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

23 Pages Posted: 23 Aug 2012

See all articles by Charles M. North

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: September 2012

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 article presents a case study of the Texas mold insurance crisis of 2001–2002. 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 postcrisis 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.

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 (September 2012). Journal of Risk and Insurance, Vol. 79, Issue 3, pp. 817-839, 2012, Available at SSRN: https://ssrn.com/abstract=2134746 or http://dx.doi.org/10.1111/j.1539-6975.2011.01457.x

Charles M. North (Contact Author)

Baylor University Department of Economics ( email )

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

James R. Garven

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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