Perhaps the most interesting part of the article:
This is starting to feel more and more like a planned property grab.
Unfortunately whether intentional or not I think it’ll play out that way specifically for those who could not afford, with time and money, to re-build their homes and buy a new place to live.
For example, parts of Altadena, CA were exempt from redlining, so there is a majority black and brown homeowners in certain neighborhoods who have owned their homes for many years. They couldn’t afford their $1M+ house in today’s market. Insurance will pay them out, but there’s nowhere to live in Altadena now. Maybe some will lease while their home is being rebuilt, but I think many will cash out and buy a new home somewhere else, leaving a lot of opportunity for investors to buy up land and build for-profit housing.
Of course, we now know that insurance companies will not cover some of these properties so may not be a valuable investment, but the community will be forever changed, and I would be surprised if that didn’t include further gentrification.
What? How is it a property grab if no one can live there? Only the stupidest and/or richest people would buy an uninsurable home. You can’t get a mortgage without insurance, because the banks want to make sure they still have an asset to repossess if you default. Even if you were that rich, why would you throw your money away on something that will almost certainly be destroyed, sooner rather than later, without a way to recoup any of the cost? If a company like Zillow comes in and snaps up all the uninsurable homes in these regions, they’ll be declaring bankruptcy within 5 years.
Maybe? They’re not sure if this guy is linked.
Warning: MSN link ahead:
Alleged Arsonist Arrested In Los Angeles Amid Deadly California Wildfires: What We Know
ETA: Also, 3 fires started all at once looks a little wonky in January.
Edit 2:
…though law enforcement officials have said they cannot confirm a connection between the arson suspect and any of the deadly fires currently burning through California.
One of the women involved in the citizen’s arrest, Renata Grinshpun, told local news he had a “propane tank or… like a flame thrower” and that someone saw him “behind a van, trying to light something on fire.”
Any spark that wasn’t dealt with immediately during Santa Ana’s that severe (60-100 mph gusts, constant wind around 40 mph), and during a severe drought, AND with humidity below 20% was going to blow up.
It is wonky that it happened in January, because historically that’s when we’re getting rain, but that hasn’t happened this water year. For all practical purposes we’re still in the dry season.
Yeah, but they caught a guy with a torch blower trying to start fires. I don’t know if it’s arson or not. I hope not, this is horrific.
Yeah, it sounds like he is responsible probably for the Kenneth fire, which started after the winds had died down a bit. Still enough wind to kick it off (regular 20 mph gusts), but it wasn’t hurricane force winds like Tuesday when the Palisades and Eaton fires started. I’m skeptical that any arsonist is fire happy enough to also get clonked in the head by flying debris.
I can see why you’re pretty confident, but I don’t think you can be 100% confident that these weren’t all started. We’ll have to wait and see. They’re usually pretty great about figuring out what happened.
That’s honestly really impressive. The majority of the evidence has been incinerated by thousand-degree fires and covered in sea water and firefighting foam by the time investigators get to it.
Not if their cameras were sent to the cloud before they were engulfed in flames.
I think it’s much simpler honestly: fires like these have been happening every year in California for the past hmm… at least 5 years, maybe more. Insurances are simply catching on and doing what any for-profit company would do in this situation, avoid losing money.
Definitely more than 5 years. I still remember some fires back in 2009 that we’re jumping the freeways and I had to wait over a day and travel almost triple the amount of time to make it back home while being worried the whole time that my family’s house would burn down.
Yeah I said at least 5 years, cause I haven’t been here forever, and also it seems they’re getting worse in the last few years, though maybe that’s just my biased perception.
Malibu hills fires happened almost every year 20 years ago. Maybe not in areas with homes but it’s hardly surprising from the outside looking in. Still pity the folks.
Wildfires are part of the ecology for basically the whole state. Most of the native plants here have evolved to actually depend on and co-exist with routine fire. It’s completely normal and natural for this state to burn. The problem is that for 100 years we decided that it should never ever burn at all, so there were many areas of the state that should have burned at least once every ten years that sat there and accumulated unnatural amounts of growth and fuel for ten times that long. So, when we got hit with a megadrought and a fire finally did happen in those places, it was a crazy slate-wiped fire that nothing survived instead of a manageable brush fire that plenty of things would grow back from next year.
