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I think we've started to enter a weird space. For a number of "necessary" things in life (in the US), one needs to purchase insurance - in some cases its requir

I think we've started to enter a weird space. For a number of "necessary" things in life (in the US), one needs to purchase insurance - in some cases its required by law, or an unavoidable policy of obtaining a loan. Cars and houses. But insurers have started just refusing to insure some cars, or homes in some locations (and we're not just talking about building in a flood plane). We're going to have piles of cars and homes that no one can use because the risk profile is too high for insurers.

ratedgene 2y ago
Wouldn't people just secure higher cost insurance to offset the risk?
- SoftTalker 2y ago
  At some point that becomes unaffordable for most people.
  - ratedgene 2y ago
    Then it becomes like insuring priceless art, people are just priced out of it, especially if it's a requirement to owning/driving it in the first place. Perhaps these become undrivable and get their own stage in some art hall.
- sroussey 2y ago
  Many states require approval for various rates, so it’s easier to just not insure.
- Slevin11 2y ago
  In many places there is no higher cost insurance to offset the risk.
Workaccount2 2y ago
People should take heed in what premiums insurance places on things. They are in the business of pricing risk, independent of political or social bias. They lose money if they have ideologues as actuaries. They make money if their assessments match reality. So when insurance companies are dropping coverage for things, it's a strong signal that you should too(unless you have a high appetite for risk.)
- glimshe 2y ago
  I once walked away from a home purchase because my insurer refused to insure it against termite damage. Why? Synthetic stucco siding in the US south.
  - SoftTalker 2y ago
    Do termites like synthetic stucco? What is it made of? Sawdust?
    - mandevil 2y ago
      No, it's the wood framing underneath the synthetic stucco that can't really be easily monitored or checked that's the problem. I'm not familiar with the termite threat, but water damage issues with EIFS (the technical name for synthetic stucco is Exterior Insulation and Finish System) is a big and famous deal: https://en.wikipedia.org/wiki/Leaky_condo_crisis https://en.wikipedia.org/wiki/Leaky_condo_crisis The basic issue is that you can't really check what's going inside the EIFS so if water (or termites, I suppose) does get inside it can't get out and you can't really know until it collapses because the wood framing is gone. Even if you check every year, if the probe missed the bad spot then you've no way of knowing.
      - rawgabbit 2y ago
        For such a wet damp environment like British Columbia what is the recommended or tried and true way to build without suffering rot?
  - staticman2 2y ago
    I just searched online and homeowners insurance policies typically don't cover termite damage. I assume this isn't actually a huge financial risk since mortgage companies don't care if you have it? In other words you'd self insure for it.
    - SoftTalker 2y ago
toomuchtodo 2y ago
Insurance costs are financial signal that your financial decisions are bad. They won't insure high climate risk areas? You don't live there. They won't insure high risk vehicles? You don't buy them. You can ignore this if you're wealthy enough to self insure, but for the rest of us, you don't have to believe in the risk; the financial system and the risk modeler data they consume believes in it for you [1]. My homeowner's insurance through Citizens in Florida is approaching $5k/year. It will likely go up at least $1k/year, if not more, next year. Citizens is requiring all homes to carry flood insurance eventually, even if there is no flood risk. I will likely have to pay a surcharge after Hurricane Milton due to Citizens having insufficient reserves for the amount of climate related claim loss they are experiencing (such is the peril of socialized, insurer of last resort systems). This will likely push me to sell my primary residence, my last property in Florida I have not liquidated, and move somewhere with much lower climate risk. This is the system working as intended, telling people to leave places too expensive to insure. We are collectively internalizing the previously ignored and/or externalized costs. It should be expected that this process will be painful and messy as risk pricing snaps to reality. (folks not of means who live where climate risk has accelerated ahead of what they can afford should be bought out and provided assistance to relocate to where the risk is lower, and their property acquired by an entity that will hold it in perpetuity to prevent further development or occupancy, for the record; FEMA does this, but this must be done at a much larger scale imho) [1] https://firststreet.org/ https://firststreet.org/
- oldpersonintx 2y ago
  [dead]
- thfuran 2y ago
  >They won't insure high climate risk areas? You don't live there. They won't insure high risk vehicles? You don't buy them Yes, but there are already people who own cybertrucks or live in these places.
  - toomuchtodo 2y ago
    That is unfortunate. Life isn't fair. Not a judgement call, just an observation of the reality we live in. Can't find a Cybertruck insurer and can't self insure? Sell it. If Tesla wants to sell them, they can provide insurance as part of Tesla Insurance [1], if Tesla believes they can effectively manage the risk of their insured cohort and the modeled vehicle losses. If Tesla won't insure their own Cybertrucks, also sends valuable signal. I thought I sufficiently covered my position on places people live in my top comment, but to reiterate: we should absolutely and unequivocally help folks move who need help moving away from climate risk, and very aggressively, through policy and financial signals, inhibit folks from moving to where the climate risk is beyond an agreed upon collective risk appetite (which sets policy, financial signal, etc). This will make folks sad, but to not will make them more sad when the risk exposure is realized. [1] https://www.tesla.com/insurance https://www.tesla.com/insurance
floydnoel 2y ago
*Floodplain: https://en.m.wikipedia.org/wiki/Floodplain https://en.m.wikipedia.org/wiki/Floodplain
blendergeek 2y ago
This what insurance requirements are for. Keep people from doing things with bad risk profiles. As long as insurance is a competitive market, the only activities prohibited by insurance requirements will be those that people wouldn't have been able to afford anyway (long term).
