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Why bother building a better home when it's cheaper to buy insurance and rebuild later? This is why prices are important - sometimes it's sensible to build che

Why bother building a better home when it's cheaper to buy insurance and rebuild later? This is why prices are important - sometimes it's sensible to build cheaper houses without these safeties if the risk isn't there, but if the risk does exist then it needs to be priced right to provide that incentive.

miohtama 2y ago
Maybe be there is no longer "cheap" and that's the issue
- fishstock25 2y ago
  I don't understand the downvote. I think this hit the nail on its head. People whine about insurances pulling out. All they want is for somebody else to pay for their risk. It's their choice to live in that area, they should bear the consequences. It's not like it is or has ever been a secret. Climate change is known for decades now. Many people just chose not to "believe" in it. Well, their choice, but now that sh* hits the fan, they shouldn't come whine that everything gets sprayed with poo.
  - pestaa 2y ago
    But this cuts both ways. The insurers chose to provide their services in the area for the amount of money agreed upon. If anyone was more aware of the risks and probabilities, it's them. Why do they get to pull out now when it's time to hold their end of the contract?
    - fishstock25 2y ago
      That depends on what you mean with "pull out". Typically you pay a premium and that means you are insured for a certain period. A year or so. Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility. But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.
      - andrewaylett 2y ago
        On the other hand, suddenly not offering cover at all is a problem for people who have established interests in a property. I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk. As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised. Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover. Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.
        Panzer04 2y ago
        If you want a longer reinsurance term, it needed to be agreed to upfront. I'd guess insurance companies are well aware of the risks of writing long-term policies and so don't usually offer them. That being said, your comparison to term life insurance is quite apt - I wonder if such insurance policies actually exist. I would guess they'd cost more than a yearly renewing policy, but who knows. Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.
        andrewaylett 2y ago
        Oh, definitely. At least not without a lot of discussion around how much the extra insurance would have cost. I'm not in a position to implement it either :). If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.
    - SirMaster 2y ago
      California law limits how high the insurance companies can charge for premiums. Did that law or those limits exist when they started offering coverage in the area? Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.
      - miohtama 2y ago
        Meanwhile in Florida: But it is possible that more private insurers in Florida, who have to adhere to state guidelines for how much they can raise premiums, will cancel policies after this year’s hurricanes, leading more people to turn to Citizens, Rappmund said. “When you don’t allow the price to be matched to the risk, then the private companies can’t make a business there and they retreat.” Still, if fewer private insurers want to do business in Florida, Citizens would likely need to push for higher rates on its customers more and potentially even reworking what its policies cover, Rappmund told CNN.
    - miohtama 2y ago
      People of the area can always start their own community insurance company or have the state to be the insurance company.
  - mvc 2y ago
    Please do let me know where I can live that is guaranteed to be safe from unexpected natural disaster.
    - fishstock25 2y ago
      In your mind, probably. More seriously, nowhere of course, but if the risk is manageable (a fluffy term to mean predictable and not too high) then you'll find an insurance that covers you. Those natural conditions are dynamic though, so where such insurance is available can be (and is) subject to change. Predictably so. Nobody will provide you with the same car insurance when your car is new compared to 40 years later (same car). Things change. If you don't want your insurance to change, negotiate a 40-year term. Forcing them is nuts.
    - waterhouse 2y ago
      Not a guarantee, but it appears there's a nearly 200x difference between the most dangerous and the safest countries in the world: https://en.wikipedia.org/wiki/List_of_countries_by_natural_disaster_risk https://en.wikipedia.org/wiki/List_of_countries_by_natural_d...
    - miohtama 2y ago
      Finland
consp 2y ago
Only you also take into account your cheap home will likely accelerate the problem. Which never happens.
Almondsetat 2y ago
How about the cost of your life? If the house resists the earthquake and you are inside it, you don't die.
- ZeroGravitas 2y ago
  Building to protect occupants and building to make the structure salvageable afterwards may be two different goals. Think crumple zones in cars.
  - earnestinger 2y ago
    Nice point. Still, in wast majority of cases, house keeps standing -> habitant survival chance goes up. Cars being on the move, makes that distinction much much more relevant
    - hnaccount_rng 2y ago
      For inhabitant survival a sifficient goal is something like “remains structurally intact for ~30 minutes after the end of the earthquake”. Which is significantly leas than is required for staying habitable
      - earnestinger 2y ago
        Makes sense. I was fixating on the opposition of goals in the car (if car doesn’t bend/deform, then death risk increases).
  - llm_trw 2y ago
    Where is the crumple zone in the burned out buildings in California?
    - HPsquared 2y ago
      Evacuation. Hardly anyone died in these fires.
poisonborz 2y ago
Maybe people don't like to restart their lives like that if it's avoidable, even if it costs more.
vasco 2y ago
The key thing to understand is that you don't get to choose when the house gets destroyed or get advanced notice. Which means you might be in there, or your kids, or all your belongings. But yes, after you're dead in the rubble someone else can rebuild your house and it might be cheaper.
- yurishimo 2y ago
  There’s not much rubble for a house made of wood!
- michaelt 2y ago
  These wildfires produce surprisingly few deaths. Did you know the most destructive wildfire in California history, the 2018 Camp Fire, destroyed 19,000 buildings but only caused 85 deaths? [1] [1] https://oehha.ca.gov/sites/default/files/media/downloads/climate-change/document/04wildfires.pdf https://oehha.ca.gov/sites/default/files/media/downloads/cli...
  - pixl97 2y ago
    Immediate deaths. How many suicides happened after the fact as an indirect cause?
- DiggyJohnson 2y ago
  Yes of course, but everything in life is a risk trade off. Presumably the person you’re replying to understands that.
thisoneworks 2y ago
Hah financialization strikes again. Try explaining this to a person from a third world country, they would say "what are you talking about". Also they would have better health care than your average American.
bgnn 2y ago
in case of earthquakes: to not to die.

