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At War with the WeatherManaging Large-Scale Risks in a New Era of Catastrophes$
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Howard C. Kunreuther and Erwann O. Michel-Kerjan

Print publication date: 2009

Print ISBN-13: 9780262012829

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262012829.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2018. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 17 October 2019

Impact of Insurance Status on Economic Welfare of Homeowners in Hazard-Prone Areas: The Affordability Challenge

Impact of Insurance Status on Economic Welfare of Homeowners in Hazard-Prone Areas: The Affordability Challenge

Chapter:
(p.234) (p.235) 11 Impact of Insurance Status on Economic Welfare of Homeowners in Hazard-Prone Areas: The Affordability Challenge
Source:
At War with the Weather
Author(s):

Howard C. Kunreuther

Erwann O. Michel-Kerjan

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262012829.003.0011

This chapter examines the impact of insurance status on the economic welfare of homeowners living in hazard-prone areas. In particular, it considers what proportion of homeowners in hazard-prone areas are currently covered by insurance and why some have (or should have) homeowners’ insurance while others do not. Drawing on American Housing Survey data, it shows that a large number of owner-occupied homes in eight cities are owned by households with incomes below the affordability threshold. Among low-income households who could not afford insurance, a significant fraction are nevertheless insured, even when no mortgage requiring coverage is involved. Static notions of affordability are reflected in measures based on purchasing power and household choices, yet homeowners may link equity to the fairness in changes in their insurance premiums.

Keywords:   economic welfare, homeowners, hazard-prone areas, homeowners’ insurance, American Housing Survey, affordability, purchasing power, equity, insurance premiums, incomes

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