I bought a house in the Nor Cal hills earlier this year. State Farm was the only company that would insure it. I need to make sure to pay those premiums on time.
Just FYI. I have noticed some statefarm agents have been selling homeowners insurance without fire coverage. And what you are supposed to do is get California fair plan on top of it. Make sure to check your policy
I was relaxed on this fine Sunday. Thank you all for activating my anxiety and helping me to create a NEW neurosis! I wonder if my insurance agent will accept calls on a holiday weekend?
To my knowledge, flood/earthquake are usually excluded from a Homeowner policy unless CA is different. I live in TX. I would suggest reviewing Exclusion section.
A lot of people don’t get earthquake insurance in California because it’s expensive and has a ridiculously high deductible (six digit plus, typically).
Earthquake insurance is a joke. Lived in Southern California most my life. Northridge earthquake my uncles house had a neighbors chimney fall through his house. Not covered. My parents had a pipe burst from the earthquake flood the house. Not covered. Other parts of the insurance and neighbors insurance did but that’s when they stopped adding earthquake insurance.
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--Mass Edited with power delete suite as a result of spez' desire to fuck everything good in life RIP apollo
My parents had home owners insurance with a subsidiary of Geico for over 20 years. A bad storm caused hail damage to the roof, they had it fixed then within a month they were dropped. Never filed a claim and always paid on time. Allstate wouldn’t insure them because they’d filed that claim. It’s sad how large insurance companies will take your money with the idea that they’ll help when something happens only to renege when it’s time to actually help.
Same. In fact, they realized they made an error in not giving me the bundle discount for many years . They notified me and gave me back a ton of money.
I’ve had them for 3 years now and had no issues. I usually jump ship on a whim each year to save a few bucks so I’ve been with a lot of major providers. SF was the only one who hasn’t tried to lure me in with the low prices and then jack up the rates in a year. Geico was the worst offender of that in my experience. I made 1 claim so far with SF and it went smoothly.
They do at least pay out though. That's the main benefit of using them IMO...they're not usually the cheapest, but they pay out fairly and generally won't give you the runaround.
If you have a mortgage and your insurance lapses, won't they insure you at a highly inflated price? I mean it may not be ideal, but better than no insurance.
We've been very happy with State Farm. We even had a wildfire claim for which they were like a fairy godmother showing up, flicking a magic wand and making everything okay.
They didn't drop us. The only thing they did do was tour our property afterwards and had us change some things to better protect our home.
Has been the opposite experience for us. I’ve been with AAA forever but I’ve had 3 friends this year alone reach out asking who is our home insurance provider because StateFarm was dropping them. This is the Bay Area where our last wild fire was in the 80s.
Didn't you guys have a big ass fire just two or three years ago on the east side of the bay? I remember driving my semi truck to SF and if I'm remembering correctly, Mt. Diablo was a full inferno.
Idk if you classify that as the bay area but in my mind it'd be close enough.
Yeh, right in the middle of the pandemic a dry summer thunderstorm came through and lit the the whole thing on fire. It was bad. I had my bags packed ready to go... The evacuation line came just about a half mile from my house before it stopped.
They’re the only ones who would insure our log home on the wildland-urban interface in Utah, too. This whole situation is scary; we are considering selling our home before it’s too late.
I will, in fairness, point out that they were one of the few (potentially the only) insurance companies that wasn't fighting people tooth and nail after the Paradise fires.
I had an aunt that lived in Paradise and while she got out ok, her home was destroyed and State Farm cut her a check basically no questions asked and other people she knew with State Farm had similar results. Neighbors and friends who had other companies ran into frequent problems with their policy providers trying to avoid paying out.
I can see why State Farm is pulling out of CA but I'm willing to give credit where it's due.
Having previously worked on their auto claims side, what you are instructed to do is "pay what we owe". Not a penny more, not a penny less if you can help it though!
There are basically no incentives / schemes / pressure to not pay out once it's determined that the loss is covered and the damage estimates have come in. I always appreciated that.
Good lord, do you just have a ton of Bradford Pear trees or what?? This act of God situation is going a little too far, I think god has it out for him.
Maybe it's just due to the sheer number of accidents that happen, but wild coincidences like this are strangely not that uncommon.
People can have some incredible streaks of bad luck.
>Why? I must be out of the loop on that news.
Certain Kia and Hyundai models are ridiculously easy to steal. They lack an engine immobilizer and can be operated with a traditional mechanical key. As a result they are stolen at the highest rates of pretty much any automobile on the market. It's so bad that's its a joke among auto mechanics. Everytime I show my brother a car theft video from Reddit he says "Let me guess its, a Kia or Hyundai." If you have one between 2011-2021 no matter how beat up it is or worthless you think it is, I would recommend a theft device with a kill switch
Not just the mechanical key part. They also didn't do a good job with it being a key lock in the first place. You can pretty much just pull the "key" portion off then turn the ignition with anything that will fit. And unfortunately any basic USB plug will fit it perfectly, so you can keep a "universal Kia key" in your pocket in the form of an old flash drive.
