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Insurance companies cannot credibly cover acts of god, aka correlated risks, because they happen to too many people all at once. It's not a simple matter of "fi
by mbroshi 11y ago
Insurance companies cannot credibly cover acts of god, aka correlated risks, because they happen to too many people all at once. It's not a simple matter of "fixing" insurance for those matters.
NPR's Planet Money had a good discussion: http://www.npr.org/sections/money/2014/10/03/353030214/bedbugs-lava-and-bowling-balls-inside-my-homeowners-insurance-policy http://www.npr.org/sections/money/2014/10/03/353030214/bedbu...
- cbr 11y agoWe're talking about hail. Insurance companies cover hail damage all the time. (Actually, hail claims have been going up: http://www.claimsjournal.com/news/national/2014/05/02/248354.htm http://www.claimsjournal.com/news/national/2014/05/02/248354... )
- jsprogrammer 11y agoSomeone drove his car into a hailstorm unprotected. That's not an act of god.
- jandrese 11y agoIf you're in the middle of Kansas and a big hailstorm comes up there isn't much you can do. There's nowhere to hide.
- duaneb 11y agoKansas has trees and overpasses; it's not completely barren. I just drove through a ridiculous rain storm in Kansas two months ago and had to do exactly this.
- jessaustin 11y agoIf you're driving cross-country you're on an interstate. Park under an overpass.
- deleted 11y ago[deleted]
- Filligree 11y agoAnd get hit from behind? No, thanks.
- jsprogrammer 11y agoInterstates generally have a decent width shoulder to pull over on. Also, it's not safe to drive during a massive hailstorm. You should be pulled over anyway.
- jessaustin 11y agoWe're talking about a car-hauler. You could run into it from behind with a loaded dump truck and do no damage (to the car-hauler).
- hvidgaard 11y agoThe entire reason we buy insurance is to cover events like that, that one would be unable to cover personally. Of course they can cover. It's a matter of how much you pay for your insurance, and to a large degree how much they company saves up. In the case of a hailstorm it's not because they cannot pay, it's because they don't have proper savings to cover it. A hailstorm with fist size hails is not going to cover the entirety of California, so it's very manageable. An example, when a fireworks factory in Denmark exploded the total claim of material damage was 750 million DKK (113 million USD). The vast majority was covered by insurance companies, even though that would fall under correlated risks. One of the way insurance companies handle this is to have a joint fund with other insurance companies (I think this is government mandated), where they can withdraw in cases like this.
- TimothyGee 11y agoThis joint fund is called reinsurance- essentially insurance for insurance companies.