What Prompts People to Buy Flood Insurance? Here's One Clue

E&E News extensively covers a new RFF working paper on the relationship between home equity and flood insurance take-up.

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Aug. 20, 2021

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E&E News

" The housing boom of the early 2000s was a great time for real estate investors to buy low, sell high and pocket millions.

Now a team of disaster researchers has unearthed another phenomenon from the boom years: A lot of people bought flood insurance.

The finding helps unravel the mystery of what prompts homeowners to insure against flood damage, and suggests a possible solution to the millions of flood-prone homes lacking insurance against flood damage.

A new working paper by Yanjun Liao of Resources for the Future found that the sharp rise in home prices in the early and mid-2000s coincided with many homeowners buying flood coverage through the federal government’s National Flood Insurance Program.

'Flood insurance take-up indeed increases more in high boom markets when compared to low boom markets,' Liao said in a recent podcast episode."

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