TY  - JOUR
AU  - Shiller,Robert J.
AU  - Weiss,Allan N.
TI  - Home Equity Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4830
PY  - 1994
Y2  - August 1994
UR  - http://www.nber.org/papers/w4830
L1  - http://www.nber.org/papers/w4830.pdf
N1  - Author contact info:
Robert J. Shiller
Yale University, Cowles Foundation
Box 208281
30 Hillhouse Avenue
New Haven, CT  06520-8281
Tel: 203/432-3708
Fax: 203/432-6167
E-Mail: robert.shiller@yale.edu
M2  - featured in NBER digest on 1994-11-01
AB  - Home equity insurance policies, policies insuring homeowners against declines in the price of their homes, would bear some resemblance both to ordinary insurance and to financial hedging vehicles.  A menu of choices for the design of such policies is presented here, and conceptual issues are discussed.  Choices include pass-through futures and options, in which the insurance company in effect serves as a retailer to homeowners of short positions in real estate futures markets or of put options on real estate.  Another choice is a life-event-triggered insurance policy, in which the homeowner pays regular fixed insurance premia and is entitled to a claim if both there is a sufficient decline in the real estate price index and a specified life event (such as a move beyond a certain geographical distance) occurs.  Pricing of the premia to cover loss experience is derived, and tables of break-even policy premia are shown, based on estimated models of Los Angeles housing prices 1971- 91.
ER  -