davewritescode 2y ago
It varies state by state in the US but the level of insurance you're required to buy for operating a vehicle is incredibly low. Generally, the level of insurance you must buy is dictated by the terms of financing because the only collateral the bank has is the vehicle itself. If I were in the market for a CyberTruck (I'm not) I'd be thinking long and hard about what I'm getting myself into.
- thfuran 2y ago
  In my state, you can get out of the insurance requirement by holding $30k in escrow (or at least that's what it was about ten years ago; maybe they've increased it). I guess maybe it's meant to be indicative that you could get your hands on more cash if needed, but that's basically only enough to cover a fender bender. If there's injuries or a totalled vehicle, it's likely not sufficient.
  - SoftTalker 2y ago
    If there's injury, $30k would only cover a day or two in the hospital, might not even cover ER expenses, as they'll be charged at list price not the "negotiated" rates insurance companies pay. $30k is an absurdly small bond to post for self-insurance, though I'd believe that the regulations have not kept pace with reality.
    - 1123581321 2y ago
      The cash rate is similar to insurance negotiated rates. Typically 25-30% off automatically, 50-100% off with a financial aid application. Doesn’t change the inadequacy of $30k medical liability in a serious wreck, but don’t think you’re stuck with list price bills if you’re hit by an underinsured driver and have no health insurance.
  - wl 2y ago
    Are you in California? The requirement is to either a bond $35k or to carry a liability policy that covers at least $30k for death and injury and $5k for property damage, matching the deposit requirement. That will increase to $75k in 2025, which still seems far too low.
hn_throwaway_99 2y ago
> We're going to have piles of cars and homes that no one can use because the risk profile is too high for insurers. That is entirely the point. If you build a house or vehicle that is horrible from a risk perspective, don't expect someone else to take in that risk.
krzyk 2y ago
Strange. AFAIK in Europe car insurance is obligatory and insurance companies can't refuse to sell it to you (if they did it would be mind blowing, catch 22)
- elthran 2y ago
  Nothing to prevent them giving you an "F U quote" of say 6k for a year though - they've offered to insure, you've declined their price (speaking from UK perspective)
mandevil 2y ago
Homeowners insurance is tricky for both good and bad reasons. Florida's homeowner's insurance market being so dysfunctional is a blinking red warning sign that things like Hurricane Milton are only getting more common. That's a market sending out a reasonable signal- hurricane risk on a low-lying state right next to the Gulf of Mexico and central Atlantic is bad and going to get worse in the future. But California's homeowners insurance market is screwed up for legal reasons, and it isn't even the legislature's fault or something they can easily fix. It's the fault of Proposition 103, where a whole bunch of massive changes were made to how homeowners insurance worked, in 1988, by a 51-49 vote of the electorate. And the way that prop's work is that the legislature can't amend or change these regulations. The only way to fix it is another proposition to roll back those rules, where the electorate realizes that they did something dumb and agrees to fix it. Among many other changes, this proposition specifically enumerates what kinds of models an insurance company can use to justify their rates (1). In 1988 global climate change models weren't a thing, so they're not on the list. And while with legislative regulations it would be easy to add an extra model type in as a side-amendment into a much larger bill (that sort of stuff happens all the time!) the California initiative system means that the state legislature can't change any of it. So they are really struggling with the rise of wildfires in particular, the insurance companies run their real models of what the risks will be, and then when they run the approved models they have to try and figure out how to get the approved models to capture that risk and it's really hard to do. The approved models basically force the companies to use the previous seven years of costs only, but if you believe that the risk of wildfires is steadily growing that underlying bias will destroy your company. So the only alternative is to withdraw from the market. Which is why major insurers who can are withdrawing (or threatening to withdraw as part of negotiations to try and force the IC to approve even larger rate hikes!) and smaller, less well capitalized insurers are taking a greater share, but will probably need to be bailed out if there is another bad fire season. I live- and own a home!- in a nearby state where the real estate market is buoyed largely by people who are leaving California because of their dysfunctional real estate market (Prop 13 is the famous one but these are all pretty bad). So it's actually against my financial interest for California to fix their problems, but I want them to anyway because it's so intensely frustrating for me and I don't even live there. 1: To the directly elected Insurance Commission- another change in Prop 103- who has to approve all rate changes, which is now an ~18 month process, because of a third thing created in this proposition. The Consumer Intervenor's Process means that basically anyone can challenge a rate hike and if they convince the Commission that the hikes were too high then they get their costs and time paid for by the company that lost the rate hike. So there are people in California who make their living as private citizens reviewing and challenging all insurance company rate hikes.
toast0 2y ago
Mostly, but not always, legal auto insurance requirements don't strictly require insurance. If you can afford a cybertruck, you can probably afford to post a $75,000 bond or deposit with the California DMV (increases from $35k on Jan 1, 2025). Assuming you can't get liability coverage elsewhere. For mortgage insurance, my understanding is if you don't carry property insurance, the lender can obtain lender placed insurance at your cost. That comes from a different, more expensive, market than direct homeowner insurance, but I believe it includes guaranteed issuance. But, if that falls through, I expect the lenders will stop lending, because they can't sell to fannie mae if it has no property coverage.