Now, is it all bad land management? No, a bunch of shit came together at once to make this message:
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California was caught in a mega drought for the better part of a decade and we’re still years from our groundwater returning to where it was before the drought.
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The Japanese pine beetle killed a lot of pine trees, and that’s most of what there is in the Sierra range (yes, there are some oaks and other things, but, well, we’re getting there, hold on). So many trees died where they stood that dealing with them all was a nearly impossible task, and beetle-killed wood can’t really be used for anything (don’t ask me why, but when I was wondering why nobody had come to get all this basically free wood just laying around, that was the answer I got). So, you had huge, huge stands of beetle-kill just standing there, getting drier and drier, waiting for a spark.
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The drought also severely dried out lots of other vegetation. There’s people I know in the Sierra who said they didn’t even have to season their fresh-cut wood. Just chuck it right in the fire, no problem.
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Fucking PG&E decided they didn’t need to follow best practices because that costs money and spending the money your consumers pay you on stuff that isn’t bullshit makes PG&E a sad panda. So, they stopped cutting around their power lines. As someone who partly grew up in the southeast US, this fucking melted my brain. Georgia’s a pretty wet, green state, and Georgia Power clear cuts everything down to shin height for probably 50 meters to either side of their transmission lines. Humid-ass Georgia decided they needed it, but we’re totally fine to skip it in the Phoenix state, yeah, that makes sense.
So, is climate change to blame? Mostly, yes, climate change is a big, big part of why we’re here. Hotter, drier weather with shorter, more intense rain delivery means that the vegetation gets dry faster and stays dry. It means there’s less water to fight fires with. That said, it’s not the whole picture. There’s other ways we could be doing stuff better.
PG&E absolutely should have faced criminal charges for pulling that… I remember hearing it was also equipment maintenance, which the state even gave them the money to do, and they just gave it to their shareholders as dividends instead
Wonder if a nationalized or state-owned utility would have actually invested those funds properly.
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There was a wildfire in the area last month. A couple years ago, a wildfire burned down a bunch of Malibu, a few miles away. I would be very surprised if wildfires in the area stop happening.
I think that maybe the most-reasonable solution is for insurers to just ramp rates way up unless a home is built to be extremely fire-resistant – just assume that there are going to be wildfires that dump embers in the area sooner or later, and that if your home isn’t constrained such that it is able to withstand being showered with embers without going up in flames, that it’s going to be insanely costly to insure, because it’s likely to burn sooner or later.
The problem is that it just makes more financial sense to just not insure the area. The property itself is wildly expensive and then the owners are sure to lawyer up if they don’t get exactly what they want. Makes more sense to just not issue policies.
The problem is that it just makes more financial sense to just not insure the area.
There is always going to be some price at which it makes sense for an insurer to insure a property, as long as they are not restricted in what price they can charge.
They are restricted. California has an insurance commissioner who has to approve any rate increases. It’s probably easier to stop insuring then to get the rates up to the profitability margin their risk models are suggesting are appropriate.
Even if one specific house is a concrete bunker, if it’s in the middle of normal homes, the bunker still faces potentially 1000 degree temperatures from surrounding homes, and shit’s going to burn.
You could pave everything; put in some 100-yard paved firebreaks; who know what else. Or you could just accept that there’s going to be a lot of climate refugees fleeing high risk US states. All the heads-in-sand people thinking it was just Tuvalu and Kiribati at risk going to wake up and find out it’s LA and Miami, too.
and shit’s going to burn.
Having a house next door burn doesn’t entail that your house burns. You can see video from this fire of people walking around next to houses on fire – they aren’t spontaneously combusting. Heck, I had a relative who had exactly the not-burn thing happen to them in this fire – the house next door burned down, but theirs didn’t. And it’s not hard to see that that has to be the case, or once one house in a city burns, the whole rest of the city would too. That didn’t happen even in this fire, or there wouldn’t be a Los Angeles left.
You can constrain how your house is built. You can have one of those counter-wildfire systems that has large tanks of water kept on-site and a generator-driven system that sprays it out over the property in a fire. I’m sure that there are others. They aren’t necessarily cheap and some aren’t pretty, but you can do buildings that can pull though fires.
