6 ms·

CA also has sort of a price cap on wildfire home insurance, which has prompted many insurers to leave the state entirely.

whimsicalism 3y ago
This one frustrates me because when the government intervenes to try to lower wildfire insurance premiums they are literally risking people’s lives. People should have to pay the full cost of the risk of living in these dangerous areas so the price system encourages them to move.
- idopmstuff 3y ago
  Definitely agree, and I also firmly believe that each property should get exactly one FEMA bailout ever. If you live in Florida and your house gets destroyed by a hurricane, FEMA should pay you for it. If you choose to rebuild on that exact same spot, and your house gets destroyed by a hurricane, you should get exactly bupkis. This should carry with the property address - the next person who buys it should have to sign a form acknowledging that they aren't going to get a FEMA bailout if it gets destroyed. Lots of Florida Republicans out there who complain about welfare but rely on some of the biggest welfare checks that get written to repair their homes because of the absolutely foreseeable results of their choices.
  - bdowling 3y ago
    > the next person who buys it If they can’t build on it, who would buy it? Urban farmers? In any case, your plan would destroy the land value, and the corresponding property tax revenue.
    - burnerthrow008 3y ago
      > In any case, your plan would destroy the land value, and the corresponding property tax revenue Sounds like the market effectively discovered the true value of the property with all externalities priced in. I don’t see a problem here?
      - bdowling 3y ago
        The problem is that the city relies on property tax revenues to function.
    - arccy 3y ago
      perhaps disaster prone areas shouldn't be worth a lot?
    - lokar 3y ago
      The value of the land has already been destroyed. What’s going on now is corrupt public subsidy.
    - toast0 3y ago
      Well, it would likely be affordable at least. On the downside, when the next disaster hit and FEMA didn't cover it, it would look like FEMA doesn't want to cover low income housing, which isn't a good look. But there does need to be some mechanism to convince people to abandon homes and towns that are not appropriate given environmental conditions. And it needs to be done carefully so it's not like kick all the poor people out, do some civil engineering that never happened while it was a poor community, then sell the land to developers who make a huge profit.
      - bdowling 3y ago
        That is basically what governments are for, collective actions that make land more valuable: roads, schools, police, fire departments, and civil engineering projects.
  - ouEight12 3y ago
    I could be mistaken on this, as I don't live in an area where such things are common, but my understanding is the issue is that if your house is destroyed by say, a hurricane, no insurance provider (or fema) gives you a bag of cash and says "move", reimbursement is predicated on rebuilding the structure where it stood.
    - slavboj 3y ago
      Insurance makes you whole, not the property. You are perfectly welcome to pocket the cash. Although if you have a mortgage, you do have an additional obligation to maintain the value of their collateral or pay off the loan.
      - phonon 3y ago
        If you have replacement cost coverage (as opposed to actual cash value (=depreciated value) you typically have to use it to reconstruct the home if you want the full amount. This is typical. "We will pay no more than the actual cash value of the damage until actual repair or replacement is complete." [0] [0] https://www.iii.org/sites/default/files/docs/pdf/HO3_sample.pdf https://www.iii.org/sites/default/files/docs/pdf/HO3_sample....
        whimsicalism 3y ago
        Terrible idea, so glad the government structured NFIP this way.
    - lokar 3y ago
      And a rational insurance program would not keep insuring the same property over and over as it gets destroyed.
  - bluGill 3y ago
    If built to modern codes houses can survive a hurricane, or so I'm told.
    - mcast 3y ago
      Not all coastal areas have the same strict building code. Homes not built with concrete exteriors and hurricane tie down anchors have a strong risk of being demolished in strong hurricanes. South Florida revamped their building codes after Hurricane Andrew wiped many of the homes and infrastructure in the 90s. However, not all coastal houses in northern Florida or on the gulf are built with concrete or on stilt foundations. A secondary threat is prolonged flooding which can submerge entire homes with salt water for weeks at a time. That's very costly and not preventable with existing homes in flood zones.
      - chmod775 3y ago
        This I never understood. Other countries didn't need building codes mandating such things - people always built houses that were intended to stand for many decades and that are suited to their local environment[1]. It defies comprehension that despite being somewhat poorer and enjoying milder weather, Europeans built their houses from brick and mortar while the US insists on erecting cheap cardboard boxes that even if they're not blown away or flooded, will probably rot away within the lifetime of their owner. [1] https://i.imgur.com/Y678tV7.png https://i.imgur.com/Y678tV7.png
        bluGill 3y ago
        this isn't the three little pigs. Brick is not automatictally stronger. Wood houses have advantages as well, and can be just as strong.
        chmod775 3y ago
        I did not use the word "wood" once. I don't think houses with walls you can kick holes in qualify as wood houses. They're closer to cardboard than wood. Anyways, the point isn't the materials - the point is that the houses are fundamentally unsuited to the environment they are in.
