Jump to ContentJump to Main Navigation
At War with the WeatherManaging Large-Scale Risks in a New Era of Catastrophes$
Users without a subscription are not able to see the full content.

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

Show Summary Details
Page of

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

Homeowners’ Decision Making for Purchasing Insurance Coverage

Homeowners’ Decision Making for Purchasing Insurance Coverage

Chapter:
(p.119) 5 Homeowners’ Decision Making for Purchasing Insurance Coverage
Source:
At War with the Weather
Author(s):

Howard C. Kunreuther

Erwann O. Michel-Kerjan

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262012829.003.0005

This chapter explores how homeowners decide when buying insurance coverage, with special emphasis on the amount of insurance (if any) to purchase against losses from a natural disaster. It shows that descriptive aspects of behavior are not taken into account in a normative theory of decision making for purchasing insurance based on expected utility theory. It also reviews empirical evidence on how behavioral and informational factors are likely to affect the purchase of insurance. The chapter demonstrates that there are generally no cost-benefit trade-offs in insurance purchase decisions. The number of presidential disaster declarations has increased considerably since 1965, especially during election years. Aside from financial protection, other factors that influence a homeowner’s decision to purchase of insurance include satisfying mortgage requirements, reduction of anxiety (obtaining peace of mind), and satisfying social norms (for example, purchasing insurance because one’s friends and neighbors have coverage).

Keywords:   homeowners, insurance coverage, normative theory, decision making, purchasing, expected utility theory, presidential disaster, natural disaster

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.