Homeowners Insurance Premiums Way Up In Some Coastal Areas

I have never been a big fan of USA Today, but this is a decent effort at a story about increased homeowner premiums in coastal areas.  It has some really good anecdotes, but makes a number of points that the author doesn’t explore or even seem to realize are there.  One is the casual mention of an idea that I suspect would strike most people as unjust, foolish and expensive: creating a federal program to collect a tax on homeowners insurance across the country so that people who live on the coast can afford to pay their premiums.  We already have two common funds to deal with this problem: they are called federal flood insurance and federal disaster payments.  Law and Economics folks refer to this as an "externality," where one seeks to push the cost of an activity onto others.

The writer also steps right around the point that home values on the coast are "skyrocketing."  That being the case, you have to suspect the anecdotes were carefully vetted to weed out folks who have $1.3 million houses to make the story more sympathetic, and while the story discusses the huge rise in homeowners insurance premiums, there is no exploration of the overall increase in wealth of homeowners through increased home values.  I’ve run into this attitude in citizen advisory boards I’ve served on here in Portland, where people seek special funds to assist people (including a lot who have 100 percent equity in their homes) who have to pay more in property taxes as home values go way, way up. It’s hard to make them see that someone who owes an extra few hundred dollars in taxes while the value of their home is gaining $50,000 per year is not a charity case. 

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