Loading…

Reconstruction Cost Model for Housing Insurance

AbstractInsurance policies are a fundamental risk management tool for the housing market. Climate change and extreme events together with a growing urbanization are increasing the relevance and need for insurance. Every year the number of incidents is increasing, as well as the insurance claims. Fre...

Full description

Saved in:
Bibliographic Details
Published in:Journal of legal affairs and dispute resolution in engineering and construction 2020-08, Vol.12 (3)
Main Authors: Cruz, Carlos Oliveira, Branco, Fernando
Format: Article
Language:English
Subjects:
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:AbstractInsurance policies are a fundamental risk management tool for the housing market. Climate change and extreme events together with a growing urbanization are increasing the relevance and need for insurance. Every year the number of incidents is increasing, as well as the insurance claims. Frequently, when dealing with total losses, the indemnities are insufficient to cover the reconstruction costs. This paper proposes a simplified reconstruction cost model that can improve the transparency of the market and help insurers calculate the insurance value. The model was applied to Portugal. The motivation was the problems with insurance claims arising from severe wild fires in 2017. The model was tested using a set of 48 properties. The results of the model show that reconstruction costs are higher than those obtained by the previous methodology. The structure and variables of the model can be used in other countries by insurance companies upon necessary calibration of the parameters.
ISSN:1943-4162
1943-4170
DOI:10.1061/(ASCE)LA.1943-4170.0000408