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Publication Date

12-15-2016

Abstract

Local governments typically insure themselves against all kinds of losses, from property damage to legal liability. For small- and medium-sized governments, this usually means purchasing insurance from private insurers or participating in municipal risk pools. Insurance for regulatory takings claims, however, is generally unavailable. This previously unnoticed gap in municipal insurance coverage could lead risk averse local governments to underregulate and underenforce existing regulations where property owners threaten to bring takings claims. This seemingly technical observation turns out to have profound implications for theoretical accounts of the Takings Clause that focus on government regulatory incentives. This Article explores the impact of insurance on land use regulations. In the process, it reveals important insights about public insurance more generally and offers a novel explanation for the burgeoning land use innovation in cities compared to the relative stagnation of land use in the suburbs. It concludes by suggesting new ways for promoting local land use regulations that risk generating takings claims.

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