Wind Insurance and Mitigation in the Coastal Zone
Land Economics 91(2): 272-95, 2016
Posted: 6 Nov 2013 Last revised: 19 May 2018
Date Written: 2015
This paper presents the only study analyzing the decision to purchase wind coverage for individuals whose standard homeowner’s policy excludes wind, and one o f very few analyses o f the decision to undertake wind mitigation measures. Because these two decisions are closely related, a simultaneous mixed-process approach is used that allows for correlated disturbances across prohit (insurance) and tobit (mitigation) equations. Results indicate a positive correlation between errors of the insurance and mitigation models; conditioning on covariates, households that hold wind insurance tend to engage in greater levels o f wind mitigation.
Keywords: mitigation, risk preferences, risk perceptions, wind insurance, wind pool
JEL Classification: C35,Q54
Suggested Citation: Suggested Citation