Flood Insurance Coverage in the Coastal Zone

Craig Landry and Mohammad Jahan-Parvar

MPRA Paper from University Library of Munich, Germany

Abstract: We explore behavior and test theory regarding the determinants of flood insurance coverage in the coastal zone using household-level data for nine southeastern counties. We use Tobit regression models to assess the importance and magnitude of insurance cost, risk factors, community characteristics, and household attributes on flood insurance purchase for residential building structures. Overall estimates indicate price inelastic demand, though subsidized policyholders are more sensitive to price and hold greater flood insurance coverage (controlling for value of asset at risk). We find support for rational choice in the coastal zone, with flood insurance coverage positively correlated in the level of flood risk. We find evidence that coastal erosion risk effects flood insurance demand, and that community level erosion hazard mitigation projects influence flood insurance holdings, with shoreline armoring appearing to act as a substitute and beach replenishment appearing to act as a complement.

Keywords: Insurance coverage; flood; hazard; coastal; erosion; Tobit model (search for similar items in EconPapers)
JEL-codes: D81 H11 Q54 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-ias
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https://mpra.ub.uni-muenchen.de/15498/1/MPRA_paper_15498.pdf original version (application/pdf)

Related works:
Journal Article: Flood Insurance Coverage in the Coastal Zone (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:15498

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