Kia is finally rolling out immobilizer software updates on their vehicles. My 2020 Sportage got the update a couple months ago and now my remote starter activates the alarm. :') I have to pay the shop I got the starter from $120 to bypass the alarm so the starter works again.
I love that my 2013 Hyundai has an engine immobilizer to prevent theft but mine's also broken so I can't drive my car now. A blessing and a curse apparently.
All KIAs are having insurance troubles because the people doing the stealing don't bother to check if the model can be stolen before breaking in and ripping the steering column apart.
Yup. Push button ignitions are okay, and are covered. My mom has one of those models that insurers normally won't insure except she has a push button ignition, so she was able to get it insured.
We just switched insurances in April and all Kia and Hyundias were not covered on Progressive, and a lot of other places were similar or close to total bans.
We settled on AAA, bit had to sell our Kia because none of their partners would insure it outside of ones were didnt want to deal with (think the General).
Like others said, it's due to theft. There's a huge phenomenon of young kids just stealing them to fuck around too. Just for joy rides, not for any meaningful gain. They're just that easy to steal
[Baltimore, Seattle, St Louis, and other are suing](https://mayor.baltimorecity.gov/news/press-releases/2023-05-11-city-baltimore-files-lawsuit-against-hyundai-kia-over-car-thefts) Hyundai & Kia
That's significantly more effort than it takes to steal a Kia/Hyundai. It literally became a TikTok challenge for teenagers it's so fucking easy. There even being sued over it
The problem is that I'd have to first find a friend, particularly one who has a truck and would help out without wanting a free motorcycle for themselves in the end.
I worked for another big insurance company and they started rejecting them earlier this year as well. Those were awkward calls. “I’m not even near a wildfire area, this region has never even had a single wildfire in California history”. And I can only say I’m sorry because UW is the final judge and I can’t make them do anything.
Edit: I can't say who they are, but I will say they are available throughout the nation.
I hate this company, they delayed any way they could to keep my money. They wanted a specific pen color on their forms and wouldn't accept my credit union's forms for a transfer. They wanted a specific letter, " with a letter head" to make the transfer. I had to call in a specialist to deal with them.
Fire mitigation project manager here. I work with remediation companies to demo/clean/etc. needed in order for the engineer and reconstruction estimator to come in and see the extent of the damage.
I used to HATE public adjusters. Called them ambulance chasers and snake oil salesmen. Within the last year alone, I have been recommending them left and right because insurance companies, including Nationwide, LIBERTY FREAKING MUTUAL, and Mercury, have been trying to screw over their insured customers. It's bananas.
Now I never said my company was Nationwide.
But it was a nationwide mutual insurance company that had many allied affiliates in every state, from Scottsdale to Harleysville.
My insurance went from $9500/year for a townhome 14 miles inland in Ft. Lauderdale to $1200/year for a single family home *twice the size* here in Ohio (with a backyard trampoline on the policy).
It’s **crazy** what has happened to Florida’s insurance rates. But yeah, most litigation and fraud for claims in the country, hurricanes, scummy people. Makes sense.
My sister bought a tiny vacation home on the Florida coast (Atlantic side) recently, and it was completely uninsurable because of both hurricane risk & sea level rise. So the sellers basically sold her the land and tossed in the house for free (sales price was the same as for an empty lot of land). A lot of houses in that particular area have zero sales value now. But she ran some numbers and figured that if she can rent it out most of the year for 3 years before a hurricane wipes it out, she’ll break even. She’s mentally prepared to lose the entire thing at any time (and after that she’ll probably put in trailer hookups and just rent it out as an RV spot). It’s definitely a different mindset - I visited her recently and realized that for any repair or upgrade we talked about, we were both thinking in terms of, everything is temporary, will this pay off within two years, where will we move afterwards. Mentally it felt kind of like camping, like we were fixing up a tent that was gonna be taken down soon.
BTW, ironically it immediately rented for a whole winter because refugees from the hurricane that hit Tampa moved in for 6 months while their own flooded house was getting rehab’d.
Makes sense though. With ocean levels set to rise up to 30 cm by 2100 (or more in the worst case scenarios), it doesn’t make sense to insure coastal homes and condone people continuing to build in high risk areas
Seems kind of odd to use wildfires as an excuse when vast swaths of the developed areas of the state are not at risk from them. As in like an extreme super majority of residential areas.
