Coastal Homeowner Responses to Hurricane Risk Perceptions

Abstract

This study extends a recent literature on homeowner behavior in response to changing perceptions of hurricane risk. A survey of coastal North Carolina homeowners is used to measure how hurricane damage expectations correlate with the purchase of defensive home improvements. The findings show that higher household income, larger insurance deductibles, and increased expectations of Category 3 hurricane strikes raise the likelihood of purchasing damage-mitigating improvements. Interestingly, increasing expectations of Category 4 and 5 hurricane strikes are not significantly associated with mitigation decisions. On reflection, this is actually rational, as most insurance deductibles cap homeowners’ potential dollar-damages with those more severe storms. Varied stakeholders, from homeowners to insurers to policymakers and lenders, might use these findings in their own decision-making.