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

[SC Maintenance]

So government is the savior again huh? Force companies to do business where they dont want to. Makes a lot of sense.
I think the old Soviet Union used to do that, didnt work out so well, this is who you are asking to further regulate?
http://usdebtclock.org
I would strongly suggest State Farm regulate the government, not what you suggest and have the government further regulate private business.

You either want to be free or have other people pay your way. If people could not afford to live in CA costs would not be so high and if the day comes that people cant live there, costs will come down. Furthermore you dont have to buy insurance on a home if you can afford it and dont want to. If you cant afford it move to a place one can.

You can't compare insuring against natural disasters to other insurance problems. The macro issue is a natural disaster can wipe out a huge number of customers all at once bankrupting the insurance company.

You can accurately predict if selling health insurance the number of people in a group likely to have a significant illness in a given year. Its math, so you can charge and accrue for it. A natural disaster insurance is 100% pure profit until the disaster hits - then odds are it will be big enough to bankrupt most insurance companies. Not to mention we don't have enough years to accurately predict disasters, because there frequency occurs over millennia. So not many if any companies participate. Then like all free market things they use there size as a monopoly to make excess profits, and if they can't they simply leave.

Thats what happened to flood insurance in the 20's. Eventually there were zero insurance companies willing to insure against flood. FEMA took it over, and its worked quite well with the exception of some specific stupidity that @GON mentioned earlier. But its worked well because FEMA is big enough to insure against flood everywhere, where even the largest insurance companies can't serve every market.

So I am not saying government is the solution either, but saying its as simple as "capitalism" means you really don't understand the problem.

 

[John105]

How is that going to work when the median income in the USA is like $55k?

For profit insurance is the problem. That doesn’t mean I’m for government insurance necessarily.

Some scenarios make no sense to rebuild, others not so much. In a flood plain? Maybe not such a great idea unless you can self insure. An entire state surrounded by water, with millions of people? That’s a harder scenario.

Thieving contractors don’t help. Nor do actual rising prices.

It does seem like you hit the mail on the head. For profit. I don’t think anyone here disagrees that State Farm is fine being for profit. They were one of the first to send out disgraceful rebates when people were not driving in 2020 and their losses plummeted. They sign up top notch franchise athletes for their ads. And they will convince you that aftermarket glass is good enough for your brand new car. All fine and dandy.

We likely all generally agree with one another and there’s no simple answer. Because when disaster strikes, everyone loses. Everyone is better off if it didn’t happen at all.

Maybe we became a self fulfilled prophecy from the song …. “Singin’ I got mine and you got yours…”

 

[alarmguy]

All I meant was to say I have a bad heart. I can’t take that higher paying job because if I did, I wouldn’t be covered for 1 1/2 years, DESPITE HAVING COVERAGE AND PAYING FOR IT. So I keep my old job. Everybody knows this makes no sense. But until the govt forced away with that clause, insurance would not do what makes sense.

I feel this is a good example where no matter what you stand for politically, almost all of us will agree the pre existing conditions clause made no sense.

I just think insurance doesn’t play fair and they do need to be forced to act right. If they don’t feel they are being treated right, then leave. But I doubt it’s the case. The case is they can’t afford the margins they want.

I feel for you, trust me, the male side of my family is a train wreck with heart disease. I know every procedure known to mankind (mostly)
My own sibling would have been affected by the pre-existing clause. Let me be clear, there was NOTHING wrong with requiring companies to cover everyone without the clause if they had insurance already or in place within the year.
But did it stop there? of course not, then a whole slew of required mandatory procedures needed to be covered and your individual right to pick and chose what you wanted covered was decimated to no longer a choice. the result $2000+ a month individual health insurance costs.
Onto of that, I personally know people who were able to game this new ACA system and result in almost free coverage.

AS far as you, Im shocked. Maybe it's the company you were invested in. I know for a fact even a part time bank teller for a big bank only has a 30 day wait period for incredible full coverage.