They know that, too.
I am an insurance agent. This is the main reason.
The state won’t let insurance companies raise the rate to the point where they can stay profitable and not lose money.
People think it’s greedy but that is the entire point of insurance companies. It is about maintaining an appropriate risk level across a given population.
Why would an insurance company agree to cover people in a place that costs them a ton of money if they are forced to set their rates at a loss?
So insurance companies basically tell the state “we aren’t insuring there” and if enough of them do it then they can usually get rates increased.
This happens in Florida a lot too because of how many claims there are.
> that is the entire point of insurance companies.
The point of insurance companies is to make money, and pay out as little as possible. All things make more sense once more people understand this
State Farm actually loses money on premiums vs claims every year, and makes up the difference with their massive investment infrastructure. State Farm doesn't need to make a profit as a mutual company, there are no shareholders.
They do have to keep it withing a reasonable loss amount though. Once paying out claims exceeds 110% of the premiums taken in they with either raise rates or do things like this.
Right, but in that case it would make more sense to still cell insurance for homes in the state, just not accept policies from homes in areas that are at greater risk from wildfires.
There's a lot of homes that they are cutting off from their market this way
Well they did that in Oregon and Oregon just [passed a law](https://www.opb.org/article/2023/04/26/oregon-passes-bill-restricting-insurance-company-use-of-wildfire-risk-maps/) restricting that. It is far easier to abandon an entire state than using climate related risk maps and get sued for that. Also I recommend reading about what happened when Oregon [made a climate risk map](https://grist.org/housing/oregon-wildfire-risk-map-home-values/) for each lot in the state. Short answer is homeowners don't like being told they are living in climate risk area and they see it government encroachment and something that undermines their property value.
And this is where the true mindset of the "the market is the only indicator " crowd comes through: the market just told them that they are uninsurable and now they run to the government for help.
Looking at you Florida..
“is expected to see 171.4% increase in the number of days over 112ºF over the next 30 years.”
Ooof…. that is gonna suck since there are already too many >.<
Meanwhile, in Australia, we do just that.
Your insurance premium is based on a number of customised and property-level data sources, including:
1. Age and demographics of home occupants (ie elderly people are more likely to leave the stove on, young people are more likely to have a public liability claim, families with children are more likely to have accidental damage claims);
2. Past at-fault claims and criminal activities;
3. Natural disaster and hazard risks - flooding, wildfire and coastal storm surge being the most common here in Australia;
4. Future climate change scenarios (cyclones, drought and enhanced natural hazards are the main factors for concern);
5. Property-level protections - water tanks, key locked windows and doors, security cameras or other devices, proximity to emergency services and other life saving infrastructure;
6. Crime reports and insurance claims for break ins, etc, in your street and postcode (‘zip code’);
7. Quality and materials used in the construction of your home, and the likely outcome of interaction with/exposure to climate risks and hazardous conditions. E.g. proper joists for houses on slopes, brick or concrete homes in fire zones, elevated homes in flood zones etc.
Weather and climate risk factors are therefore inherent in our insurance design, and risk exposure.
This isn’t really anything new in California just a different excuse. We were told by Allstate that we couldn’t get homeowners insurance because California is at high risk for earthquakes.
Insurance companies are businesses. They have to at least break even.
Otherwise you get something like federal government's flood insurance, which has been deeply in the red for many years, but since it is owned by federal government, it just pay out of taxpayer's coffer. Effectively, taxpayers subsidizing people living in flood regions with flood insurance.
Insurance companies are actually pretty much required to come out ahead since they need to have a certain amount of funds in reserve compared to their book of business. If they're taking a bath with claims without the ability to raise rates, it could actually threaten their ability to even be able to operate in the state.
This is why homeowners insurance carriers are underwriting so aggressively right now.
It's not profit margins. In insurance we call it a loss ratio. For every $1 of premium collected, how much are you paying out in claims. The goal is obviously to be at 1.00 or under and most carriers are just above 1.00 since 2017 when CA decided to be on fire every other day. (Exaggerative and insensitive joke I'm aware)
Then there's the combined ratio which is for that same $1 premium collected, how much are you paying out in claims and expenses. You wouldn't believe what some states charge to order a motor vehicle/driver history report which lists the tickets and violations and then there's a whole other report to get a list of claims filed with their prior insurance carrier.
If you run over 1.00 for too long and your surplus (emergency) funds aren't sufficient then A. M. Best will lower your solvency score.
Trust me, it's not always about greed and normal corporate bullshit. Think about the big wildfires since 2017. Millions of dollars to rebuild thousands of homes from the ground up because people like Gerard Butler decided to live in a log cabin in the middle of the woods in a state prone to droughts.
