State Farm ceasing new applications in California for property insurance, other policies

[dishdude]

The question is if the citizens of the USA are ok having ma and pa American subsidizing and being liable for high risk properties, when lower risk properties are available to the people purchasing high risk properties?

The country is at unsustainable debt, deficit, liability, and entitlement levels in part because we want someone else to pay directly or indirectly for our lifestyles.

Where do you draw the line? The entire state of Florida would be off limits, most of the east coast. Texas gets a lot of hurricanes as does the midwest. California has earthquakes and tornados. Even Phoenix had major flooding a few years ago.

 

[GON]

Where do you draw the line? The entire state of Florida would be off limits, most of the east coast. Texas gets a lot of hurricanes as does the midwest. California has earthquakes and tornados. Even Phoenix had major flooding a few years ago.

There is zero line to be drawn. Let the property owners figure out how to pay for and protect their high risk property.

 

[dishdude]

There is zero line to be drawn. Let the property owners figure out how to pay for and protect their high risk property.

Sounds like a great fantasy, but then those areas essentially become uninhabitable so you'll have people moving out in droves which causes other burdens on the country that we'll all end up enduring the burden of anyway.

 

[CKN]

Sounds like a great fantasy, but then those areas essentially become uninhabitable so you'll have people moving out in droves which causes other burdens on the country that we'll all end up enduring the burden of anyway.

That is one of the most outrageous things gon have ever said......"let the property owners figure it out". Yea...sure. Good thing states regulate that you need car insurance to be on their roads...and not have -"the drivers figure it out". Insurance is a "risk pool". That's the way it is. The only way to not have it (which even then would be questionable) would be so rich your pockets have no depth and be self insured.

 

[GON]

Sounds like a great fantasy, but then those areas essentially become uninhabitable so you'll have people moving out in droves which causes other burdens on the country that we'll all end up enduring the burden of anyway.

That's funny. In 1980 on South Florida, 99 percent of all single family residences were constructed of cement block structure (cbs). Over the past 40 years, 2 x4 frame structure has become the majority in single family home construction in south Florida.

Can't afford single family home insurance in Florida? The rates in Iowa and Nebraska offers single family home insurance at pennies on the dollar compared to Florida.

But having a married family in Nebraska, one that works in a slaughter house, the other that works at Casey gas station, subsidize the risk for homeowners in high risk areas, when ample low risk areas are readily available, is simply counter to what made the USA the greatest Nation in the history of the world.

 

[dishdude]

That's funny. In 1980 on South Florida, 99 percent of all single family residences were constructed of cement block structure (cbs). Over the past 40 years, 2 x4 frame structure has become the majority in single family home construction in south Florida.

Can't afford single family home insurance in Florida? The rates in Iowa and Nebraska offers single family home insurance at pennies on the dollar compared to Florida.

But having a married family in Nebraska, one that works in a slaughter house, the other that works at Casey gas station, subsidize the risk for homeowners in high risk areas, when ample low risk areas are readily available, is socialism.

That's a very simple way to look at a very complicated issue. You could argue all insurance is socialism, what I paid in premiums went to fix someone else's car or burned down house.

 

[GON]

This

That's a very simple way to look at a very complicated issue. You could argue all insurance is socialism, what I paid in premiums went to fix someone else's car or burned down house.

This is coming
down to bickering, so I will step away from further replies in this thread.

 

[alarmguy]

That's a very simple way to look at a very complicated issue. You could argue all insurance is socialism, what I paid in premiums went to fix someone else's car or burned down house.

I dont see it as complicated at all. Im fine with State Farm not insuring homes in CA. It's a free country. Insurance isnt socialism. You dont have to pay for what you do not want in the simplest form, but you do have a wide choice of options, no one is forced to pay.

Social media has a way of convincing people that there are problems that do not exist. Life is not perfect, never was, nothing has changed in the insurance industry of the last 70 years except social media making a big deal out of nothing and something that has always been. Somehow the public believes because of social media something must be done to make someones life more easy, silly stuff. Just tell them to stay out of my paycheck.

If one wants to be a ward of the state, well, there are countries they can go to for that... *LOL*

 

[dishdude]

I dont see it as complicated at all. Im fine with State Farm not insuring homes in CA. It's a free country. Insurance isnt socialism. You dont have to pay for what you do not want in the simplest form, but you do have a wide choice of options, no one is forced to pay.