ratedgene 2y ago

Wouldn't people just secure higher cost insurance to offset the risk?

SoftTalker 2y ago
At some point that becomes unaffordable for most people.
- ratedgene 2y ago
  Then it becomes like insuring priceless art, people are just priced out of it, especially if it's a requirement to owning/driving it in the first place. Perhaps these become undrivable and get their own stage in some art hall.
sroussey 2y ago
Many states require approval for various rates, so it’s easier to just not insure.
Slevin11 2y ago
In many places there is no higher cost insurance to offset the risk.

Workaccount2 2y ago

People should take heed in what premiums insurance places on things. They are in the business of pricing risk, independent of political or social bias. They lose money if they have ideologues as actuaries. They make money if their assessments match reality. So when insurance companies are dropping coverage for things, it's a strong signal that you should too(unless you have a high appetite for risk.)

glimshe 2y ago
I once walked away from a home purchase because my insurer refused to insure it against termite damage. Why? Synthetic stucco siding in the US south.
- SoftTalker 2y ago
  Do termites like synthetic stucco? What is it made of? Sawdust?
  - mandevil 2y ago
    No, it's the wood framing underneath the synthetic stucco that can't really be easily monitored or checked that's the problem. I'm not familiar with the termite threat, but water damage issues with EIFS (the technical name for synthetic stucco is Exterior Insulation and Finish System) is a big and famous deal: https://en.wikipedia.org/wiki/Leaky_condo_crisis https://en.wikipedia.org/wiki/Leaky_condo_crisis The basic issue is that you can't really check what's going inside the EIFS so if water (or termites, I suppose) does get inside it can't get out and you can't really know until it collapses because the wood framing is gone. Even if you check every year, if the probe missed the bad spot then you've no way of knowing.
    - rawgabbit 2y ago
      For such a wet damp environment like British Columbia what is the recommended or tried and true way to build without suffering rot?
- staticman2 2y ago
  I just searched online and homeowners insurance policies typically don't cover termite damage. I assume this isn't actually a huge financial risk since mortgage companies don't care if you have it? In other words you'd self insure for it.
  - SoftTalker 2y ago