 

[John105]

I feel for you, trust me, the male side of my family is a train wreck with heart disease. I know every procedure known to mankind (mostly)
My own sibling would have been affected by the pre-existing clause. Let me be clear, there was NOTHING wrong with requiring companies to cover everyone without the clause if they had insurance already or in place within the year.
But did it stop there? of course not, then a whole slew of required mandatory procedures needed to be covered and your individual right to pick and chose what you wanted covered was decimated to no longer a choice. the result $2000+ a month individual health insurance costs.
Onto of that, I personally know people who were able to game this new ACA system and result in almost free coverage.

AS far as you, Im shocked. Maybe it's the company you were invested in. I know for a fact even a part time bank teller for a big bank only has a 30 day wait period for incredible full coverage.

I misspoke in that I meant hypothetically if I had a bad heart…

And also my wife and I have both gotten jobs where either coverage was day 1, day 31, and day 91. My present employer was 90 days, and when I came aboard they reimbursed me for COBRA.

Here’s my understanding…even with full coverage being paid for, if a person had a preexisting condition, they have to wait 18 mos for it to be covered. If they had a preexisting condition, but had 18 mos coverage prior and a cert to show, they have to be covered by a new insurance policy. But today, this is moot. You did have a condition and you didn’t have insurance but now do, covered.

I’m not for govt controlling our lives but there are instances were better off that they exist. They build parks, libraries, remove fallen trees, collect trash, etc.

Insurance shouldn’t be forced in and out of markets but there have to be rules and they have to have skin in the game….

 

[alarmguy]

...

So I am not saying government is the solution either, but saying its as simple as "capitalism" means you really don't understand the problem.

You're picking and choosing words from me and telling me I dont UNDERSTAND the problem?
Living in what is becoming an uninhabitable area?
I understand the problem, I also believe in a free market. If companies dont want to insure a high risk area who am I to endorse other people to pay for it? Or possibly bankrupt a company?

You're bringing up national flood insurance has nothing to do with forcing companies to provide coverage for fire or flooding or you dont understand what flood insurance is.
If your for national fire insurance that would be a possibility where no coverage is available. How much less expensive it would be we do not know, maybe it would be more expensive since it would be a pool, just like flood insurance where everyone chips in that pool and the public at large doesnt bear the cost of those people is fine with me.

As you may know because of the high amount of flood insurance claims the government has bailed the system out to be paid back by the rate payers and the public who chooses to live in safe flood free areas doesnt pay. True though we crossed the line (what else is new with any government program) and lent money to the program.

BTW- National Flood insurance covers the structure, not the contents of the structure, that is optional and costly.

 

[y_p_w]

Honestly - I've had to deal with difficulty in getting homeowner's insurance, which is required by my lender in order to protect their interest. If I go without it I can be charged for insurance of their choosing which can be really expensive since they won't shop around.

One of my first issues was that our house still used fuses. We went to a broker who had to look around in order to find a policy. But more recently my insurer just raised the rate by a bunch until I cancelled and found a replacement police for far less. Our big risk here is that we live in heavily wooded areas with fire risk.

Still - it could be worse, like Florida. I keep on hearing about how it's costing double to triple what I'm paying for a house with less than fifth the value of mine.

 

[fdcg27]

State Farm is a mutual company, so it is owned by its policyholders and not by stockholders or some vulture leveraged to the limit VC syndicate. We've had home and auto with State Farm for years and have found the company to be very fair in settling claims, like with the four cars totaled between my two sons in their younger and dumber days. Thankfully nobody got anything more than minor injuries in these mishaps.
Insurers can only offer insurance where they can accurately price the risk. If they can't come up with good numbers on risk they also can't reinsure that risk since the same lack of information will apply to the reinsurance market. They therefore can't offer coverage.
Rates reflect loss experience and rapidly increasing rates reflect past under pricing of risk.
The personal lines property and casualty insurance market is entirely state regulated and federal courts have ruled that insurance is not commerce, so that clause of the constitution doesn't apply.
There are plenty of companies out there large and small offering personal lines coverage, which as a rule is written to reflect state standard form policies for that coverage for all players, so there is ample competition in the market. For that reason, I would doubt that there is any gouging going on in setting renewal rates.

