Flood risks and the willingness to purchase flood insurance

Water Resources Research
By:  and 



Computer simulation experiments were conducted to determine the effects of alternative sources of uncertainty on the willingness to pay for flood insurance. Two alternative insurance protection schemes were investigated: coinsurance and fixed coverage. The question investigated here is to what extent does the insurance scheme influence how purchasers respond to flood risks? Floods were assumed to be log normally distributed and the effects on the purchase of insurance of uncertainties in the parameters of the distribution were explored using response surface analysis. Results indicate that fixed coverage insurance provisions shift most of the uncertainty in the physical parameters governing natural disaster occurrences away from the insuree and onto the insurer. The results also show that the form of the damage function has little effect on the demand for flood insurance.

Publication type Article
Publication Subtype Journal Article
Title Flood risks and the willingness to purchase flood insurance
Series title Water Resources Research
DOI 10.1029/WR016i004p00617
Volume 16
Issue 4
Year Published 1980
Language English
Publisher American Geophysical Union
Description 6 p.
First page 617
Last page 622
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