Coastal Property Risks in Rhode Island

Rhode Island, known as the "Ocean State," has an extensive coastline that creates unique property insurance challenges. The state faces significant exposure to hurricanes, coastal storms, and flooding.

Rhode Island's Coastal Geography

Coastline Characteristics

Rhode Island Coastline:

• Total Coastline: Approximately 400 miles (including bays and estuaries)
• Narragansett Bay: Large bay penetrating deep into the state
• Atlantic Ocean: Direct ocean exposure on southern coast
• Islands: Block Island and other coastal islands
• Barrier Beaches: Sandy coastal barriers vulnerable to storms

Major Coastal Communities:

• Newport: Historic mansions and waterfront properties
• Narragansett: Beach communities and summer homes
• Westerly: Watch Hill and coastal resort areas
• Block Island: Offshore island with extreme exposure
• Warwick: Oakland Beach and coastal neighborhoods
• Jamestown: Conanicut Island in Narragansett Bay

Coastal Risk Factors

Natural Hazards:

Historic Hurricanes in Rhode Island

The Great Hurricane of 1938

The most devastating hurricane in Rhode Island history:

Hurricane of 1938:

• Date: September 21, 1938
• Category: Category 3 at landfall (Category 5 offshore)
• Impact: 262 deaths in Rhode Island, $100 million damage ($2 billion in 2026 dollars)
• Storm Surge: Up to 18 feet in Narragansett Bay
• Downtown Providence: Flooded with 13 feet of water
• Destruction: Thousands of homes and buildings destroyed

Insurance Aftermath: The 1938 hurricane led to significant changes in property insurance:

• Many insurers became insolvent
• Hurricane exclusions added to policies
• Recognition of coastal catastrophic risk
• Foundation for modern hurricane insurance regulation

Other Major Rhode Island Hurricanes

Exam Tip: The Great Hurricane of 1938 is the most significant event in Rhode Island insurance history. It devastated Rhode Island, flooded downtown Providence with 13 feet of water, and killed 262 people statewide.

Rhode Island Hurricane Deductible Regulations

Rhode Island law (230-RICR-20-05-13) regulates hurricane deductibles to protect consumers from excessive out-of-pocket costs.

Maximum Hurricane Deductible

5% Cap on Hurricane Deductibles: Rhode Island law limits hurricane deductibles to no more than 5% of Coverage A (dwelling coverage).

How It Works:

• Coverage A: $400,000 (dwelling value)
• Maximum Hurricane Deductible: 5% × $400,000 = $20,000
• Cannot Exceed: $20,000 for this policy

Deductible Options: Insurers may offer hurricane deductibles of:

• 2% of Coverage A
• 5% of Coverage A (maximum)
• Flat dollar amounts ($1,000, $2,500, $5,000, etc.)

Premium Credits: Insurers must provide premium credits (discounts) for policies with hurricane deductibles. Higher deductibles = larger premium credits.

Windstorm Deductibles Prohibited

Rhode Island Law: Windstorm deductibles may NOT be included in residential property insurance policies.

Key Distinction:

• Hurricane deductibles: ALLOWED (up to 5% of Coverage A)
• Windstorm deductibles: PROHIBITED (not allowed separately)

Why This Matters: Some coastal states allow separate windstorm deductibles in addition to hurricane deductibles. Rhode Island prohibits windstorm deductibles to prevent consumers from facing multiple high deductibles.

Exam Tip: Hurricane deductibles are allowed (maximum 5% of Coverage A), but windstorm deductibles are PROHIBITED in Rhode Island residential property policies. This is a key consumer protection.

Hurricane Deductible Trigger

When Does the Hurricane Deductible Apply?

The hurricane deductible applies only during the period defined by National Weather Service hurricane warnings:

Hurricane Deductible Period:

1. Begins: When the National Weather Service issues a hurricane warning for Rhode Island
2. Ends: 24 hours after the termination of the last hurricane warning

For Rhode Island (except Block Island): The hurricane deductible applies when hurricane force sustained winds (74+ mph) occur anywhere in Rhode Island other than Block Island.

For Block Island: The hurricane deductible applies when hurricane force sustained winds occur on Block Island as reported by the National Weather Service.

Outside Hurricane Deductible Period: If wind damage occurs outside the hurricane warning period (e.g., from a nor'easter or severe thunderstorm), the standard homeowners deductible applies, NOT the higher hurricane deductible.

Hurricane Deductible Disclosure

Insurer Requirements: Rhode Island requires insurers to:

1. Clearly state hurricane deductible in policy declarations
2. Explain trigger conditions (hurricane warning from National Weather Service)
3. Define time period (during warning + 24 hours after)
4. Provide written disclosure at policy inception and renewal
5. Explain premium credit for accepting hurricane deductible

Consumer Rights: Policyholders have the right to:

• Understand deductible terms before purchasing
• Receive written explanation of hurricane deductible
• Compare premium credits for different deductible levels
• Request clarification from insurer or agent

Hurricane Deductible Mitigation and Waivers

Mitigation Measures

Rhode Island law encourages property owners to invest in hurricane mitigation measures that reduce damage risk.

