Rainfall or Rainmaking? Lawyers, Courts, and the Price of Mold Insurance in Texas

Journal of Risk and Insurance, Forthcoming

32 Pages Posted: 21 Oct 2011 Last revised: 27 Aug 2012

Charles M. North

Baylor University Department of Economics

James R. Garven

Baylor University - Department of Finance, Insurance & Real Estate

Carl R. Gwin

Pepperdine University

Multiple version iconThere are 2 versions of this paper

Date Written: October 19, 2011

Abstract

In well-functioning property-liability insurance markets, the price of coverage reflects the impact of the legal environment on the frequency and severity of claims. This paper presents a case study of the Texas mold insurance crisis of 2001-02. We provide a narrative of the controversy in Texas over insurance coverage for household mold and use county-level data from a single Texas insurer to assess the determinants of post-crisis prices for supplemental mold, slab, and extended water loss coverages. We find that more attorneys per capita and more heavily Democratic courts were both associated with higher prices for mold and slab coverage.

JEL Classification: G22, K41

Suggested Citation

North, Charles M. and Garven, James R. and Gwin, Carl R., Rainfall or Rainmaking? Lawyers, Courts, and the Price of Mold Insurance in Texas (October 19, 2011). Journal of Risk and Insurance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1946462

Charles M. North

Baylor University Department of Economics ( email )

One Bear Place # 98003
Waco, TX 76798-8003
United States

James R. Garven (Contact Author)

Baylor University - Department of Finance, Insurance & Real Estate ( email )

One Bear Place #98004
Baylor University
Waco, TX 76798-8004
United States

HOME PAGE: http://business.baylor.edu/directory/?id=James_Garven

Carl R. Gwin

Pepperdine University ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States
310-506-7352 (Phone)

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