Yeah, one house on fire next to you is probably fine, although I’ve seen that melt the siding off neighbors. All the houses on your block, especially when those houses are only separated by 6 feet, is a completely different situation.
Insurance companies wanted to raise rates… The insurance commissioner said no. So a lot are leaving.
Same for cars, getting a lot harder to find car insurance in Cali was well.
Meanwhile the insurance companies are throwing parties right now for pulling out ahead of the disaster. Probably tweaking their models to make sure they’re not at risk anywhere else.
Don’t worry though, the incoming administration will be working with local governments to prepare for future challenges… Or ignoring them and dismantling any and all efforts to mitigate climate disasters. One or the other.
I think the curious aspect of this is that business is absolutely aware, and acknowledges existence of the climate change.
They should be putting in effort to reduce climate change impacts. It’s in their financial interest, even if they have no capability to have a moral motivation
I’m pretty sure these gamblers will profit all the way down.
If they run out of people/places that are profitable to insure any more, there won’t be any profits to make.
lol dude climate change has been in companies’ drawers since the 1970s, for example shell and such. they just acted as if they didn’t know to continue selling at record speeds.
Insurance companies are scummy but the headline phrasing makes it seem like they JUST canceled the policies…but no, it was 6 months ago.
As much as I want to hate them for it, can you really blame them? Insurance operates under the measured assumption that most people won’t have to use it for some major. When wildfires become probable, it’s almost guaranteed to cost them exponentially more than homeowners paid in premiums.
Even if insurance cost $50,000/year, it would take several years of payments to cover the payout. And California has wildfires yearly.
For some reason you made me think of banks being covered by government insurance. In a way you’d think the government would also insure land, seeing as that’s one of the main things they protect.
The logistics would probably be horrible for that type of thing though.
Government can print money when appropriate and not abused. Payments directly to the general public are the best type of stimulus. Take a bad situation and make it a stimulus.
Part two though has to be that they are not allowed to receive a payout more than once or make it illegal to build new construction in wildfire zones until they have figured out the forest management issues.
There aren’t really forestry issues at all.
Practically everywhere is a wildfire zone though. Yes we need much more forest management, infrastructure hardening, fire resources, etc, but giving folks a one time payout and then they move to another area that gets destroyed and now they don’t get support doesn’t seem helpful since we can’t really predict what will burn. It’s simply harder than e.g. flood mapping.
You don’t have to drop the entire area though, you just have to drop forest fires as a claimable item.
Then people can make a decision on if that’s okay for them, or try to find someone else.
Would this not most likely still cause the same kind of financial collapse in the housing market that was mentioned as a possibility in the article linked by OP? If it is not possible to get insurance for an event (i.e. wildfire) that is likely(/definitely going) to occur, then I imagine buyers/real-estate developers would be less inclined to pay high prices in those regions.
I think we’re likely to see a collapse of housing markets in places like CA and FL no matter what.
You just can’t live any place and in such a fashion as shall certainly result in a loss
I’d think so, but just to a lesser extent?
I know some areas have laws mandating certain minimal coverages. I wonder if the insurers would even be allowed to issue policies that didn’t cover wildfires.
If that’s the case, we might see some laws changing in the near future.
As much as I want to hate them for it, can you really blame them?
Yes; go sue big oil who fucking knew since the 60’s climate change was inevitable if nothing changed. Make those fuckers pay dearly.
Especially for the palisades $3,500,000 homes.
At $50,000 a year it would take 70 years of payments.
Well, it should be proportional to the value they’re covering * the risk of loss, so they’re probably paying much more than $50000/year.
This is why insurance shouldn’t be for profit.
I think you might have missed the point.
I mean it would be great to have some kind of socialised home insurance that wasn’t “for profit”, but such a scheme should still refuse to insure homes which are likely to burn down.
That probably sounds good in your head. But you are only thinking of fires. What if they just pick the highest risk factor for every house and refuse to cover that. Then what would be the point of the insurance. And if you consider all the houses that are a high risk for something… fire, hurricane, flooding, high winds, tornadoes, earthquakes… you aren’t left with many houses.
What a silly thing to say.
Obviously, if one insurer refused to cover what ever thing, they would lose all their customers to other insurers who covered sensible risks.