  - anonymouskimmer 3y ago
    This is what building to code should address. If a house is built to a specific hurricane code, and is destroyed due to other reasons (a hypercane, for instance), then let insurance cover this and mandate rebuilding to an even higher standard. https://www.nbcnews.com/news/us-news/hurricane-idalias-destruction-skipped-homes-floridas-coast-rcna102887 https://www.nbcnews.com/news/us-news/hurricane-idalias-destr... : Dozens of modest homes along the Big Bend coast were heavily damaged in the floodwaters, but interspersed among the debris were residences left relatively unscathed, all because they were built elevated on stilts.
  - LorenPechtel 3y ago
    I'd do it a little differently. If a house is destroyed by any form of reasonably common widespread disaster it becomes illegal to build anything on that lot that would likewise be destroyed. You can rebuild after the hurricane, you must build a house that will stand up to a hurricane. (Yes, it can be done.) I wouldn't apply this to flukes--your town does a Tunguska there's no reason to require asteroid-safe houses. I would also make an exception for things which by their nature must be in the line of fire--such things must never be permanent habitation and can't have community-rate insurance against whatever happened to them. A business can rebuild it's beach cabanas but would have to go to Lloyd's if they wanted insurance.
- cmilton 3y ago
  While I understand the idea, who would buy these properties they likely may want to sell to escape these rising costs?
  - whimsicalism 3y ago
    for long standing communities, ideally the government would offer voluntary buyouts if they can’t find someone willing to cover the insurance premium. they already do the same in flooding zones. but yes, people who live in fire-prone areas may take a loss. encouraging people to anticipate these losses is part of a functioning market. if they can live somewhere risky without financial risk, we only encourage future people to do the same.
  - abigail95 3y ago
    me, i'll take discounted land in california any day of the week.
  - sokoloff 3y ago
    For $1 each, lots of people. Price will find buyers.
  - deleted 3y ago
    [deleted]
- bcrosby95 3y ago
  You're only looking at step 1. If you recursively got everyone in dangerous areas to move, no one would live in California. If you live in a population center in California, the only reason why you aren't prone to wildfires is because of the people living around you that are. It's a scenario where everyone paying the same actually makes sense. Your insurance is that others are accepting the risk of losing all their personal belongings or even their lives - even if insurance will cover them financially. It's not the same as hurricanes or earthquakes.
- xenadu02 3y ago
  Its quite unfortunate because it would be a great opportunity to accurate price the risk to encourage better building standards and fireproofing. In reality we don't need people to move to greatly reduce the risk. In many wildfire events homes burn because brush/scrub burns all the way up to the house and catches the siding on fire, or because embers land on the roof or enter soffits and start a fire that way. These things are really easily improved. Insurance could require fireproof siding, no bushes/plants right up against the house, fire screens on roof/soffit vents, and fireproof roofing. Those changes alone would decrease the number of houses that burn in a fire. Obviously there are some areas where the landscape, wind patterns, and nature of trees means if it burns it will rage and everything's gonna go up no matter what you do. But that isn't everywhere. What I don't know right now: how much does CA law allow insurers to price this kind of risk? Is it a matter of law not allowing them to send accurate price signals? I can believe this is the case. I also don't know if CA law allows them to only sell in certain areas... there's no practical wildfire risk to the Bay Area for example so why stop writing policies there? Or are insurers going into knee-jerk mode or even using this as an opportunity to goose profits (knowing that wildfires wax and wane)? I can also believe this is happening. Like I said: it is unfortunate that CA law, insurance companies, or both are not using this as an opportunity to improve fire survivability in rural areas.
  - sgammon 3y ago
    According to State fire officials (Cal Fire), the entire state of California will burn. It is simply a matter of “when.” There is practical wildfire risk in the Bay Area. You should drive down 280 some time.
    - xenadu02 3y ago
      Much of the Bay Area is urban and suburban, with very little chance of a wildfire ever threatening those homes. Why stop writing policies in those areas?
