The United States sustained 27 billion-dollar weather and climate disasters in 2024, totaling $183 billion in damage. As weather events with heavy consequences for infrastructure and communities become more frequent and intense, insurance companies are retreating from high-risk markets, raising premiums to unprecedented levels, and leaving property owners, including coastal business operators, struggling to maintain coverage. For beachfront hospitality businesses facing the dual threats of rising seas and accelerating erosion, access to insurance may very well not be a reality in the near future.
Reflecting on the Center for American Progress’ piece on the issue, we think innovative adaptive solutions, particularly rapid-deployment barrier systems, offer a practical path forward for maintaining insurability while protecting valuable coastal assets and the communities that depend on them.
Coastal Hotels Face Unprecedented Insurance Challenges
Hotels by the sea face a unique convergence of climate-related risks. Rising sea levels are accelerating coastal erosion at rates that exceed historical patterns. Hurricanes are intensifying, bringing stronger winds and more devastating storm surge. These surges increasingly compound with king tides, pushing water farther inland than traditional flood models predicted. In response, private insurers are abandoning coastal markets entirely. This means that major companies are exiting Florida and California, while others have stopped writing new policies in vulnerable areas.
Source: NCEI – NOOA
Hotels represent significant capital investments, often financed through mortgages that require comprehensive insurance coverage. Beyond property damage, business interruption can devastate revenue for months or even years. Local economies, particularly in tourism-dependent communities, face cascading losses when hotels close, even temporarily. Workers lose wages, suppliers lose contracts, and tax revenues plummet.
The current insurance market reality reflects these risks. Property insurance premiums jumped an average of 33 percent between 2020 and 2023, with coastal properties experiencing even steeper increases. Even state-run FAIR plans are becoming overwhelmed. California’s FAIR plan faces nearly $5 billion in exposure from the Los Angeles wildfires alone, forcing a $1 billion assessment on private insurers that will likely be passed to policyholders statewide. The growing protection gap between insured and actual losses threatens to destabilize property values and mortgage markets along America’s coastlines.
Further reading: How AI and Tech Tools Are Transforming Coastal Resilience for Hospitality
Erosion Creates Coverage Gaps Insurers Won’t Fill
When it comes to erosion coverage, traditional insurance products have significant gaps. The National Flood Insurance Program covers flooding but excludes erosion damage. Most private policies classify erosion as “earth movement” and explicitly exclude it from coverage. This leaves coastal hotel owners vulnerable to a chronic, progressive threat that undermines foundations and creates structural instability over time.
The cascading effects make erosion particularly problematic for insurers. As beaches narrow and disappear, properties lose their natural buffer against wave action. Each storm carries water and debris farther inland, increasing flood vulnerability. Infrastructure damage becomes more likely with every weather event. While insurers can model and price catastrophic events like hurricanes, they struggle with erosion’s slow, seemingly inevitable progression.
When it comes to erosion, past patterns and data are quickly becoming unreliable in predicting future risks due to the acceleration of climate change. Erosion rates vary dramatically by location, dependent on factors like sediment supply, wave patterns, and coastal geology. This variability complicates risk modeling and pricing which deters many insurers from addressing coastal exposure.
Removable Barriers May Reduce Risk and Lower Premiums
When integrated in prevention measures, removable barrier systems could instigate a paradigm shift in coastal protection. Unlike permanent seawalls that alter beach aesthetics and access, these barriers deploy only when weather warnings are issued. ReefShield’s barriers are typically deployed between 24 and 72 hours before a storm arrives. Once the threat passes, they’re removed, restoring normal beach operations and maintaining the visual appeal that draws tourists to coastal destinations.
For insurers, these systems provide demonstrated, quantifiable risk mitigation. They protect ground-floor infrastructure, entrances, pool decks, boardwalks, and amenities from storm surge and wave damage. More importantly, they dramatically reduce expected losses, which is the key metric insurers use to price policies and determine whether to offer coverage at all.
In hospitality-related settings, barriers safeguard critical infrastructure during storms while minimizing business interruption from cleanup and repairs. A hotel that can reopen days rather than weeks after a hurricane maintains operational continuity during peak seasons, preserving revenue and protecting its workforce. The system’s removability means no permanent alteration to the beach experience that guests expect.
The cost-benefit analysis is compelling. While initial investment in barrier systems requires capital, the return comes through multiple channels: reduced insurance premiums, avoided losses from even a single major event, enhanced property values, and improved marketability to increasingly climate-conscious travelers. Properties demonstrating proactive risk mitigation position themselves favorably in insurance negotiations, potentially qualifying for discounts that compound over years.
Insurers Must Reward Mitigation Investments
Coastal hotel owners who invest in storm surge prevention like rapid-deploying and temporary barrier systems deserve lower premiums. Yet many states don’t require insurers to factor protective measures into pricing. State regulators should mandate that properties with removable barriers, stronger construction, or resilience programs qualify for reduced rates.
Broader solutions also efficiently address the issue:
- Beach nourishment and living shorelines restore natural buffers.
- Coordinated barrier deployment across multiple properties creates collective protection greater than individual efforts.
- Updated building codes ensure new construction meets resilience standards.
Federal research shows every dollar spent on disaster preparedness saves $13 in damage costs. Incentives for resilience investments, better climate data, and public-private partnerships protect not just hotels, but jobs, tax revenues, and entire coastal communities.
Futher reading: Hotel Revenue Protection: Why Caribbean Resorts Are Losing 30% of Rooms to Sea Level Rise
Coastal Properties Can Remain Insurable
As climate change ensures more frequent, intense storms, the insurance crisis is snowballing. What is undeniable is that sea level rise and erosion will continue. For many, “uninsurable” rhymes with “unpreventable”. Flexible barrier systems change that equation. They represent practical, deployable technology available today that fundamentally alters the risk profile of coastal properties.
Resilience demands a step forward from everyone. Hotel owners should invest in proven mitigation solutions and demand insurance products that reward resilience. Insurers must recognize that supporting adaptive technologies serves their long-term interests by maintaining viable markets rather than abandoning entire regions. Policymakers should incentivize resilience through tax credits, grants, and regulations that require insurers to acknowledge effective mitigation.
The choice facing coastal communities revolves around implementing smart solutions that protect properties, preserve livelihoods, and maintain the beaches that draw millions of visitors annually. Beachfront hotels can remain insurable but only if we embrace the adaptive technologies and forward-thinking policies that match the scale of the challenge we face.
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Photo credit: Quinn Simonson