Some coastal landowners are worried that new regulations aimed at protecting shore birds will force them to forgo their dreams of oceanfront homes. While lawmakers will soon look for ways to better target these regulations, coastal property owners may have bigger concerns than birds. Coastal insurance rates are on the rise and some companies will no longer insure waterfront homes because of the increasing losses from hurricanes and other storms.

Two major factors are pushing insurance costs upwards. One is the growth of homes – both in number and size along the nation’s coastlines. Maine has the ninth-highest insured coastal property value, totaling $64.5 billion, in the nation, according to Applied Insurance Research Worldwide, a Boston-based risk modeling firm. Insured residential coastal property values account for 61 percent of the state’s total.

Nationwide, the growing value of coastal properties is driven by population growth and an increased standard of living, according to the firm.

A second factor driving up insurance costs is the increase in storm-related losses. According to the Coalition for Environmentally Responsible Economies, U.S. insurers have seen a 15-fold increase in insured losses from catastrophic weather events in the last three decades. The increase has far outpaced population growth, inflation and growth in premiums. Swiss Re, the world’s second-largest reinsurer, announced two years ago that it expects environmental disasters – from storms, drought, flooding, hurricanes, and the like – to leap to $150 billion a year in the next 10 years, with insurance companies paying out $30 billion to $40 billion annually.

The National Association of Insurance Commissioners was scheduled to hold a symposium on climate change in September 2005 in New Orleans. Hurricane Katrina postponed the meeting but the association later voted to establish a task force to examine the impact of climate change on the insurance industry and its U.S. consumers.

For some Maine consumers, the impacts are already being felt. An Islesford couple was left scrambling to find insurance after their longtime carrier declined coverage of their island summer home just days after they bought it. Other companies were concerned about the distance to the fire department and the lack of heat. The couple ultimately secured a policy but at a much higher price than expected.

State Farm has said it will underwrite new policies on property within 2,500 feet of Maine’s coastline beginning in 2007, according to the Bureau of Insurance. In some other states, the company is canceling existing policies on such properties.

This restriction is far more severe than the new rules aimed at protecting bird habitat that require a 250-foot setback in many coastal areas.

These situations make it clear that building close to the shoreline will become increasingly problematic due to environmental and insurance concerns. Landowners and perspective buyers should consider these concerns before making a purchase or starting construction.