Residential Property Insurance Risk by Location

Don Epley

Journal of Real Estate Literature, 2017, vol. 25, issue 1, 189-205

Abstract: This project used a unique insurance data set recently released by a state insurance agency to examine the average overall residential risk rate by location. The intent was to determine the more risky locations that would be expected to show a higher capitalization rate, which would cause a higher insurance premium. Higher insurance premiums provide a fertile environment for a lower sales price on residential properties. In 2012, locations not touching the ocean illustrated the highest risk levels. In 2009, locations on the water were the highest. Rates of change between the two locations for 2009 and 2012 were approximately the same. This project illustrated data and data sources that a practicing appraiser could evaluate and use, and provides a benchmark that does not currently exist. It also provides the local appraiser guidance on risky locations where insurance premiums can impact residential sales prices.

Date: 2017
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DOI: 10.1080/10835547.2017.12090447

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