Improving Household and Community Disaster Recovery: Evidence on the Role of Insurance

Abstract

We study the role of insurance in improving household and community disaster recovery. Harnessing unique survey data of residents impacted by four land-falling hurricanes in the U.S., we find that insured households are less likely to experience high financial burdens in both the short and longer-run post-disaster and are less likely to have unmet funding needs. Insurance also provides spillover benefits for the local economy. Post-disaster visitation rates to many local businesses increase with flood insurance payouts. Despite this, motivating purchase of disaster insurance remains a challenge among low-income households who are less likely to report seeing insurance as useful.