Climate Risk and the Massachusetts Insurance Crisis: What Every Homebuyer Must Know Before Buying Coastal or Flood-Prone Property

Climate risk is creating an insurance availability crisis that fundamentally threatens Massachusetts property values—especially coastal homes. Four converging trends: (1) Insurers non-renewing coastal policies at accelerating rates (up 300% since 2019), with some exiting Massachusetts entirely; (2) FEMA's Risk Rating 2.0 driving flood insurance premium increases of 18% annually (some policies jumping from $1,800 to $12,000+); (3) Expanded flood zones projected to reclassify thousands of 'safe' properties as high-risk by 2030; (4) Growing gap between replacement cost and insurance availability (homes worth $2M with no available coverage). Coastal towns (Scituate, Marshfield, Cohasset, Hull, Revere) face most acute crisis. Inland buyers face rising stormwater/heat costs. Properties that can't secure insurance become functionally unsellable—mortgage lenders require coverage. The 'climate risk discount' is already appearing in resale data.

Anyone buying coastal property, buyers in FEMA flood zones, owners facing non-renewal notices, sellers discovering buyers can't get insurance, investors evaluating climate-exposed markets, anyone comparing coastal vs. inland property values.

• •Insurance non-renewals up 300% in coastal MA since 2019; some towns hit 15-20% non-renewal rates annually
• •FEMA Risk Rating 2.0 uses individualized pricing: same street, 10x premium variance based on elevation/distance
• •Massachusetts FAIR Plan (insurer of last resort) grew 250% 2020-2025; premiums 3-5x private market
• •Properties in FEMA Zone AE with elevation 2+ feet below BFE seeing $8K-$15K annual flood premiums
• •Coastal property appreciation lagging inland by 2-4% annually since 2022 (climate risk discount emerging)
• •No insurance = no mortgage = cash buyers only = severe liquidity constraint = declining values
• •30-year total insurance cost can exceed $500K for high-risk coastal properties