- PH95VuimJjqBqy 3y ago
  wildfire insurance isn't saving lives, the state does that via fire departments.

whimsicalism 3y ago

This one frustrates me because when the government intervenes to try to lower wildfire insurance premiums they are literally risking people’s lives. People should have to pay the full cost of the risk of living in these dangerous areas so the price system encourages them to move.

idopmstuff 3y ago
Definitely agree, and I also firmly believe that each property should get exactly one FEMA bailout ever. If you live in Florida and your house gets destroyed by a hurricane, FEMA should pay you for it. If you choose to rebuild on that exact same spot, and your house gets destroyed by a hurricane, you should get exactly bupkis. This should carry with the property address - the next person who buys it should have to sign a form acknowledging that they aren't going to get a FEMA bailout if it gets destroyed. Lots of Florida Republicans out there who complain about welfare but rely on some of the biggest welfare checks that get written to repair their homes because of the absolutely foreseeable results of their choices.
- bdowling 3y ago
  > the next person who buys it If they can’t build on it, who would buy it? Urban farmers? In any case, your plan would destroy the land value, and the corresponding property tax revenue.
  - burnerthrow008 3y ago
    > In any case, your plan would destroy the land value, and the corresponding property tax revenue Sounds like the market effectively discovered the true value of the property with all externalities priced in. I don’t see a problem here?
    - bdowling 3y ago
      The problem is that the city relies on property tax revenues to function.
  - arccy 3y ago
    perhaps disaster prone areas shouldn't be worth a lot?
  - lokar 3y ago
    The value of the land has already been destroyed. What’s going on now is corrupt public subsidy.
  - toast0 3y ago
    Well, it would likely be affordable at least. On the downside, when the next disaster hit and FEMA didn't cover it, it would look like FEMA doesn't want to cover low income housing, which isn't a good look. But there does need to be some mechanism to convince people to abandon homes and towns that are not appropriate given environmental conditions. And it needs to be done carefully so it's not like kick all the poor people out, do some civil engineering that never happened while it was a poor community, then sell the land to developers who make a huge profit.
    - bdowling 3y ago
      That is basically what governments are for, collective actions that make land more valuable: roads, schools, police, fire departments, and civil engineering projects.
- ouEight12 3y ago
  I could be mistaken on this, as I don't live in an area where such things are common, but my understanding is the issue is that if your house is destroyed by say, a hurricane, no insurance provider (or fema) gives you a bag of cash and says "move", reimbursement is predicated on rebuilding the structure where it stood.
  - slavboj 3y ago
    Insurance makes you whole, not the property. You are perfectly welcome to pocket the cash. Although if you have a mortgage, you do have an additional obligation to maintain the value of their collateral or pay off the loan.
    - phonon 3y ago
      If you have replacement cost coverage (as opposed to actual cash value (=depreciated value) you typically have to use it to reconstruct the home if you want the full amount. This is typical. "We will pay no more than the actual cash value of the damage until actual repair or replacement is complete." [0] [0] https://www.iii.org/sites/default/files/docs/pdf/HO3_sample.pdf https://www.iii.org/sites/default/files/docs/pdf/HO3_sample....
      - whimsicalism 3y ago
        Terrible idea, so glad the government structured NFIP this way.
  - lokar 3y ago
    And a rational insurance program would not keep insuring the same property over and over as it gets destroyed.
- bluGill 3y ago
  If built to modern codes houses can survive a hurricane, or so I'm told.
  - mcast 3y ago
    Not all coastal areas have the same strict building code. Homes not built with concrete exteriors and hurricane tie down anchors have a strong risk of being demolished in strong hurricanes. South Florida revamped their building codes after Hurricane Andrew wiped many of the homes and infrastructure in the 90s. However, not all coastal houses in northern Florida or on the gulf are built with concrete or on stilt foundations. A secondary threat is prolonged flooding which can submerge entire homes with salt water for weeks at a time. That's very costly and not preventable with existing homes in flood zones.
    - chmod775 3y ago
      This I never understood. Other countries didn't need building codes mandating such things - people always built houses that were intended to stand for many decades and that are suited to their local environment[1]. It defies comprehension that despite being somewhat poorer and enjoying milder weather, Europeans built their houses from brick and mortar while the US insists on erecting cheap cardboard boxes that even if they're not blown away or flooded, will probably rot away within the lifetime of their owner. [1] https://i.imgur.com/Y678tV7.png https://i.imgur.com/Y678tV7.png
      - bluGill 3y ago
        this isn't the three little pigs. Brick is not automatictally stronger. Wood houses have advantages as well, and can be just as strong.
        chmod775 3y ago
        I did not use the word "wood" once. I don't think houses with walls you can kick holes in qualify as wood houses. They're closer to cardboard than wood. Anyways, the point isn't the materials - the point is that the houses are fundamentally unsuited to the environment they are in.
