan, at a much higher rate than the state. Nearly half of Island residents use the FAIR Plan, a state-mandated insurance program that ensures coverage for most Massachusetts residents and has low deniability, but also has less coverage than some other policies for severe weather events like named storms.
The FAIR Plan was designed as an insurer of last resort, and many districts are insured by the organization at as low as 2 percent. At 40 percent, Dukes County has one of the highest rates of enrollment with the FAIR Plan, according to a report by the Massachusetts Division of Insurance.
Frank O’Brien, general counsel for the FAIR Plan, told The Times “there hasn’t been a shift up or down,” in FAIR Plan coverage throughout the state. O’Brien also pointed out that Massachusetts has better insurance coverage than many other states. Wildfires on the West Coast and hurricanes in Florida over the past few years have skyrocketed rates in those surrounding areas.
“When you’re in the insurance business, or when you’re in any business for that matter, you try to do the best thing you can … based on the information you have available,” O’Brien said. He added that while New England hasn’t had volatile storms yet this year, “Mother Nature has a way of evening things out.”
Legislation geared toward potentially lightening the insurance load on homeowners was introduced by State Senator Julian Cyr this session. One bill encourages private flood markets and another promotes a grant program that would incentivize homeowners to fortify their homes against climate risks.
“We still know that Islanders and Cape Codders pay 40 percent more for home insurance than the state average,” Cyr said in an interview with The Times. “Homeowners insurance premiums on the Islands and the Cape are higher than both the state and the national averages.”
Cyr said both bills were reported on favorably in the committees. He also pointed out the rising costs of building and buying homes on the Cape and Islands. With dramatically rising property values and a median home price of over $1.55 million, the Vineyard has higher insurance premiums even without climate considerations.
“Regardless if we’re seeing some moderation or easing in insurance costs, this isn’t a problem that’s going away,” Cyr continued. “That’s why it’s going to remain a priority for me, to ensure that we are providing options to Islanders and Cape Codders to insure their homes.”
Updated to reflect accuracy of Hurricane Bob’s impact.
Shop around folks. I had a policy with a local insurance agency on the island that keep rising 20 to 30% a year. I contacted an agency in Falmouth and cut my bill in half and had slightly better coverage. It takes time and effort but it’s worth it to shop around. Also these increased rates have nothing to do with “climate change”. Coastal populations, which are most directly affected by storms, have grown by 46% in the last 40 years. Any storm is going to cost the insurance companies more when there are more properties affected and this cost is spread out amongst all policy holders.
A family member once did a study to find the highest price customers would pay for a certain item.
The owner of the item increased the price by nearly triple.
Perhaps the insurance companies have done the same, to charge what the market will bear.
Capitalism.