Home insurance

[Detective D]

I don't live in CA. I can't speak to the issues going on there from personal experience. I live about as far removed from coastal BS as possible without living in the mountains as a hermit.
However, apparently CA is working to allow the insurance companies to use speculation to set rates on home insurance. In return, they will be required to cover homes.




Now, this can be worded in a way that maybe makes sense on it's face, but ultimately the government requiring insurance coverage and how insurance works(everyone pays in so when a claim is made that person is covered) means everyone will foot the bill for government mandated insurance. Sounds like a loosely related to obamacare approach.
My concern is this will go nationwide if it benefits the insurance companies(it will, for certain) due to their lobbying power. Then I will get to foot the bill for people living in stupid *** places. I will get to pay premiums for the people living in hurricane areas, flood areas, and yes, wildfire areas. This is the first step in letting the insurance companies get back to making absurd profits(which they dump into the stock market) after a stretch of bad luck. They made sure to throw climate change in there lol, can't talk about something with the most recent buzzwords!
Future state the WEF does not want people owning homes. As others have mentioned about old cars in various other threads, insurance can be a tool to push people out of them. Once the government requires coverage to be available, it is only a matter of time before they require everyone to have it. I feel bad for people that can't get their home covered, it is a huge investment to not have that back up plan financially, but long term this is going to end really badly IMO and people need to deal with their own problems sometimes instead of expecting the government or the rest of society bail them out. This will be open season on the insurance companies cranking rates for everyone regardless. This serves as their excuse to spread it to everyone instead of creating ill will by localizing the risk. Like obamacare, it becomes taxpayer subsidized insurance, once removed, to avoid legal issues and other things that all end up falling in favor of the big companies.

 

[Ron H]

I’d like to chime in, but it would likely get ‘political’ so…

 

[YY1]

Insurance payouts to claims is already subsidized by those who don't file claims.

Those of us who live in less damage prone areas are already subsidizing those who choose to live on the waterfront, or on cliffs.

 

[#41]

I'm in favor of free market economics. If you have to pay 10x insurance to cover your high-risk home, then let it be. Less people will move/live there and overall losses will come down saving the collective economy a ton of dough. ....But of course, this will never happen. It's inevitable that it will end up like state mandatory car insurance and our tax structure where the Haves fund the Have-nots.

Not to derail this topic, but check out this cool FEMA risk map and its different layers:

Map | National Risk Index

I'm in a yellow risk county, but with moderate loss. I thought it would be lower.

 

[Detective D]

Insurance payouts to claims is already subsidized by those who don't file claims.

Those of us who live in less damage prone areas are already subsidizing those who choose to live on the waterfront, or on cliffs.

Then what is the purpose of these changes?
As you say the whole system is a game of numbers already. I also am pretty sure risk is currently regionalized. I don't think my homeowners in WI is helping to cover some ocean front property. There are regional cost of replacement considerations too. Auto insurance is the same, the companies care where the car is garaged, and how far it travels from home daily.
The way this video comes off, to me, is that those localized considerations are going to be abandoned. Might be state wide first, but that is never how things stay when it comes to this type of thing.

 

[Detective D]

I'm in favor of free market economics. If you have to pay 10x insurance to cover your high-risk home, then let it be. Less people will move/live there and overall losses will come down saving the collective economy a ton of dough. ....But of course, this will never happen. It's inevitable that it will end up like state mandatory car insurance and our tax structure where the Haves fund the Have-nots.

Not to derail this topic, but check out this cool FEMA risk map and its different layers:

Map | National Risk Index

I'm in a yellow risk county, but with moderate loss. I thought it would be lower.

that is pretty cool, never saw that.
I am firmly in navy blue and surrounded by it. Might be part of why this topic caught my interest, from a young age watching news stories about earth quakes, hurricanes, floods, land slides... I always wondered why people lived there and decided I would not. As I get older it becomes less of a concern, but I do not want to see doors opened where I am paying for someone else's poor home location choice. I tend to agree with your thoughts I free market. Take care of your own business, don't make a fool choice on where you put your family home, that type of thing.

