Quote Originally Posted by thisguysthumbs View Post
Because in an overwhelming amount of cases insurance company's will not insure coastal homeowners, specifically because of the risk of hurricane damage.
Coastal windstorm is a non-diversified risk with high severity of loss with a difficult to project occurence. This means that an insurance company would have to price the insurance very high due to high uncertainty and risk of a storm requiring a payment that would make them insolvent. VERY simple math: $1mm house that could be expected to be destroyed in a 50 year event - allowing for costs and profits (from investing the premiums) you are going to be looking at $20k per year as your starting point. With non-correlated risk you get a benefit from the diversification of your policies across different locations, holders and risks. This does not exist for coastal windstorm.