Social media has a way of convincing people that there are problems that do not exist. Life is not perfect, never was, nothing has changed in the insurance industry of the last 70 years except social media making a big deal out of nothing and something that has always been. Somehow the public believes because of social media something must be done to make someones life more easy, silly stuff. Just tell them to stay out of my paycheck.

If one wants to be a ward of the state, well, there are countries they can go to for that... *LOL*

This thread is a perfect example of social media making a big deal out of nothing and something that has always been.

 

[BMWTurboDzl]

Too many people in wildfire areas and too many fires. Insurers are sensitive to changes in climate. Higher frequency of catastrophic events combined with higher density.

 

[CKN]

Too many people in wildfire areas and too many fires. Insurers are sensitive to changes in climate. Higher frequency of catastrophic events combined with higher density.

There have been plenty of disasters in just your regular run-of-the mill suburban housing tracks. Exploding gas lines, sink holes and the like. All unforeseen by anybody or any organization.

 

[Fla]

That is one of the most outrageous things gon have ever said......"let the property owners figure it out". Yea...sure. Good thing states regulate that you need car insurance to be on their roads...and not have -"the drivers figure it out". Insurance is a "risk pool". That's the way it is. The only way to not have it (which even then would be questionable) would be so rich your pockets have no depth and be self insured.

I don't think that it's outrageous at all. The OWNER should take the risk of their property being damaged and not the general public. I live in inland Florida and nobody subsidizes my property insurance, so why should I pay a higher insurance rate to cover those people that want to live on the coast? If the insurance for beach front property isn't affordable then the owner should move elsewhere. For hundreds of years few people lived along the coasts, anywhere in the world, except fishermen and people that made their living there. But now it's trendy to live along the coasts and other high risk areas but the owners are trying to force others to pay to insure their risky property investments.

it's simple, if you want to live in a highly wooded and fire prone area then you should be prepared to assume that risk. The same goes for people living in flood planes and along an coast line in a hurricane prone area. The owners can buy insurance or take the risk of losing their property, that's up to them. But no one else should be required to help fund their life style choice.

 

[SC Maintenance]

I think the debate is getting distorted on this thread.

Per the original article - a major insurance company is not writing new policies in California. Not risky parts of California - all of California. The primary reason is re-insurers don't want to write anything in California due to extreme weather, and don't want to take the time to figure out which locations are OK and which are not.

So a family with a normal home in relatively safe Sacramento is now having the same problems getting insurance as someone in the fire prone hills to the North because some big swiss or German re-insurer doesn't want to touch California.

Same problem in Florida. Someone with a modest home in Orlando is paying 3X more because the hurricanes washed away some barrier islands 100 miles away.

I don't think there are too many that would disagree that if you build a house 2 feet above sea level or on stilts leaning off a mountain, you should be on your own. But lets not throw the baby out with the bathwater.

 

[Brett776]

A lot of talk about Florida, and it’s true rates have gotten very high. It also depends on where you’re at in Florida. I’ve lived in Florida my whole life, very inland for most of it now I live south Florida. I’m about 15 miles from the Atlantic coast and 45 min north of palm beach. My insurance is about 2500 a year. My house is CBS, with hurricane impact windows, outward opening door, hurricane rated roof, etc. My house is also only 3 years old and building codes have required more robust homes. I think I pay a reasonable rate for my location.

I have friends closer to the beach in 30 year old wood frame homes with just shutters. Their rates are 4x mine. Prices reflect risk, one risk being geography and the other construction. There’s really not too many new builds in the prime real estate area near the beach. That property was bought up long ago. Still a lot of stick homes/no impact windows here so when we get hit with a catastrophic storm these houses are demolished all at once and it bankrupts insurance.

My point is not everywhere in Florida is outrageous and the rates are better if your home is built right. Flooding, that’s a whole different problem if you’re in a flood zone. No amount of reinforcement can really solve that.

one thing I’d certain, from the amount of growth I’ve seen these rates don’t seem to be hindering anyone from moving here. I do wish we had a high deductible plan that made it more affordable for those in high risk areas/homes.

