Comment by WalterBright
Comment by WalterBright 10 days ago
Legislation generally opposes granular insurance policies, as it is discrimination.
Comment by WalterBright 10 days ago
Legislation generally opposes granular insurance policies, as it is discrimination.
There have been endless lawsuits by homeowners alleging discrimination in their insurance rates. All this impairs granular risk assessment and insurance rates. A recent WSJ article was about lawsuits from homeowners who were quoted higher insurance rates because their roof was rotten and/or there were trees that could fall on their house.
The same has happened with auto insurance rates (men and women have different accident rates, so used to have different rates), and, glaringly, medical insurance rates.
Most medical insurance isn't really insurance, it's more prepaid health care.
It's discrimination when it's based on uncontrollable situations. It is not discrimination when it's based on factors one can control. And an indefensible structure in a fire zone is most certainly something you can control. Pricing it appropriately would keep builders from building them in the first place and it would get the people that have them to do what they can to make it more defensible.
The problem is people come to the legislature screaming about being charged a rate that actually reflects the risk. The legislature eventually responds by making insurance spread the costs over it's policy base. This results in people to screaming to the legislature because their rates are skyrocketing to pay for the idiots in the danger zone. The legislature eventually responds by not allowing insurance companies to charge enough--and they walk.
By the time you reach the point of the insurance companies walking you've already had many chances to fix the problem. But we never learn, people are determined to have their cake and eat it also.
But in the case of home insurance, unlike health, people actually have a choice: build there or do it somewhere else.
Artificially forcing blended home insurance rates lessens the pricing signal that this particular area might be too risky to build in.
At the end of the day, it's developers and the city/county making money while offloading the risk to insurance companies and government mortgage buyers.