Household insurance and financial stress: do households maintain coverage on their most important assets?

Abstract

Rising home insurance costs are exposing new affordability risks that threaten households’ ability to protect their most important asset. While this problem is often assumed to be concentrated among low-income households, there has been limited examination of how affordability pressures are distributed across the income spectrum. Breaking with conventional framing of a monotonic relationship between income and insurance, we focus instead of financial stress and insurance coverage in order to examine the role of budgetary constraints in driving underinsurance without limiting our analysis to low-income households. Using Australian panel data in a difference-in-differences model, we find that ..