Optimal Coverage Level Choice with Individual and Area Plans of Insurance

We theoretically examine a farmer’s coverage demand with area and individual insurance plans as either separate or integrated options. The individual and area losses are assumed to be imperfectly and positively correlated. With actuarially fair rates, the farmer will fully insure with the individual plan and demand no area insurance regardless of the plans being separate or integrated. Under separate plans, free area insurance and the fair rate for individual insurance, area insurance replaces a portion of individual insurance demand. Under integrated plans, free area insurance, and the fair rate for individual insurance, the farmer over-insures using both area and individual plans.


Issue Date:
Jan 14 2011
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/98803
Page range:
1-44
Total Pages:
44
JEL Codes:
D81; G22; Q12; Q18
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-25

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