 

[Ron H]

In WI wasn't that long ago auto insurance wasn't mandated. People I knew got smacked by driver's w/o insurance and they didn't have a pot to piss in to collect squat - and we, the insured, had to pay 'Uninsured Motorist' coverage. With all the shootings and crashes in the hood, daily, who's paying for the hospital bills and property damages?

 

[YY1]

Home insurance is governed and marketed at the state level, so no, I'm not subsidizing the CA fires damage, but I am subsidizing the FL hurricane damage.

Sometimes, though as is the case here, the haves get subsidized by the have less'

 

[YY1]

I didn't watch the vid, but the OP's description says "...they (insurance companies) will be required to cover homes..."

That's not the same as- "homeowners will be required to purchase insurance".

IMO what needs to happen is a more realistic pricing model needs to be put in place wherein the more "at risk" homes have a more proportionate premium, that perhaps would actually discourage building or buying in those locations by those who can't really afford it.

...while at the same time, giving those of us who don't choose to live in those locations a break.

We've never filed a claim on any of our properties, despite having some minor hurricane related damage from Irma.
Those two roofs were borderline in need of replacement before, so we just paid for it ourselves.
Sure, we could have claimed them, but then what would our rates be?
Shouldn't we get some kind of discount for that?

Another issue I have is that there really no way to see how claims affect rates.
It is purposely muddied so the homeowner cant single that out as the reason.

 

[wahya]

I didn’t see anywhere on that article about homeowners mandated to have insurance on their homes. It seems to me that it’s about requiring companies to insure homes. The mortgage lenders, at least in these parts, are the ones that require the insurance to protect their investment. Our state run insurance, citizen’s, the company of last resort, is being overrun. If you don’t have a mortgage and you decide not to get insurance and your home gets destroyed, I guess you are out of luck. (Unless fema bails you out?)

 

[cr8crshr]

Home insurance is governed and marketed at the state level, so no, I'm not subsidizing the CA fires damage, but I am subsidizing the FL hurricane damage.

Sometimes, though as is the case here, the haves get subsidized by the have less'

Partially true...If it is a nationally admitted Insurance company doing business in said State then all other insureds with that company throughout the country are in essence funding the losses incurred in other States in a Mutual agreement. It is calculated by Experience Modification tables based upon loss ratios from income...premiums... versus loss payouts. I have said many times on the Insurance question here that it is nothing more than a legalized Ponzi Scheme. The Insurance companies get rich while we get to take it in the shorts by extortionate rate increases and penalties for just doing our due responsibility. One can never win...cr8crshr/Bill

 

[Cranky]

I’d like to chime in, but it would likely get ‘political’ so…

It's pretty much already political.....

 

[Cranky]

I didn’t see anywhere on that article about homeowners mandated to have insurance on their homes. It seems to me that it’s about requiring companies to insure homes. The mortgage lenders, at least in these parts, are the ones that require the insurance to protect their investment. Our state run insurance, citizen’s, the company of last resort, is being overrun. If you don’t have a mortgage and you decide not to get insurance and your home gets destroyed, I guess you are out of luck. (Unless fema bails you out?)

Yup and I doubt FEMA will bail ya out.....

 

[Ron H]

Spent 16 years in the property/cas/work comp industry. The latter was a state actuarial calculated rate based on the nature of business (ex. foundries paid more then a T&D shop) called WC classifications. Rates were based on the claim experience over 5-years for that class of biz. No need to say foundries typically have more losses than a tool & die shop. Premium further refined by the insured’s loss experience w/in their class code – premium modification. Average was a 1.00 figure, worse could be anything above it, such as 1.50, better could be 0.75. This multiplied by their stat-premium resulted in a 50% prem debit (increase) or 25% credit (decrease) in these examples. Motivation to control their claims experience. Not unlike how insurers apply premium/rating based on their insured driver’s accident history. There are risk-calculations for it down to a ‘T’ as is for home ins.