Eligible Mitigation Measures:

• Hurricane-resistant glass and glazing
• Permanent storm shutters (professionally installed)
• Reinforced roof structures meeting wind resistance standards
• Impact-resistant doors
• Roof-to-wall connectors (hurricane straps)

Insurer Inspection: If property owners install state-approved hurricane protection:

1. Professional Installation: Mitigation measures must be properly installed
2. Insurer Inspection: Insurer inspects and verifies installation
3. Certification: Owner receives certification of mitigation measures
4. Deductible Waiver: Insurer may waive the hurricane deductible for that property

Exam Tip: Rhode Island law allows insurers to waive hurricane deductibles if property owners install state-approved hurricane protection (like hurricane-resistant glass and permanent storm shutters) and the insurer inspects and approves the installation.

Premium Credits vs. Deductible Waivers

Premium Credits:

• All policies with hurricane deductibles receive premium discounts
• Higher deductible = larger discount
• Required by Rhode Island law

Deductible Waivers:

• Insurers may (not required) waive hurricane deductibles for properties with approved mitigation
• Encourages investment in property protection
• Reduces insurer losses and consumer out-of-pocket costs

Flood Insurance in Coastal Rhode Island

National Flood Insurance Program (NFIP)

FEMA Flood Insurance: Coastal Rhode Island properties face significant flood risk, requiring National Flood Insurance Program (NFIP) coverage.

NFIP Requirements:

• Mandatory: Properties in Special Flood Hazard Areas (SFHAs) with federally backed mortgages must carry flood insurance
• Coverage Limits: Up to $250,000 dwelling, $100,000 contents
• Separate Policy: Flood insurance is separate from homeowners insurance
• Coastal Rhode Island: Most coastal areas designated SFHA (high flood risk)

FEMA Flood Zones in Rhode Island

High-Risk Flood Zones:

Moderate-to-Low Risk Zones:

VE Zones (Coastal High Hazard):

• V stands for Velocity: Wave action expected
• Higher premiums: Significantly more expensive than AE zones
• Stricter building codes: Elevated structures, breakaway walls
• Rhode Island Coast: Many waterfront properties in VE zones

NFIP Waiting Period

30-Day Waiting Period: NFIP flood insurance has a 30-day waiting period before coverage takes effect (with limited exceptions).

Exceptions to Waiting Period:

• New mortgage: Flood insurance required at closing (no wait)
• Map revision: If property newly mapped into SFHA, 1-day wait
• Policy renewal: No wait for continuous coverage renewal

Exam Tip: NFIP flood insurance has a 30-day waiting period. Coastal Rhode Island homebuyers should purchase flood insurance early, not wait until closing.

Rhode Island Property Insurance Challenges

Coastal Property Insurability

Market Dynamics:

• High-risk coastal areas: Limited carrier availability
• Premium increases: Coastal properties face significant rate increases
• Underwriting restrictions: Some insurers limit coastal exposure
• Residual market: RIJRA provides last-resort coverage (see Section 2.2)

Factors Affecting Insurability:

1. Distance from coast: Properties closer to ocean = higher risk
2. Elevation: Higher elevation = lower flood risk
3. Construction type: Frame construction more vulnerable than masonry
4. Age of structure: Older homes face higher premiums
5. Prior losses: Properties with claim history harder to insure
6. Mitigation measures: Hurricane protection reduces premiums

Historic Coastal Properties

Newport Mansions and Historic Districts: Rhode Island has extensive historic properties requiring specialized insurance:

Historic Property Challenges:

• Replacement cost: Historic materials and craftsmanship expensive
• Building codes: Updates must comply with historic preservation rules
• Agreed value coverage: May need agreed value policies
• Ordinance or law coverage: Essential for historic property rebuilding

Special Considerations:

• National Register properties: May qualify for special programs
• Local historic districts: Additional restrictions on repairs
• Preservation easements: Affect coverage and rebuilding
• Specialized carriers: Some insurers specialize in historic properties

Storm Preparedness and Loss Prevention

Property Owner Responsibilities

Before Hurricane Season (June 1 - November 30):

• Review policy and understand hurricane deductible
• Verify flood insurance is current
• Document property with photos/video
• Clear gutters and secure outdoor items
• Trim trees near structures
• Check roof for damage

Hurricane Warning Issued:

• Secure loose items that could become projectiles
• Board windows or close storm shutters
• Move valuables to higher floors
• Review evacuation plans
• Document pre-storm condition

After Storm:

• Document damage with photos/video
• Contact insurer immediately
• Mitigate further damage (cover holes, remove water)
• Keep receipts for emergency repairs
• Do not make permanent repairs until adjuster inspects

Producer Responsibilities

Agent/Broker Duties:

• Educate clients about hurricane deductibles and flood insurance
• Review coverage limits annually, especially for coastal properties
• Recommend mitigation measures to clients
• Explain RIJRA option if voluntary market unavailable
• Verify flood insurance for coastal properties

Exam Tip: Producers have a duty to educate coastal property clients about hurricane deductibles, flood insurance requirements, and available mitigation discounts. Failure to properly advise clients can result in E&O claims.