 

[CKN]

I don't think that it's outrageous at all. The OWNER should take the risk of their property being damaged and not the general public. I live in inland Florida and nobody subsidizes my property insurance, so why should I pay a higher insurance rate to cover those people that want to live on the coast? If the insurance for beach front property isn't affordable then the owner should move elsewhere. For hundreds of years few people lived along the coasts, anywhere in the world, except fishermen and people that made their living there. But now it's trendy to live along the coasts and other high risk areas but the owners are trying to force others to pay to insure their risky property investments.

it's simple, if you want to live in a highly wooded and fire prone area then you should be prepared to assume that risk. The same goes for people living in flood planes and along an coast line in a hurricane prone area. The owners can buy insurance or take the risk of losing their property, that's up to them. But no one else should be required to help fund their life style choice.

Doesn't work that way-nor ever will. If the homeowners in the affected areas had to pay the full burden (remember they do pay a higher amount, they do pay flood insurance-an extra burden already)-it would be unaffordable and very few would be able to afford to live there-and there would be a mass exodus as stated by a previous poster.

Insurance is a risk pool-if you don't like the system you could be self insured-if you have the means. If you don't-you are playing the game as well-we all are. You don't know all the factors you rates are based on. Sure it's risk, but also credit history, claims and other things we as the public are not privy to.

You may feel that way but it's not going to happen.

You have medical insurance? OH-you probably like being in that risk pool. Especially if you are past 65.

If you get some terrible life threatening disease-we are all paying for it. OR-you shoulder the entire insurance costs for treatment. Think about it....

 

[PandaBear]

My take on insurance, especially home insurance:

It is a risk pool like a casino, you gain sometimes you lose sometimes, but are you feeling lucky? Some large companies decided to self insure and they are big enough to withstand events as long as they reinsure correctly. In a way they are like bookies, sometimes the winning and losing odd is too extreme and they would hedge with other bookies against the extreme cases.

In California, we have homes build near wildfire prone areas, and neglected powerlines that sparks fires. I'm not surprised nobody want to do home insurance here anymore. Those who will take a chance demands the profit, fair enough to me. If you don't pay or want to pay then you shouldn't get a mortgage, and if you do pay you have less income and that will hit your ability to mortgage, hence reduced property value. The math will balance out in the end, or the house will turn into something not valuable and the zone will degrade into a slum, like high risk area has always been in human civilization.

Having home insurance covers "emotional damage" of people injured in the house is just plain stupid IMO, they should be another kind of insurance instead.

 

[PandaBear]

The optimal solution would be for the government to get out of the flood insurance business entirely and leave it to the private market, which would
endeavor to accurately measure risk and charge a price for its insurance that covers the expected costs.

The government's hidden housing subsidy for the rich

It's time to reform the flood insurance program.

www.politico.com

Throughout history no private business would cover more risk than government, unless they have huge profits which means extremely high premium. If that happens a lot of homes may get foreclosed or bank no longer finance the loans, and the home price could collapse, sinking the area from middle class (they won't be highly valued to begin with if the risk to insure is so high) to slum, cause even fewer people willing to do the necessary maintenance or updates to reduce the risk.

There is no free lunch.

 

[PandaBear]

There are lots of houses on faultlines, I look at the map and refuse to even go to the open houses when I was shopping. However as a whole unless there is a code that prevent building in those area, someone would, and someone would either die or pay for its damage, directly or indirectly through insurance.

Developers will plant a house anywhere they can. When I purchase a home I look at the location and surrounding areas as to limit my exposure to disaster. This seems to be such an issue lately that insurabilty of specific regions needs to be a consideration when buying/building a home.

 

[daves87rs]

Five pages, but here is the real issue:

It’s about the money, plain and simple….

 

[y_p_w]

There are lots of houses on faultlines, I look at the map and refuse to even go to the open houses when I was shopping. However as a whole unless there is a code that prevent building in those area, someone would, and someone would either die or pay for its damage, directly or indirectly through insurance.

I don't know if that would specifically be allowed. But having researched the issue with the California Memorial Stadium rebuild (which would never be allowed as a new construction) and the newish "athletic performance center next to the stadium) I understand that there really isn't that much difference than being almost next to a fault like and being a mile away. The shaking is just about as bad in an earthquake. But they even painted a line on the playing surface over the fault line.



We had to sign an acknowledgement that our house was less than maybe a half mile from the Hayward Fault. I believe if we didn't sign it, the title company would have noted it and then we could have likely backed out of the purchase agreement.

My understanding is that anything that sits direction on a known fault like wouldn't be allowed these days, but it may be grandfathered in.