Over the past year, much attention has been focused on the housing shortage crisis, both regionally and nationally. The MBTA Communities Act and the requirements it places on many Massachusetts towns, including Marblehead, to create plans to build more affordable housing have stirred passions on both sides of the issue.
In a recent ruling, the Supreme Judicial Court unanimously upheld the act’s constitutionality and affirmed the Attorney General’s legal authority to enforce its mandates. Marblehead now faces a stark choice: comply or potentially lose badly needed state funds.
But there is another housing crisis that may not generate as many headlines but can no longer be ignored, either: the availability and rising cost of homeowners insurance.
Driven by climate change, rising ocean levels and temperatures, and other unprecedented weather extremes, the ensuing natural disasters, ranging from hurricane destruction in the South to catastrophic wildfires in the West, have caused massive property losses and staggering costs to repair or replace homes and businesses. With their resources under mounting strain, insurance companies are passing along these costs to homeowners nationwide.
Many of our own town residents are feeling the pinch as their policies are either being canceled or their annual premiums substantially increased, in some cases by 40% to 50% or more. Why? Often, the justification given is that ours is a coastal town and therefore more vulnerable than inland locations to ocean storm damage.
While that may be true — virtually all of Marblehead lies within 2 miles of the coast, placing it in the category of “most difficult to obtain new insurance” — less than 2% of its land mass is contained within FEMA’s designated flood risk area. In short, the vast majority of local homes are not, or should not be, considered oceanfront property.
Meanwhile, a recent congressional investigation found that Massachusetts’s non-renewal rate is the fifth highest in the nation and that Essex County alone has seen a nearly 32% increase in non-renewals since 2018.
For local homeowners, those are some tough numbers to swallow. And at a time when the federal response to climate change and the burning of fossil fuels seems to be headed in the wrong direction, those numbers only threaten to get worse.
As we await the release of updated FEMA flood maps and drafting of new town bylaws for presentation to Town Meeting in May, we’ll soon learn more about their impact on the cost of homeowners insurance, especially for those residents in flood risk areas. Still, it seems safe to assume that premiums and deductibles will be rising just as surely as ocean levels continue to do.
Local insurance agent Twig Burke tells the Current that if the existing cycle of non-renewals and cost increases continues, insurance companies may need to change their business models. He suggests this could include “meaningful credits for deductibles, including windstorm, leak detection systems, home improvements and loss-free history, to name just a few.”
As we well know from watching horrors like the Los Angeles fires, the problem is complicated, the costs daunting and solutions elusive at best. But obtaining adequate insurance protection is a challenge that will not be going away anytime soon. Unless all interested parties — homeowners, insurers, local communities such as ours, and federal agencies, including FEMA — can figure out ways to meet that challenge, housing costs in Marblehead will only become more prohibitively high and the ongoing shortage more severe.
