Homeowners of mobile and manufactured homes in Maryland’s coastal areas are struggling to find insurance coverage as many insurance companies withdraw from the market. This situation is making it difficult for owners to sell their homes, as potential buyers often need insurance to secure loans. As a result, sellers are limited to cash buyers, which is reducing property values in these communities.
Delegate Wayne Hartman, who represents parts of Wicomico and Worcester counties, expressed concern that neighborhoods in Ocean City, such as Montego Bay and White Park, could see significant drops in property values if insurance becomes unavailable. Ocean City Mayor Rick Meehan raised a troubling question: “Why can a recreational vehicle easily get insurance while a manufactured home cannot, even when it’s placed on a concrete foundation?”
Meehan emphasized that those who can least afford it are being hurt the most by the lack of reasonably priced homeowners insurance.
Public Hearing on Insurance Challenges
The Maryland Insurance Administration (MIA) held an online meeting on October 23 to discuss these issues with city officials, legislators, insurance agents, and consumers. During the meeting, Hartman and Meehan shared their concerns. Acting Insurance Commissioner Marie Grant noted that many standard carriers are no longer offering coverage for manufactured homes in Worcester County, and surplus lines carriers are also tightening their policies, often excluding wind coverage or limiting insurance to homes under 20 or 25 years old.
Local communities most affected include Montego Bay in Ocean City and Assateague Pointe in Worcester County.
Claire Pantaloni, vice president of the Insurance Agents and Brokers Association, conducted a survey that revealed insurance is mostly unavailable for older mobile homes, which struggle to find coverage.
Local Insurance Agents Speak Out
Local insurance agents confirmed the dire situation. Colleen Nichols from Landmark Insurance in Ocean City stated, “If they’re on a canal, forget it. We are really struggling to get coverage.” She appealed for help for those who may be purchasing their last home. Nichols also noted that surplus lines carriers are pulling out, especially for homes older than 25 years.
Emily Nock, president of Nock Insurance, described it as “impossible” to insure mobile homes and expressed concern that this issue could extend to stick-built homes in the future. She mentioned that several carriers have stopped renewing policies in coastal areas.
Greg Cathell from Cathell Insurance reported losing 100 clients when one carrier exited Worcester County, highlighting the difficulty in finding insurance options.
Misconceptions About Risk
Ocean City leaders argue that the insurance industry overlooks the city’s efforts to mitigate risks from extreme weather through improved building codes and other measures. Mayor Meehan and City Manager Terry McGean pointed out that Ocean City has experienced fewer flood insurance claims compared to other regions.
McGean recalled being told in 1990 that Ocean City would not last a decade due to erosion and hurricanes. “Thirty-four years later, we are still here and stronger than ever,” he stated. He attributed this resilience to strict building codes and zoning laws adopted in the 1970s to address flooding and high winds.
Meehan highlighted significant infrastructure improvements, such as beach replenishment and a seawall, which have made homes safer. Since joining the National Flood Insurance Program in 1971, Ocean City has received only $10 million in claims for properties valued at over $7 billion, a stark contrast to Anne Arundel County, which has received $46 million for properties worth $1.5 billion.
Need for State Support
Many participants in the meeting expressed a desire for the Maryland Joint Insurance Association (JIA) to take more action, as private insurance markets are shrinking. However, the JIA currently does not offer homeowners policies for mobile and manufactured homes, only providing a basic dwelling policy that lacks replacement cost coverage.
Delegate Hartman suggested that the JIA’s outdated building codes may hinder property owners’ ability to secure coverage. He noted that Ocean City has adopted the strict International Building Code, while JIA guidelines still reference the older Southern Standard Building Code.
Seeking Solutions
As the meeting turned to potential solutions, Pantaloni asked if the JIA could identify risk characteristics that would allow them to offer homeowners policies for certain manufactured homes, such as those permanently attached to a foundation.
MIA’s Joy Hatchette inquired about the possibility of a difference-in-conditions policy to bridge the gap between JIA’s limited coverage and lenders’ requirements for replacement cost.
Higher reinsurance costs were cited as a reason for insurers exiting the market. One broker noted that without a way to pass these costs onto homeowners, insurers would continue to avoid these risks.
Marlene White, executive director of Maryland Economic Action, warned that the situation is worsening for low-income homeowners, as the inability to secure insurance could lead to declining home values in manufactured housing communities, which are vital for affordable housing.
Commissioner Grant acknowledged that the issues discussed are not unique to Ocean City and may affect other areas in Maryland. She stated that the search for solutions is just beginning and welcomed input from insurance carriers, although none spoke up during the meeting.
The insurance coverage crisis for mobile and manufactured homes in Maryland’s coastal communities raises significant concerns about property values and the availability of affordable housing in the region.
Related Topics:
