Flood Insurance Coverage in the Coastal Zone
East Carolina University Economics Department Working Paper No. ecu0804
40 Pages Posted: 27 Apr 2011
Date Written: December 1, 2008
We explore behavior and test theory regarding the determinants of flood insurance coverage in the coastal zone using micro-data for nine southeastern counties. Overall estimates indicate price inelastic demand, though subsidized policyholders have greater coverage and are more price sensitive. Mortgage-borrowers exhibit greater coverage and less elastic demand, though only 38% claim flood insurance was required by their lender. Flood insurance demand is positively correlated with the level of flood risk. Households facing higher erosion hazard demand greater coverage. Community level erosion hazard mitigation projects influence flood insurance holdings, with shoreline armoring acting as a substitute and beach replenishment acting as a complement.
Keywords: Insurance coverage, flood, hazard, coastal, erosion, Tobit model
JEL Classification: D81, G22,
Suggested Citation: Suggested Citation