The point is, you can’t insure against risks that are too likely to occur.
Let me rephrase. If they refused to insure any house that was a high risk for one factor. That would be a very sizable chunk of the country. Even if they only refused to insure it for the thing it was high risk for, it would make unsurance on the house pointless. Flood zones and wildfire zones particularly are expending every year. Hurricane zones used to be ok to insure because hurricanes didn’t hit too hard too often. But they are stronger and more frequent, so much of Florida has a very short list of insurers which will trend to zero in the near future. While I agree everyone should move out of florida because of the shitty politics, that isn’t really practical.
The cost of insurance needs to equal the risk though.
If a house is going to get burned down every year, who pays to re-build it?
It isn’t practical to expect everyone to move out of florida, but climate change is impractical.
Thats why i pointed at building codes. Require building that will survive the threat. Then people will have to pay more for them which discourages people from building in those areas at least.
Insurances need to cover their expected cost with the rates, otherwise they won’t be able to cover in case of an incident. Nobody will run an insurance expecting a loss, and you can’t force anyone to.
The alternative is like when we had flood that the state bails out the boomers who bought houses when they were cheap in areas where insurance won’t insure because of risk, paid with taxes by people like me who have a hard time acquiring property because taxes and other cost are so high due to decisions their generation and earlier ones made.
Of course, this is somewhat exaggerated; they also pay taxes. But it’s also not completely wrong.
In the particular case of a previous colleague’s house getting flooded, I always had to think of the fact that she chose to fly a certain route for work to save about 2 hours because it’s just so much more convenient than the train.
I mean it would have happened with it without her flying, but still thought about it.
They could cover a lot more if they didn’t need to make billions in profit. But your general concern is valid. What stops people from building in extremely high risk places. The answer should be federal building standards. If a house is built in a high risk area, it must have mitigating features that protect it from the high risk, or it can’t be built. Local building codes already do this sort of thing. So this is just an extension of something already done. Most people don’t know which areas are high risk for what. So don’t penalize them for getting duped. And in many cases the house wasn’t in a high risk area when built. So there needs to be funding to upgrade those houses to reduce the risk. That should come from the industries that profitted on ignoring the effects of thier industry in exchange for great profits.
I’m sorry, are we just skipping over the regulations that caused these companies to pull out? Most of these homes would still be covered. They’d be paying a higher price, but they’d be covered.
When you put a legal cap on costs, the company will pull out.
Turns out when you say you cannot charge more than x for a service that costs y to provide, and y>x, no one can sell the service.
Insurance companies fucking suck, but too many think their profits are the ONLY reason there is a problem.
Yea that’s just basic economics.
Maybe we should have rules in place that provide more protection for actual human beings instead of prioritizing profit margins or pretending that “Basic Economics” is a universal law rather than a guideline of how people interact with each other. Sorry, I’m not mad at you, just the system we live in
We, did, they were pushed to the side. Those rules and protections were building more reservoirs, keeping those and the current ones full of water, continuous upkeep on fire hydrants, rehiring firefighters who were fired for not taking the vax, regular controlled burns, clearing out the undergrowth, not dumping water into the ocean after rainfall… So, so many that were completely abandoned.
You seem to think the prices for fire protection came out of nowhere, but they don’t. As these precautions were abandoned one by one, fire insurance went up, because the likelihood of a fire grew exponentially. When government put a cap on price, that effectively made it clear that the company would go bankrupt, completely, because they knew a fire was going to happen eventually.
We should be mad that those very protections put in place to help people were taken away by the government, not the companies.
Por que no los dos? The government is NOT faultless in this, but how often are those regulations removed because a company lobbyist
bribed themhinted very strongly that they would like that?
Funny how the rich argue with climate change when it benefits them. For decades they denied it fiercely and now it’s time to pay… even if we take all from them (which we should) it’s not enough repair the damages their behavior caused.
There are many blue voters who live in areas affected by the Palisades fire
Blue voters that happily generate more carbon that most of us.
If you have the type of money required to live there you no longer get to be a voter, you gotta be a doer
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They do when you cram them full of black people and leave them to rot.