toomuchtodo 2y ago

Insurance costs are financial signal that your financial decisions are bad. They won't insure high climate risk areas? You don't live there. They won't insure high risk vehicles? You don't buy them. You can ignore this if you're wealthy enough to self insure, but for the rest of us, you don't have to believe in the risk; the financial system and the risk modeler data they consume believes in it for you [1]. My homeowner's insurance through Citizens in Florida is approaching $5k/year. It will likely go up at least $1k/year, if not more, next year. Citizens is requiring all homes to carry flood insurance eventually, even if there is no flood risk. I will likely have to pay a surcharge after Hurricane Milton due to Citizens having insufficient reserves for the amount of climate related claim loss they are experiencing (such is the peril of socialized, insurer of last resort systems). This will likely push me to sell my primary residence, my last property in Florida I have not liquidated, and move somewhere with much lower climate risk. This is the system working as intended, telling people to leave places too expensive to insure. We are collectively internalizing the previously ignored and/or externalized costs. It should be expected that this process will be painful and messy as risk pricing snaps to reality. (folks not of means who live where climate risk has accelerated ahead of what they can afford should be bought out and provided assistance to relocate to where the risk is lower, and their property acquired by an entity that will hold it in perpetuity to prevent further development or occupancy, for the record; FEMA does this, but this must be done at a much larger scale imho) [1] https://firststreet.org/ https://firststreet.org/

oldpersonintx 2y ago
[dead]
thfuran 2y ago
>They won't insure high climate risk areas? You don't live there. They won't insure high risk vehicles? You don't buy them Yes, but there are already people who own cybertrucks or live in these places.
- toomuchtodo 2y ago
  That is unfortunate. Life isn't fair. Not a judgement call, just an observation of the reality we live in. Can't find a Cybertruck insurer and can't self insure? Sell it. If Tesla wants to sell them, they can provide insurance as part of Tesla Insurance [1], if Tesla believes they can effectively manage the risk of their insured cohort and the modeled vehicle losses. If Tesla won't insure their own Cybertrucks, also sends valuable signal. I thought I sufficiently covered my position on places people live in my top comment, but to reiterate: we should absolutely and unequivocally help folks move who need help moving away from climate risk, and very aggressively, through policy and financial signals, inhibit folks from moving to where the climate risk is beyond an agreed upon collective risk appetite (which sets policy, financial signal, etc). This will make folks sad, but to not will make them more sad when the risk exposure is realized. [1] https://www.tesla.com/insurance https://www.tesla.com/insurance

floydnoel 2y ago

*Floodplain: https://en.m.wikipedia.org/wiki/Floodplain https://en.m.wikipedia.org/wiki/Floodplain

blendergeek 2y ago

This what insurance requirements are for. Keep people from doing things with bad risk profiles. As long as insurance is a competitive market, the only activities prohibited by insurance requirements will be those that people wouldn't have been able to afford anyway (long term).

davewritescode 2y ago

It varies state by state in the US but the level of insurance you're required to buy for operating a vehicle is incredibly low. Generally, the level of insurance you must buy is dictated by the terms of financing because the only collateral the bank has is the vehicle itself. If I were in the market for a CyberTruck (I'm not) I'd be thinking long and hard about what I'm getting myself into.

thfuran 2y ago
In my state, you can get out of the insurance requirement by holding $30k in escrow (or at least that's what it was about ten years ago; maybe they've increased it). I guess maybe it's meant to be indicative that you could get your hands on more cash if needed, but that's basically only enough to cover a fender bender. If there's injuries or a totalled vehicle, it's likely not sufficient.
- SoftTalker 2y ago
  If there's injury, $30k would only cover a day or two in the hospital, might not even cover ER expenses, as they'll be charged at list price not the "negotiated" rates insurance companies pay. $30k is an absurdly small bond to post for self-insurance, though I'd believe that the regulations have not kept pace with reality.
  - 1123581321 2y ago
    The cash rate is similar to insurance negotiated rates. Typically 25-30% off automatically, 50-100% off with a financial aid application. Doesn’t change the inadequacy of $30k medical liability in a serious wreck, but don’t think you’re stuck with list price bills if you’re hit by an underinsured driver and have no health insurance.
- wl 2y ago
  Are you in California? The requirement is to either a bond $35k or to carry a liability policy that covers at least $30k for death and injury and $5k for property damage, matching the deposit requirement. That will increase to $75k in 2025, which still seems far too low.