 

[TiGeo]

Just spoke with USAA this week on the topic of "Why are my auto rates so high?". Interesting in that she commented that Florida had a huge hike in rates b/c they weren't taking in enough on premiums to cover the payouts. It's just math...at some point you pay more to cover it....just like health insurance.

 

[Vern_in_IL]

State Farm is a mutual company, so it is owned by its policyholders and not by stockholders or some vulture leveraged to the limit VC syndicate.

Which makes it better than most.

ust spoke with USAA this week on the topic of "Why are my auto rates so high?". Interesting in that she commented that Florida had a huge hike in rates b/c they weren't taking in enough on premiums to cover the payouts. It's just math.

Also note the type of vehicle you drive will influence rates. A Subaru Imprenza STi vs a Toyota Camry. The type of home also influences rates, attached garage will always command more.

 

[MSCH]

Florida homeowners insurance companies are insolvent...a bad situation with no answers of yet.

yep. I live in FL, I just have a basic liability fire homeowners policy... no hurricane coverage.. 1600 a year now.. State Farm.
other neighbors who have mortgages have to have full coverage.. you know it is 3000+ a year for the most basic no frill insurance down here.

 

[2strokeNorthstar]

I went through this drama this year. I contacted about 10 companies and finally found one close to what I paid last year (Western Mutual). The company I had for almost 10 years through Allstate was doubling my rate for no fault of mine. I have never had a claim in my life. I could never afford to drop it. $1400 per year and house is $700k+

 

[SC Maintenance]

Ok

Living in what is becoming an uninhabitable area

So your solution is to abandon all of California? Because that is what the OP's link is talking about - the issue is for all homeowners in CA, not a small number of high risk properties - similar issues in Florida. I guess I don't care I don't live there. Seems there might be a better solution than abandoning several states?

nothing to do with forcing companies to provide coverage for fire or flooding

100% opposite of what I said. I said private companies can't take on the risk of natural disasters - not that they should be forced to. Which is the entire reason we have a FEMA flood insurance program - there is exactly 1 insurer - and there big enough to pool the risk

BTW- National Flood insurance covers the structure, not the contents of the structure, that is optional and costly.

I have FEMA flood insurance. Maximum insurable is $100K contents, and $250K structure, so its definately a working man program - not for the oceanfront crowd. You can even buy contents without structure - for example if you were a renter. Mine is 100% optional as I live in a 500 year flood plain, so I presume my premium isn't very representative.

 

[JHZR2]

Which makes it better than most.


Also note the type of vehicle you drive will influence rates. A Subaru Imprenza STi vs a Toyota Camry. The type of home also influences rates, attached garage will always command more.

actually, imo for autos, the driver should be insured, not the vehicles.

I own 13 vehicles. My wife and I can only drive two at a time, yet I get priced on all of them. Sure, I have classic insurance on a bunch that has some assumptions associated with low use. But ideally I’d insure my liability for my actions, then carry stated value and/or collision/comprehensive on cars as I wish. I don’t need to pay liability per vehicle that I can’t drive at the same time. It’s such a fraudulent practice to the consumer. I’d gladly agree not to lend or rent my vehicles to anyone else.

Homes and property are a different matter. Because most folks are protecting the bank’s asset, and anyone in a high risk area gets the benefit of others in lower risk areas.

Unfortunately auto body repair is excessively priced to do it right, as is home repair.

 

[y_p_w]

Ok

So your solution is to abandon all of California? Because that is what the OP's link is talking about - the issue is for all homeowners in CA, not a small number of high risk properties - similar issues in Florida. I guess I don't care I don't live there. Seems there might be a better solution than abandoning several states?

They’re not issuing new policies. It might create an incentive for State Farm agents in California to drop them. But they may still want to keep commissions coming on existing policies.