WTF‽
I was trying to respond to the comment I’ve copied and pasted below. Apparently Lemmy never lets you delete misplaced comments
So, projects? I would love to see a solution to home prices and the inequality they create but I think projects have been shown to work out poorly in the US.
The issue isn’t just local. “This is predicted to cascade into plunging property values in communities where insurance becomes impossible to find or prohibitively expensive - a collapse in property values with the potential to trigger a full-scale financial crisis similar to what occurred in 2008,” the report stressed.
I know this isn’t the main point of this threadpost, but I think this is another way in which allowing housing to be a store of value and an investment instead of a basic right (i.e. decommodifying it) sets us up for failure as a society. Not only does it incentivize hoarding and gentrification while the number of homeless continues to grow, it completely tanks our ability to relocate - which is a crucial component to our ability to adapt to the changing physical world around us.
Think of all the expensive L.A. houses that just burned. All that value wasted, “up in smoke”. How much of those homes’ value is because of demand/supply, and how much is from their owners deciding to invest in their resale value? How much money, how much human time and effort could have been invested elsewhere over the years? Notably into the parts of a community that can more reliably survive displacement, like tools and skills. I don’t want to argue that “surviving displacement” should become an everyday focus, rather the opposite: decommodifying housing could relax the existing investment incentives towards house market value. When your ability to live in a home goes from “mostly only guaranteed by how much you can sell your current home” to “basically guaranteed (according to society’s current capabilities)”, people will more often decide to invest their money, time, and effort into literally anything else than increasing their houses’ resale value. In my opinion, this would mechanically lead to a society that loses less to forest fires and many other climate “disasters”.
I have heard that Japan almost has a culture of disposable-yet-non-fungible homes: a house is built to last its’ builders’/owners’ lifetime at most, and when the plot of land is sold the new owner will tear down the existing house to build their own. I don’t know enough to say how - or if - this ties into the archipelago’s relative overabundance of tsunamis, earthquakes, and other natural disasters, but from the outside it seems like many parts of the USA could benefit from moving closer to this Japanese relationship with homes.
I see this sentiment frequently. What I don’t see, though, is how this can cmbe achieved short of government owned uniform housing. Maybe I’m missing something, though. Can you helpe understand?
With regard to Japan, you’re right, single family homes aren’t intended to last all that long. This is largely because building standards there change so rapidly thst building something that lasts means that you wasted money. Even if it is built to last, it will fall out of code in a way that it will devalue over time.
That doesn’t happen in the US because we don’t have the same frequency of disasters and the same rate of change in building codes. Maybe that will change moving forward, though, given the increased frequency of disasters in the US due to climate change.
We could take notes from Finland: https://pulitzercenter.org/stories/look-finlands-housing-first-initiative
Throw a few of these up in every city. Would go a long ways quickly to solving problems.
So, projects? I would love to see a solution to home prices and the inequality they create but I think projects have been shown to work out poorly in the US.
They only work out poorly in some plsces due to neglect. You have to give social services to the residents.
Because we didn’t do them properly (in many cases, intentionally). For an example of public housing done right, all one needs to do is look to Finland: https://pulitzercenter.org/stories/look-finlands-housing-first-initiative
I swear to God it’s like my countrymen saw a rap video shot in the projects when they were young, and now think the crack epidemic was the fault of public housing.
Oh good megablock housing. I’m sure that won’t be abused in any way whatsoever
As opposed to the suburban sprawl we have now? Every lawn fertilized, every driveway 2.5 cars? Or the shanty towns?
It turns out building housing is as easy as building housing. I would absolutely live in one of these if they were correctly managed. A half a billion Chinese people can’t be all that wrong.
Can’t be wrong? I’m gonna have to point you to Kowloon. Kowloon was pretty wrong. They didn’t call it the city of darkness for nothing.
Using kwaloon walked city is disingenuous AF. Kowloon was a shanty town left to its own devices, governed neither by the British or the Chinese due to a quirk of geography and diplomacy. Kowloon (the walled city area now a park, not to be confused with the neighborhood) was never built to any sort of plan.
At it height kwaloon had 40,000 people living in it. In hong Kong alone there’s now close to 10million, most of whom live in apartment buildings. It can work. It does work. Every day.
I swear to God it’s like my countrymen saw a rap video shot in the projects and now think the crack epidemic was the fault of public housing.
