Briefing
When the Mortgage Becomes the Backup Plan: Debt and Disaster Insurance
Abstract: Debt crowds out flood insurance, as homeowners with little equity have less to lose from default, making their mortgage an implicit backup plan that substitutes for formal coverage. Uninsured exposure is highest in the riskiest areas, precisely where flood damage is most likely. After Hurricane Harvey, uninsured homeowners defaulted three times more often than the regular default rate.
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https://www.richmondfed.org/publications/research/economic_brief/2026/eb_26-22
Description: Briefing
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Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Richmond Fed Economic Brief
Publication Date: 2026-07-08
Volume: 26
Issue: 22