I remember getting a walls in condo policy. I refinanced and told the agent that the insurer paid for a condo policy but for years I kept on being contacted and billed by the agent. It was frustrating but agents make passive commissions every year. I remember one who sent a calendar and $1 lottery ticket every year around Christmas. That was all the work she did every year to try and keep us as customers.

 

[Zee09]

50% of Florida insurance companies will not insure homes with roof solar panels..

 

[PimTac]

Regarding auto insurance, automobile theft has to be having a huge impact on the companies.

According to a report earlier this week, in Washington State alone almost 14,000 vehicles have been stolen so far this year alone. The majority of those are claimed on insurance. That’s just one state.

 

[alarmguy]

Esurance, an Allstate company has stopped writing new car insurance policies in all states. If you’re an existing customer and move out of state they won’t issue you a new policy, if you move to a new location in your existing state they will allow you to continue with them.
I know this directly from the company as I moved out of state but already found a better price with Costco as esurance rates went up over 15%, it was when I called to cancel I was informed they wouldn’t be able to keep me anyway.

This is everyday business that we are discussing in a social media platform where everyone is a victim of something no matter the subject.
It’s called life, gotta deal with it as another posted in here, he got quotes from up to ten companies and took charge of what he pays.
vs
A post about a company not wanting to do business in a state and another post of someone who knows some one who pays 20+k that we don’t know
It’s micro reporting on the ills of the world for problems that do not come close to impacting the majority.
No one is forced to buy anything and everyone is responsible (supposed to be) for themselves.
Society should not be responsible for yourself, that is a different form of government

 

[alarmguy]

Good post about Florida solar panels in here. It’s true up to 50% of insurers want nothing to do with solar panels and if you have one of those companies they will drop you/not insure you.

So maybe before adding up to 50 or $60,000 of solar equipment to your house you should find out implications first!
More so in a state where it’s hard to get insurance. One might find it cheaper to skip the solar panels.

Cant blame the insurance companies in a state where they barely want to insure you without solar panels to take on the additional risks involved with them.
That was a good post, I never much thought about it myself but I haven’t lived in a state with expensive electricity since escaping NY 15 years ago.

 

[MSCH]

Ok

So your solution is to abandon all of California? Because that is what the OP's link is talking about - the issue is for all homeowners in CA, not a small number of high risk properties - similar issues in Florida. I guess I don't care I don't live there. Seems there might be a better solution than abandoning several states?


100% opposite of what I said. I said private companies can't take on the risk of natural disasters - not that they should be forced to. Which is the entire reason we have a FEMA flood insurance program - there is exactly 1 insurer - and there big enough to pool the risk


I have FEMA flood insurance. Maximum insurable is $100K contents, and $250K structure, so its definately a working man program - not for the oceanfront crowd. You can even buy contents without structure - for example if you were a renter. Mine is 100% optional as I live in a 500 year flood plain, so I presume my premium isn't very representative.

here in FLA they seems to have redesignated the flood zones, so they can force more people into buying flood insurance( which then becomes mandatory if you have a mortgage) so they can subsidize the people who live in truly flood prone areas like on the water. Basically everybody is forced to subsidize the flood insurance program, but you find the wealthiest people with the most expensive housing are the ones who live on the beach..

 

[SC Maintenance]

here in FLA they seems to have redesignated the flood zones, so they can force more people into buying flood insurance( which then becomes mandatory if you have a mortgage) so they can subsidize the people who live in truly flood prone areas like on the water. Basically everybody is forced to subsidize the flood insurance program, but you find the wealthiest people with the most expensive housing are the ones who live on the beach..

The max dwelling flood insurance through FEMA is $250K, I don't think its something the beach dwellers benefit significantly from either given anything beachfront is in the millions at this point.

The flood maps are to be updated every 5 years by the army corps of engineers - its a law.

So I wouldn't be shocked to find out politics got involved, the update on its own is normal. Flood maps change as they learn more.