Actually I saw dredd cause Karl urban is rad af. We don’t need more Peachtrees. We need to eradicate Airbnb and make the housing we already have accessible to the people that need it and barred from the people that hold property for profit.
People need space in the same way that some people need religion. It’s not actually necessary until you consider comfort along with efficiency.
Really cool idea, and comment. I think it would reduce money tied up, but still, would require significant investment to build and maintain
As far as the value of the home, you need to consider rebuilding costs. New construction costs in the LA area are on average $440 and higher for custom work.
At those prices, a new house, without the land, will cost at least $500000 to build (also note that a 1130 sq ft house isn’t really what most people want to buy, as the average new house size is around 2000 sq ft, putting the cost of a basic house at $880000, again without the land).
While I mostly agree with your line of thinking, I do feel the urge to point out that most of the value of property is tied to the land underneath the structure, rather than the building itself.
This is largely why one of those Sears catalogue 2-3 bedroom post-war homes is worth significantly more than a similar footprint modern apartment/townhouse a few doors down.
The houses themselves are often seen as a depreciating asset; and for the more unscrupulous land-bankers, these fires just became free demolition.
I guess what I’m saying is, shit’s even more fucked than you thought… and until we get rid of milquetoast liberal politicians and replace them with actual populist progressives globally, it will only continue to get worse.
Louisiana be like, let’s add a few more refineries, and a ethane cracker plant for good measure
Insurance, both property and health, is completing it’s morph into a parasitic value extraction tool with zero actual use. They are committing straight fraud at this point, daring people to sue them for contract breach, knowing many won’t
Always has been.
Health insurance yes. But property insurance has a use, but these companies have ceased actually providing that service.
I agree with the first sentence, but I don’t think there’s a lawsuit here as the contracts that you sign with them have a limited term and they are simply not renewing
The map below shows rates of home insurance nonrenewals in recent years. You can explore your state and areas with the highest rates in the country, including California and Western states facing wildfires and Eastern Seaboard states like Florida and the Carolinas with elevated hurricane risk.
This is what fucking insurance is supposed to be for. It’s not a way of making obscene profits. It’s a way of making reasonable profits providing a service people need.
The US government ought to require insurers to ensure everywhere had a reasonable cost, or get out of the fucking business. They ought to require a base rate everywhere across the nation. Let everyone see what these fuckers are up to.
In Florida the state insures the highest risk people. It’s the same damn thing. Should we let the insurance companies have the low risk clients while we the people fund all the high risk clients?
That’s bullshit.
The US government ought to require insurers to ensure everywhere had a reasonable cost, or get out of the fucking business.
That’s literally what’s happening at the state level in California. And the insurers got out because they can’t cover their operating expenses while charging what the state considers a reasonable cost.
It’s a way of making reasonable profits providing a service people need.
And 6 months ago they saw that they were likely to take major losses insuring homes in that area so they stopped renewing policies. So the options were to use the last-resort state provided insurance (FAIR Act), go uninsured, or move. A lot of people didn’t switch to the state insurance.
They’ve been collecting insurance payments on those houses WITHOUT LOSSES for many months. What happened to the money they paid over the years? Just consumed and forgotten by insurance companies? You pay $2000 a month for 360 months and then they decide to drop you and you have no coverage? That $700k+ you spent doesn’t count?
With life insurance there Whole Life, where you pay until you’ve paid enough to make the value of the policy and then you stop. This problem could CERTAINLY be fixed. It will have to be legislated, though.
That’s an entirely different argument, and your math is way off.
You pay $2000 a month for 360 months
I’m pretty sure the insurance is closer to $2000 per year. So $2000 per year for 30 years is $60000, which is not going to cover the total loss on a $300000 home. $2000 per month would be on something like a $10million home.
They’ve been collecting insurance payments on those houses WITHOUT LOSSES for many months.
If there had been no losses, people wouldn’t have needed insurance. There are 1000s of homes insured and some percentage of them will have had some amountof payouts from the pool of money. Insurance pays out for lots of different types of losses, and they have to weigh the risks. They’re not charities.
Don’t get me wrong, insurance is a racket and they will do everything they can to deny coverage and stuff the pockets of their investors. But if you want to force them to provide coverage when there’s pretty much guaranteed losses, they will just exit the business altogether.
