Working Paper Revision

The Effect of Rising Insurance Premiums on Mortgage Delinquency and Household Relocation

Abstract: U.S. homeowners' insurance premiums have increased drastically, widely attributed to climate risk. Using household-level microdata and two novel instruments, we document three findings. First, households facing larger premium increases are more likely to relocate, moving to areas with lower climate risk and insurance costs. Homes with larger increases are more often acquired by investors, who obtain lower premiums. Second, higher premiums increase mortgage delinquencies. Third, the relocation effect is stronger among less financially constrained households, while the delinquency effect concentrates among more constrained ones. Rising insurance costs can threaten household financial resilience, while relocation offers a costly mechanism of adaptation.

JEL Classification: D14; G21; G22; G5; G52; G53; Q54; R21; R3;

https://doi.org/10.24149/wp2505r1

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2026-10

Number: 2505

Related Works

• Working Paper Revision (2026-10) : You are here.
• Working Paper Original (2025-01-16) : Climate Risk, Insurance Premiums and the Effects on Mortgage and Credit Outcomes