In Summary:
- Standard homeowners policies usually exclude flooding, so many Gig Harbor waterfront buyers need a separate flood policy through the NFIP or a private insurer. Check the home's FEMA flood-zone designation first.
- Bulkheads, docks, piers, and other shoreline structures can complicate coverage. Confirm who owns each one, what condition it's in, and which policy (if any) covers it.
- Talk to a licensed insurance agent before you make an offer, and give them the address, roof and systems age, flood zone, and shoreline details so there are no surprises before contingencies expire.
Washington's Department of Ecology maps the areas that have a 1% chance of flooding in any given year (what FEMA calls the "100-year floodplain"), and some Gig Harbor shoreline properties fall inside them. Over a 30-year mortgage, that adds up to roughly a one-in-four chance, which is why flood coverage matters.
If you're considering buying a property that overlooks the water, then chances are, you’ll want to have waterfront home insurance. This is what you should be aware of before you make an offer, so you go into it prepared.
Why Waterfront Homes Cost More to Insure
The waterfront property insurance cost is higher than with other inland properties because properties are close to Puget Sound. This means more exposure to:
Flooding
Wind
Storm-related water intrusion
Damage to shoreline improvements
Insuring a home on the water involves more than just its position relative to the water though. Insurers will take into account the elevation, construction, roof condition, drainage, and the age of major systems. For example, a house with an older roof will probably have different underwriting concerns than a recently updated property.
You may also have to go through extra screening if you have shoreline features, such as bulkheads, docks, stairs, retaining structures, and other improvements. The insurer may ask about not only ownership, but also condition and coverage.
Because every property is different, you shouldn't assume that there's a universal premium for waterfront properties. This makes it important for you to speak to a licensed insurance agent, as they can review a specific address and its characteristics, and then give you more detailed information.
Do You Need Separate Flood Insurance?
Flood insurance may be necessary for some waterfront homes. Of course, you'll have standard homeowners insurance, but that usually excludes flood damage. Instead, you'll have to get a separate policy from the National Flood Insurance Program (NFIP) or a private insurer.
If you're not sure where to begin, then the property's FEMA flood-zone designation is a good place to start. You can check the official FEMA Flood Map Service Center and put in the address.
An important thing to know is that just because a home's outside a high-risk flood zone doesn't necessarily mean that flooding is impossible. In fact, Washington's insurance regulator says nearly one-third of flood claims happen outside designated high-risk areas.
This is why it's crucial for you to ask an insurance agent to evaluate the property's actual flood exposure and available coverage. Don't just treat the flood map designation as the be-all and end-all.
If you're required to have flood insurance for financing, then do it early. This can help you address any underwriting or policy requirements before you close on the property.
Bulkheads, Docks, and Other Shoreline Structures
One of the best things about waterfront properties is that you usually get more than just a house. They often come with:
Bulkheads
Docks
Piers
Floats
Retaining structures
Stairs
Boat lifts
These shoreline improvements can create issues with insurance though, as it may be uncertain which parts are covered and under which policies. Their conditions matter too, as aging or visibly deteriorated structures can create additional concerns.
Before buying, you should find out who owns each shoreline structure, as well as whether it's part of the property being purchased and whether permits or other approvals exist. Do note that in Gig Harbor, exterior work within 200 feet of the shoreline can trigger land-use requirements, and the city's shoreline resources include specific shoreline and flood hazard permitting processes. So it can be helpful to have both the property inspector and insurance agent evaluate the relevant issues before committing.
How the Home's Age and Major Systems Can Affect Insurability
Let me start by saying that just because there are older systems in a property doesn't make it automatically uninsurable. However, things like the remaining useful life and maintenance history can definitely affect an insurer's assessment.
You should pay close attention to water-related problems, as Washington's insurance regulator distinguishes between sudden and accidental water damage and gradual leaks. If possible, ask the seller for records of when major systems were installed or replaced, and then give that information to the insurance agent.
Questions to Ask Before You Make an Offer
I can't stress enough how important it is to make insurance (and waterfront home maintenance) an early part of your home-buying process. Before you submit an offer, ask a licensed insurance agent to see whether the property can be insured and what coverage considerations may affect your transaction.
To help this process along, always give your insurance agent the complete address, as well as all the information you can give about the home's:
Age
Roof
Heating and electrical systems
Flood zone designation
Shoreline structures
Prior improvements
Intended use
Don't be afraid to ask specific questions either. For instance, check if you need bulkhead insurance, or ask what exclusions there are.
When you're well-informed before contingencies expire, you'll have a better understanding of insurance issues before you're tied to the property.
Understand How the Property Will Be Valued After a Loss
You can do your best to protect your home from damage, but threats can still be very real. It's very important to understand how your property and its belongings would be valued after they're damaged or destroyed. For example, regarding insurance payouts, you'll have to factor in things like replacement costs, actual cash value, deductibles, and special limits.
Also, you need to know the difference between your home's estimated market value and the amount it'd cost to rebuild it. In many cases, they're not necessarily the same numbers.
Working With the Right Insurance Partner
If waterfront home insurance is making your head swim, don't worry. I'm a seasoned Gig Harbor real estate agent, and I've got the perfect connections for you.
Get in touch with me today if you want me to point you toward local insurance agents who are experienced with waterfront properties. I'll make sure you're well taken care of!