I lived in a high risk area, in a $300k 1400 ft² home, and my insurance was 10k a year. I scaled the numbers up for California. You don’t think those people weren’t already paying through the nose? You think they were insuring a 3M home for 2k a year in a high risk area?
Pacific Palisades had 2 fires in 2009, nothing compared to this, and none of these houses were affected. No other major disasters.
I’m sorry, I want to respect your opinion, but you live in a dream world.
I didn’t say 3M home I said 300K home. https://www.policygenius.com/homeowners-insurance/california/los-angeles/
LIFE’S TO SHORT TO COUNT ZEROS!!!
How about no profit?
Risk makes insurance unaffordable or unavailable
Insurance should really always be available at some price if you don’t cap prices. It might be ludicrously expensive if insurers consider the area to be extremely risky – and this area has had serious wildfires in past months and years, and I’m sure is probably considered to be quite risky – but there’s going to be some price at which they should make a return, even if they think that there’s a pretty good probability that the house is going to burn in some kind of fire in the next N years.
If you don’t cap prices on something the insurer is expecting to be destroyed, wouldn’t they just set the price of the policy to be the price of the thing it insures, effectively making it worthless?
It most likely would just be a significant portion. Once a place is hit by fire, it takes a couple of years to be as susceptible again. Or, if it’s not been a recent hit, the odds of any individual place being hit in a given year is probably sub 25%.
So the insurance company would probably charge something like 20-25% of the value. Which, yes, is hugely unaffordable for 99.9% of people. But if you’re super rich is probably still worth it, as the reason the price is that high is that there’s a pretty good chance your house burns down in the next year or two, so you would come out ahead in that scenario.
Then again, once you’re rich enough to afford that level of insurance premium, you’re probably rich enough to just float the risk yourself. So yeah, probably pretty worthless across the board, even at levels fairly significantly lower than 100% of the replacement cost.
It’ll go up, sure. There’s nothing magical about the price of the property, though, as a line for making insurance worthwhile. You pay an annual rate, and an insurer will just expect that whatever you’re paying over the will pay for the cost of the property within the period of time until they expect the property to burn on average.
If it’s a hundred years, it might be – discounting, for simplicity, the time value of money – 1% of the property value annually. If it’s six months, it might be 200% the value of the property annually. The 100% mark isn’t a special line in terms of insurance making sense.
It’d certainly make the property more expensive to own as that percentage goes up, but that’s true whether you insure it and spread that risk over many houses or don’t insure it and pay for the loss of the thing yourself.
Isn’t it though? If my choice is to pay 200% of the value of the property annually or to not have insurance, why would I opt to have insurance? The best they could do is pay out less than I paid them.
Say I plan to sell the house in three months and want a three month term, maybe.
What you propose is illegal in California. It seems like a mildly counterproductive law, but I can’t imagine it would make much difference if they were allowed to offer policies nobody can afford anyway.
i kinda disagree. no business or government should be required to provide insurance just because you built a structure.
some things can just be not insurable.
If there was no cap on insurance, the market would absolutely fix the “uninsurable” problem. It might cost $90k a month to insure your home, but since they fully expect it to burn down in a few months, they’re likely to take a loss on that insurance.
Yeah. Insurance is for unexpected disasters. Building a house in a wildfire zone, tornado alley, or flood plain, those disasters are expected.
The challengee is (at least) two-fold: (1) existing homes that were once not in wildfire zones are now in them due to climate change, (2) some of the reason building is allowed into fire zones is to alleviate housing availability.
I’m not saying that offering insurance to a given property owner should be mandated, but that there’s always some price at which providing insurance is worthwhile to an insurer.
Like, say State Farm’s model predicts – as it probably correctly did here – that a house is most likely going to burn in the near future. Say the next two years, on average. Your annual fire insurance might be half the rebuild cost of your house, but they can still offer it, even at those levels of risk.
Tell that to the banks that won’t give you a mortgage loan without insurance.
Tell them what? Banks should not be offering mortgages on homes that are at to much risk to be insured. People simply should not be living in areas where wildfires are a near certainty.
The insurance companies had an obligation to maximize shareholder value. That is the sole purpose of insurance companies.
