The Effect of Rising Insurance Premiums on Mortgage Delinquency and Household Relocation

Shan Ge (), Stephanie Johnson and Nitzan Tzur-Ilan
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Shan Ge: https://www.stern.nyu.edu/faculty/bio/shan-ge

No 2505, Working Papers from Federal Reserve Bank of Dallas

Abstract: U.S. homeowners' insurance premiums have increased drastically, widely attributed to climate risk. Using household-level microdata and two novel instruments, we document three findings. First, households facing larger premium increases are more likely to relocate, moving to areas with lower climate risk and insurance costs. Homes with larger increases are more often acquired by investors, who obtain lower premiums. Second, higher premiums increase mortgage delinquencies. Third, the relocation effect is stronger among less financially constrained households, while the delinquency effect concentrates among more constrained ones. Rising insurance costs can threaten household financial resilience, while relocation offers a costly mechanism of adaptation.

Keywords: climate risk; insurance; mortgage; delinquency; relocation (search for similar items in EconPapers)
JEL-codes: D14 G21 G22 G5 G52 G53 Q54 R21 R3 (search for similar items in EconPapers)
Pages: 96
Date: 2025-01-16, Revised 2026-10
New Economics Papers: this item is included in nep-ban, nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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DOI: 10.24149/wp2505r1

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