.comment-link {margin-left:.6em;}

Monday, May 01, 2006

 

Insurance denied!

Recently through a source that shall remain anonymous, I found out that over the past year, several major insurance companies are denying the issuance of new or continuance of existing homeowners policies in certain regions of the south (Florida, Louisiana). This food for thought has gigantic economic consequences regarding the growth of cities in addition to the modification of existing bid rent curves.
To purchase a house (financed) the house must have homeowners insurance on it. If insurance is no longer being offered in certain areas, these areas will most likely see the following:

Devaluation of land. If someone can't get insurance on the house, it will most likely not be worth purchasing, by means of financing, and such the price will most likely fall.

Movement of inhabitants. People will most likely move from the areas no longer accepted for insuracne to just beyond the uninsured zone. This will mean unexpected growth and most likely have regional impact.

Significant sprawl. The spreading out will occur in the cities unaffected by the policy. Governments would be wise to plan on the influx of people now, for when the market rolls around to the aftershock.

Higher Prices of Ins. The companies that are willing to cover the homeowners insurance in these locations will do so at a price premium.

This is simply the market in action.

Comments: Post a Comment

Links to this post:

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?