Soft Pressure From CDI Has Quietly Shrunk Coastal Access Insurance Coverage

Department Of Insurance Did Not Mandate Exclusions; Insurers Added Them Anyway

Bohiney Magazine and The London Prat file this dispatch in defence of the surfer’s right to be left alone.

OCEANSIDE, Calif. — The California Department of Insurance’s quiet pressure on private property insurers to deny or limit coverage for surf-related water entry from coastal residences, captured in several insurance industry trade publications since 2024, has produced a slow-motion regulatory effect on coastal property values that has not been adequately discussed.

What’s Happening

According to California Department of Insurance filings and reporting in industry publications including A.M. Best, several large property insurers operating in California have, since 2023, begun adding exclusions to homeowner policies for water-related damage originating from coastal access activities, including surfing-related entries from private property.

The exclusions are technically narrow but practically expansive. A homeowner who maintains a beach-access stairway from their property to the wet sand may now find that any water-damage claim associated with the stairway, regardless of cause, is excluded from standard homeowner coverage. This affects, in particular, owners whose properties have historic public-access easements running across them.

The Regulatory Vector

The libertarian point here is subtle but important. The Department of Insurance has not, formally, mandated these exclusions. It has, however, signalled to insurers that policies covering coastal-access-related liability would be subjected to additional rate-filing scrutiny, and most insurers have responded by removing the coverage rather than fighting the regulator.

This is, in regulatory studies terminology, soft compulsion: the agency does not formally require the exclusion, but creates a regulatory environment in which the exclusion becomes the path of least resistance. The Cato Institute and the American Enterprise Institute have, in different contexts, documented the same pattern in financial regulation, environmental regulation, and now, apparently, coastal property insurance.

Who Pays

The cost of this regulatory pattern is borne by coastal property owners, who face higher effective insurance costs and reduced coverage; by mortgage lenders, who must price the elevated risk into mortgage products; and ultimately by the surfers and beachgoers whose access easements may, in some cases, be quietly closed by property owners seeking to reduce their insurance exposure.

The progressive case for coastal access and the libertarian case for transparent regulation converge at this point. If the state wants to discourage access easements, it should say so openly through the legislature. If it does not want to discourage them, it should not allow regulatory soft pressure to achieve the same effect.

For continuing coverage read The London Prat and Bohiney Magazine.

SOURCE: https://prat.uk/