Large corporations often are self-insured having enough cash, good safety performance – line of credit, to cover their losses up to an agreed/allowed sum. Insurers have insurance, re-insurers – another insurance company who enters when a claim exceeds a given amount. Say the front insurer taps their re-insurance, if a claim exceeds $250 million, their reinsurer then starts paying the amount above, until that sum is exceeded, say that arrangement caps at $100 million, then there’s more - reinsurers on top of the first reinsurer who enters if the claim exceeds, in this case $350 million. A few similarities with deductibles, an insured wants to have a minimal deductible, their premium will be higher.

The age-old lingo in insurance is ‘spreading risk’. Reason why insurers will limit their number of policyholders in certain areas. Insurance began with a group of shipping operators when pirates were around, these operators pooled their money together to cover the loss of one of the group’s ship by pirates or storms avoiding their demise. That worked similar to how self-insured org’s work today, before ‘insurance companies’ came around. Same deal with health insurance, coverage 'starts' after one pays out 5 or more grand...deductible to avoid an insane premium, if this can be had.

 

[toolmanmike]

It's pretty much already political.....

Been watching since the first post.

 

[5.7 hemi]

When I lived on the Central Coastvof Commiefornia, AAA wouldn’t cover my home. Pissed me off to no end after having both auto/home with them for years. They said it was due to Fire Risk. Ok, but there’s a fire hydrant 25 ft from my house on my property and we live in a sub division of 1+ acres. It was all DIRT! But they said they wouldn’t cover it. So I got Geico. And after 6 months AAA called to ask if I wanted to add homeowners insurance to our car insurance, told them to pound sand!

 

[toolmanmike]

Speaking of car insurance, we have our house insurance with American National. I also have my collector car insurance through them. If I don't have any claims I get a refund check every year. It's a couple hundred more than my car insurance costs. Just sayin.

 

[moparedtn]

I'm in favor of free market economics. If you have to pay 10x insurance to cover your high-risk home, then let it be. Less people will move/live there and overall losses will come down saving the collective economy a ton of dough. ....But of course, this will never happen. It's inevitable that it will end up like state mandatory car insurance and our tax structure where the Haves fund the Have-nots.

Not to derail this topic, but check out this cool FEMA risk map and its different layers:

Map | National Risk Index

I'm in a yellow risk county, but with moderate loss. I thought it would be lower.

Excellent link, thank you for sharing that.
Always love seeing the "Risk Index is Very Low" slathered all over my county here.

 

[Ron H]

Excellent link, thank you for sharing that.
Always love seeing the "Risk Index is Very Low" slathered all over my county here.

Never know what could happen, but where I’ve resided, can’t recall many fed emergency aid for squat. Lucky? I’d say more a that than any skill. For years, before I retired, had dreams of moving to a warmer climate. Hate winter. Been rather mild past several years. Lol, had thoughts of planting a Palm tree to see if it would survive. Hell, several trees I planted, supposedly for our climate, croaked!

Have old bud’s who moved south and west. Moved my kid to Miami for her job – in July! Oly chit hey. Several visits there during different times of the year. Nice for like four months. Bud in the SW sent me a photo of his thermo in July – another oly chit, was far beyond the scale. He says can’t do squat outdoors during the high-summer.

So? It’s total crap here from Dec-April - 4 months. Really reliably decent? Ok, admit, count closer to five. Been all over the country at all times of the year (most biz travel). MO, by and large not quite enough to prompt me to pull up my deep roots here to move. Compelling though as where you reside I think gives another good month or so of nice weather. You can answer this better than me, lol.

 

[YY1]

My entire philosophy regarding insurance has been to be as close to "self insured" as possible.

I tend to choose the lowest cost, least "extra benefits", highest deductible type of policy available.

...and at the same time contribute the savings to a "big pile of cash", in case something happens.

The benefit should be obvious. (hint- it's the big pile of cash), but it takes nearly an iron constitution to keep that pile of cash and not use it for other purposes.