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.
" 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."
Working Paper — Aug 17, 2021
What's at Stake? Understanding the Role of Home Equity in Flood Insurance Demand
This working paper finds that as home equity increases, so does demand for flood insurance—a finding with major implications for understanding climate change's impact on housing.
Resources Radio — Aug 17, 2021
Risks and Rewards in Homeownership and Flood Insurance, with Penny Liao
Penny Liao considers how home equity influences a household's decision to purchase flood insurance.