This is a really dumb take. Pulling out of a market where it’s impossible to even break even is not greedy or corrupt.
Yoink goes the coverage that you paid into!
And the shareholders rejoice.
Your homelessness is a you problem. You should have paid for some coverage in the event of such an occurrence.
That’s not how it works at all. You’re thinking of health insurance. This thread is about insurers declining to renew contracts, not denying claims.
This thread is about insurers declining to renew contracts, not denying claims.
So hanging around to extract insurance premiums for as long as possible, then fucking off before they have to start making any of that money flow in the other direction?
FFS, no. Do you even know what insurance is? They are always on the hook to make payouts for any policies that are active, and it happens regularly. Most of the money they take in goes toward paying claims. Most of the rest of the money goes toward overhead, which includes paying actuaries to evaluate how much risk they’re taking on and how much future payouts are going to cost. They determined that providing homeowners’ insurance in CA would soon cost them more in payouts than the state allows them to charge in premiums, so they decided to stop doing business in CA. Nobody was scammed. Their customers all got what they paid for while they were paying for it.
This reads like apologia for the insurance industry. Note the glaring absence of you mentioning their fiduciary responsibility to maximize shareholder value. I can almost see the vein on your forehead throbbing as you try to explain what insurance is to me. I understand how insurance works, but am resisting the almost overwhelming urge to reply KenM style.
Yoinking an insurance policy for my Fabrige egg collection, because I won’t stop juggling them? Cool.
Yoinking coverage for my my home, which I’m basically anchored to (proximity to work, schools etc.), while you slink off with your profits? Not so cool.
What does “uninsurable home” do to property values? The insurance companies will do fine, while I’m left to sort this out (lose everything).
I understand why they pulled out. Do you grasp the notion that home owners can’t instantly pull up stakes and teleport to more insurable locations? Do you understand how the non-insurability aggressively power-fucks those stranded home owners ability to salvage any equity in their homes?
The guillotines will be adorned with the Surprised Pikachu face.
Note the glaring absence of you mentioning their fiduciary responsibility to maximize shareholder value.
A lot of insurance companies, including big ones like State Farm and Liberty Mutual, are owned by their policy holders. So yeah, I made the mistake of not mentioning their fiduciary duty to maximize value for their customers.
Do you grasp the notion that home owners can’t instantly pull up stakes and teleport to more insurable locations?
What do you expect insurance companies to do about it? Keep offering policies and collecting premiums while knowing they won’t be able to pay all the claims they get? That’s called fraud.
You say they’re “slinking off” as if they’ve stolen something, but what have they stolen? You say they’re leaving with their profits, but what profits are you referring to? Do you really think they’d be leaving if they were making money?
The insurance companies had an obligation to maximize shareholder value. That is the sole purpose of insurance companies.
Look, I get that this is an easy go-to answer for many things, but please add this to expand your understanding a bit more so you have a more complete picture.
Not all insurance companies are public companies with shareholders to satisfy. Mutual Insurance companies are owned by their policy holders. Specifically with California, both State Farm and Liberty Mutual have both exited too. These are both large insurance companies that are NOT driven by “shareholder value”. Profits these companies make are issues as dividends to the policy holders, not shareholders.
So the issue of insuring property in California is more than just the standard “greedy shareholders” argument.
LifeShareholders uh find a way.
Ahahahahahahaha! Hahahahahahahaha!
Oh my god, get fucked rich people!
This makes me so happy.
What the fuck is wrong with you
Either grow up or become less of shitstain
You think everyone in LA is rich?
People with multi-million dollar houses in the Palisades, yes.
Alta Dena is most definitely not.
Still mostly million dollar plus homes. 8-12 times what my Midwestern home is worth. Hell, a freaking empty lot in Altadena is worth more than my house.
That doesn’t necessarily make them rich. The combined salaries of my partner and I would make us “rich” in some parts of the country but we rent an apartment and almost live paycheck to paycheck.
If they are not rich owning a million dollar asset, then I’m poor as fuck.
Living paycheck to paycheck doesn’t make you not rich. It just means you spend what you make. Plenty of rich people do that.
If you spend what you make, you’re not rich. You’re pretending to be rich.