miohtama 2y ago

Maybe be there is no longer "cheap" and that's the issue

fishstock25 2y ago
I don't understand the downvote. I think this hit the nail on its head. People whine about insurances pulling out. All they want is for somebody else to pay for their risk. It's their choice to live in that area, they should bear the consequences. It's not like it is or has ever been a secret. Climate change is known for decades now. Many people just chose not to "believe" in it. Well, their choice, but now that sh* hits the fan, they shouldn't come whine that everything gets sprayed with poo.
- pestaa 2y ago
  But this cuts both ways. The insurers chose to provide their services in the area for the amount of money agreed upon. If anyone was more aware of the risks and probabilities, it's them. Why do they get to pull out now when it's time to hold their end of the contract?
  - fishstock25 2y ago
    That depends on what you mean with "pull out". Typically you pay a premium and that means you are insured for a certain period. A year or so. Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility. But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.
    - andrewaylett 2y ago
      On the other hand, suddenly not offering cover at all is a problem for people who have established interests in a property. I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk. As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised. Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover. Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.
      - Panzer04 2y ago
        If you want a longer reinsurance term, it needed to be agreed to upfront. I'd guess insurance companies are well aware of the risks of writing long-term policies and so don't usually offer them. That being said, your comparison to term life insurance is quite apt - I wonder if such insurance policies actually exist. I would guess they'd cost more than a yearly renewing policy, but who knows. Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.
        andrewaylett 2y ago
        Oh, definitely. At least not without a lot of discussion around how much the extra insurance would have cost. I'm not in a position to implement it either :). If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.
  - SirMaster 2y ago
    California law limits how high the insurance companies can charge for premiums. Did that law or those limits exist when they started offering coverage in the area? Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.
    - miohtama 2y ago
      Meanwhile in Florida: But it is possible that more private insurers in Florida, who have to adhere to state guidelines for how much they can raise premiums, will cancel policies after this year’s hurricanes, leading more people to turn to Citizens, Rappmund said. “When you don’t allow the price to be matched to the risk, then the private companies can’t make a business there and they retreat.” Still, if fewer private insurers want to do business in Florida, Citizens would likely need to push for higher rates on its customers more and potentially even reworking what its policies cover, Rappmund told CNN.
  - miohtama 2y ago
    People of the area can always start their own community insurance company or have the state to be the insurance company.
- mvc 2y ago
  Please do let me know where I can live that is guaranteed to be safe from unexpected natural disaster.
  - fishstock25 2y ago
    In your mind, probably. More seriously, nowhere of course, but if the risk is manageable (a fluffy term to mean predictable and not too high) then you'll find an insurance that covers you. Those natural conditions are dynamic though, so where such insurance is available can be (and is) subject to change. Predictably so. Nobody will provide you with the same car insurance when your car is new compared to 40 years later (same car). Things change. If you don't want your insurance to change, negotiate a 40-year term. Forcing them is nuts.
  - waterhouse 2y ago
    Not a guarantee, but it appears there's a nearly 200x difference between the most dangerous and the safest countries in the world: https://en.wikipedia.org/wiki/List_of_countries_by_natural_disaster_risk https://en.wikipedia.org/wiki/List_of_countries_by_natural_d...
  - miohtama 2y ago
    Finland

consp 2y ago

Only you also take into account your cheap home will likely accelerate the problem. Which never happens.

Almondsetat 2y ago

How about the cost of your life? If the house resists the earthquake and you are inside it, you don't die.

ZeroGravitas 2y ago
Building to protect occupants and building to make the structure salvageable afterwards may be two different goals. Think crumple zones in cars.
- earnestinger 2y ago
  Nice point. Still, in wast majority of cases, house keeps standing -> habitant survival chance goes up. Cars being on the move, makes that distinction much much more relevant
  - hnaccount_rng 2y ago
    For inhabitant survival a sifficient goal is something like “remains structurally intact for ~30 minutes after the end of the earthquake”. Which is significantly leas than is required for staying habitable
    - earnestinger 2y ago
      Makes sense. I was fixating on the opposition of goals in the car (if car doesn’t bend/deform, then death risk increases).
- llm_trw 2y ago
  Where is the crumple zone in the burned out buildings in California?
  - HPsquared 2y ago
    Evacuation. Hardly anyone died in these fires.

poisonborz 2y ago

Maybe people don't like to restart their lives like that if it's avoidable, even if it costs more.

vasco 2y ago

The key thing to understand is that you don't get to choose when the house gets destroyed or get advanced notice. Which means you might be in there, or your kids, or all your belongings. But yes, after you're dead in the rubble someone else can rebuild your house and it might be cheaper.

yurishimo 2y ago
There’s not much rubble for a house made of wood!
michaelt 2y ago
These wildfires produce surprisingly few deaths. Did you know the most destructive wildfire in California history, the 2018 Camp Fire, destroyed 19,000 buildings but only caused 85 deaths? [1] [1] https://oehha.ca.gov/sites/default/files/media/downloads/climate-change/document/04wildfires.pdf https://oehha.ca.gov/sites/default/files/media/downloads/cli...
- pixl97 2y ago
  Immediate deaths. How many suicides happened after the fact as an indirect cause?
DiggyJohnson 2y ago
Yes of course, but everything in life is a risk trade off. Presumably the person you’re replying to understands that.

thisoneworks 2y ago

Hah financialization strikes again. Try explaining this to a person from a third world country, they would say "what are you talking about". Also they would have better health care than your average American.

bgnn 2y ago

in case of earthquakes: to not to die.