hn_throwaway_99 2y ago

> We're going to have piles of cars and homes that no one can use because the risk profile is too high for insurers. That is entirely the point. If you build a house or vehicle that is horrible from a risk perspective, don't expect someone else to take in that risk.

krzyk 2y ago

Strange. AFAIK in Europe car insurance is obligatory and insurance companies can't refuse to sell it to you (if they did it would be mind blowing, catch 22)

elthran 2y ago
Nothing to prevent them giving you an "F U quote" of say 6k for a year though - they've offered to insure, you've declined their price (speaking from UK perspective)

mandevil 2y ago

Homeowners insurance is tricky for both good and bad reasons. Florida's homeowner's insurance market being so dysfunctional is a blinking red warning sign that things like Hurricane Milton are only getting more common. That's a market sending out a reasonable signal- hurricane risk on a low-lying state right next to the Gulf of Mexico and central Atlantic is bad and going to get worse in the future. But California's homeowners insurance market is screwed up for legal reasons, and it isn't even the legislature's fault or something they can easily fix. It's the fault of Proposition 103, where a whole bunch of massive changes were made to how homeowners insurance worked, in 1988, by a 51-49 vote of the electorate. And the way that prop's work is that the legislature can't amend or change these regulations. The only way to fix it is another proposition to roll back those rules, where the electorate realizes that they did something dumb and agrees to fix it. Among many other changes, this proposition specifically enumerates what kinds of models an insurance company can use to justify their rates (1). In 1988 global climate change models weren't a thing, so they're not on the list. And while with legislative regulations it would be easy to add an extra model type in as a side-amendment into a much larger bill (that sort of stuff happens all the time!) the California initiative system means that the state legislature can't change any of it. So they are really struggling with the rise of wildfires in particular, the insurance companies run their real models of what the risks will be, and then when they run the approved models they have to try and figure out how to get the approved models to capture that risk and it's really hard to do. The approved models basically force the companies to use the previous seven years of costs only, but if you believe that the risk of wildfires is steadily growing that underlying bias will destroy your company. So the only alternative is to withdraw from the market. Which is why major insurers who can are withdrawing (or threatening to withdraw as part of negotiations to try and force the IC to approve even larger rate hikes!) and smaller, less well capitalized insurers are taking a greater share, but will probably need to be bailed out if there is another bad fire season. I live- and own a home!- in a nearby state where the real estate market is buoyed largely by people who are leaving California because of their dysfunctional real estate market (Prop 13 is the famous one but these are all pretty bad). So it's actually against my financial interest for California to fix their problems, but I want them to anyway because it's so intensely frustrating for me and I don't even live there. 1: To the directly elected Insurance Commission- another change in Prop 103- who has to approve all rate changes, which is now an ~18 month process, because of a third thing created in this proposition. The Consumer Intervenor's Process means that basically anyone can challenge a rate hike and if they convince the Commission that the hikes were too high then they get their costs and time paid for by the company that lost the rate hike. So there are people in California who make their living as private citizens reviewing and challenging all insurance company rate hikes.

toast0 2y ago

Mostly, but not always, legal auto insurance requirements don't strictly require insurance. If you can afford a cybertruck, you can probably afford to post a $75,000 bond or deposit with the California DMV (increases from $35k on Jan 1, 2025). Assuming you can't get liability coverage elsewhere. For mortgage insurance, my understanding is if you don't carry property insurance, the lender can obtain lender placed insurance at your cost. That comes from a different, more expensive, market than direct homeowner insurance, but I believe it includes guaranteed issuance. But, if that falls through, I expect the lenders will stop lending, because they can't sell to fannie mae if it has no property coverage.