- anonymouskimmer 3y ago
  This is what building to code should address. If a house is built to a specific hurricane code, and is destroyed due to other reasons (a hypercane, for instance), then let insurance cover this and mandate rebuilding to an even higher standard. https://www.nbcnews.com/news/us-news/hurricane-idalias-destruction-skipped-homes-floridas-coast-rcna102887 https://www.nbcnews.com/news/us-news/hurricane-idalias-destr... : Dozens of modest homes along the Big Bend coast were heavily damaged in the floodwaters, but interspersed among the debris were residences left relatively unscathed, all because they were built elevated on stilts.
- LorenPechtel 3y ago
  I'd do it a little differently. If a house is destroyed by any form of reasonably common widespread disaster it becomes illegal to build anything on that lot that would likewise be destroyed. You can rebuild after the hurricane, you must build a house that will stand up to a hurricane. (Yes, it can be done.) I wouldn't apply this to flukes--your town does a Tunguska there's no reason to require asteroid-safe houses. I would also make an exception for things which by their nature must be in the line of fire--such things must never be permanent habitation and can't have community-rate insurance against whatever happened to them. A business can rebuild it's beach cabanas but would have to go to Lloyd's if they wanted insurance.
cmilton 3y ago
While I understand the idea, who would buy these properties they likely may want to sell to escape these rising costs?
- whimsicalism 3y ago
  for long standing communities, ideally the government would offer voluntary buyouts if they can’t find someone willing to cover the insurance premium. they already do the same in flooding zones. but yes, people who live in fire-prone areas may take a loss. encouraging people to anticipate these losses is part of a functioning market. if they can live somewhere risky without financial risk, we only encourage future people to do the same.
- abigail95 3y ago
  me, i'll take discounted land in california any day of the week.
- sokoloff 3y ago
  For $1 each, lots of people. Price will find buyers.
- deleted 3y ago
  [deleted]
bcrosby95 3y ago
You're only looking at step 1. If you recursively got everyone in dangerous areas to move, no one would live in California. If you live in a population center in California, the only reason why you aren't prone to wildfires is because of the people living around you that are. It's a scenario where everyone paying the same actually makes sense. Your insurance is that others are accepting the risk of losing all their personal belongings or even their lives - even if insurance will cover them financially. It's not the same as hurricanes or earthquakes.
xenadu02 3y ago
Its quite unfortunate because it would be a great opportunity to accurate price the risk to encourage better building standards and fireproofing. In reality we don't need people to move to greatly reduce the risk. In many wildfire events homes burn because brush/scrub burns all the way up to the house and catches the siding on fire, or because embers land on the roof or enter soffits and start a fire that way. These things are really easily improved. Insurance could require fireproof siding, no bushes/plants right up against the house, fire screens on roof/soffit vents, and fireproof roofing. Those changes alone would decrease the number of houses that burn in a fire. Obviously there are some areas where the landscape, wind patterns, and nature of trees means if it burns it will rage and everything's gonna go up no matter what you do. But that isn't everywhere. What I don't know right now: how much does CA law allow insurers to price this kind of risk? Is it a matter of law not allowing them to send accurate price signals? I can believe this is the case. I also don't know if CA law allows them to only sell in certain areas... there's no practical wildfire risk to the Bay Area for example so why stop writing policies there? Or are insurers going into knee-jerk mode or even using this as an opportunity to goose profits (knowing that wildfires wax and wane)? I can also believe this is happening. Like I said: it is unfortunate that CA law, insurance companies, or both are not using this as an opportunity to improve fire survivability in rural areas.
- sgammon 3y ago
  According to State fire officials (Cal Fire), the entire state of California will burn. It is simply a matter of “when.” There is practical wildfire risk in the Bay Area. You should drive down 280 some time.
  - xenadu02 3y ago
    Much of the Bay Area is urban and suburban, with very little chance of a wildfire ever threatening those homes. Why stop writing policies in those areas?
PH95VuimJjqBqy 3y ago
wildfire insurance isn't saving lives, the state does that via fire departments.