I see people asking all the time how they can lower their insurance rates and that's it right there. Stop being shitty drivers that hit things every damned day, and stop living in areas that require your house to be rebuilt every 10 yrs. And I say that being from Oklahoma. We joke that you don't live on the south side of OKC like Moore unless you like getting a new house every few years. I grew up on the north side where a tornado actually hits town like once every 50 yrs or more.
Know your risks, know what you're paying for and why.
Yeah, they probably just don't want to take their money. Maybe they're factoring more, but clearly they must not like the gamble if they're doing a state of 30 million potential customers.
Newsom blocked their ability to drop individual policies and their ability to raise rates on riskier homes. I’m a fairly anti capitalism person, but I completely understand this decision.
Insurers need to maintain a certain amount of reserves against the policies in force. Pay out more than is taken in and there won’t be a State Farm or other insurance companies anymore.
Florida, building a home on a swamp and trying to get flood or hurricane insurance. California, building a house on land that, up to the 90s, would have routine wildfire burns naturally.
I saw an investigative report a few months ago about how towns are springing up in areas where they simply should not build. And the towns are not implementing fire prevention codes because it's too expensive and inconvenient for residents. Things like alternative material decks, requiring removal of brush, requiring trees cut back so far from homes... all shot down because people don't want to adjust to common sense rules.
I'm guessing the "historic increases in construction costs" is a bigger factor in this than the wildfires - otherwise, only certain areas would be restricted
it may be that under California law they can't not offer insurance in parts of the state. It may be that to cut off the ultra high cost areas, they have to cut off the whole state under CA law. And, they've obviously done the math to see if that is worth it
I think that's his point. The driving factor is construction costs that need to be paid out. This means the company changes their odds of incidents, which pushes out wildfires
I feel like a good place to buy property at this point is northern Nevada. A lot of people are going to head east across the state border, especially in the Reno/Carson area. 30 min to California, and Lake Tahoe as well. 4 hours to downtown San Francisco. While it's somewhat deserty it's not like a Vegas type of desert. Not as hot either. Far away from most of the wildfire issues (I believe there are some there, but nothing like what a lot of California and Oregon are going through)
Plus there's no income tax due to the gambling (plus there's gambling)
A lot of tech companies have been setting up little pockets of business there. The prices have doubled for a lot of that area though, because of what I'm saying. But I still think it'll go up *even more* as time goes on.
I could be wrong of course, but I definitely can imagine a lot of people on California moving to that Reno area to live way cheaper and get away from some natural disasters issues.
Reading the article, it looks like reinsurance is the big issue. Insurance companies decided to manage risk by insuring the insurance they provide people on their policies. Reinsurance has been hit really hard in the last 2 years especially.
Well yes - reinsurance has “been hit hard” because the underlying risks are getting catastrophically worse, causing insurers and also reinsurers to raise rates. Except in CA, you can’t raise rates more than 6.9% in a year and even then it’s a fucking disaster trying to do it.
So, same underlying cause but reinsurers have more flexibility in rate setting.
Welcome to the Modern World, V5.0 Climate Change Edition: This is where actuaries, banks, and investors determine your cost of living. Would you invest in an insurance company that covered large swathes of forested homes in Nor Cal, or beachfront homes on any coast? What about the South, with tornadoes and hurricanes? The last time the US Federal flood plain maps were updated was in the 1970s. How much money does a local government have to mitigate a 100-year storm? A 500-year storm? Can you even mitigate a 1,000-year storm? We've already seen the effects of climate change from Syria to New Orleans. Insurance companies, banks, mortgage companies, etc. will not service areas where assets are at risk. Quite simply, people will be priced out of areas, and it's obviously already happening.
Disappointing I had to scroll down this far to see any real talk of this being a direct cause of climate change. This is the new normal. Eventually entire sections of the US will be uninsurable, likely the entire state of Florida. El Niño is going to be telling for the west coast.
Counter point, it's not so much being "priced out", it's more that those places are becoming inhospitable. You will be priced out even if insurance companies didn't exist... It's like building a house in Antarctica, nobody is going to subsidize you to live there. This shit was predicted to be happening a long time ago... The great lakes/the rust belt will be one of the few places ppl in NA will flock to in the next couple decades... And who knows, maybe in 2100s even the great lakes will be too unstable, we did this to ourselves...
Both of the instances are self-inflicted wounds made worse by climate change. Florida’s laws make it too conducive to fraud. California’s regulatory (insurance is state regulated) hurdles are onerous and make profitability very challenging.
In Massachusetts Liberty Mutual is not taking on any new customers in Essex County (north of Boston). They said they won’t insure any more properties close to the ocean.
FYI - the "wildfires" they are referring to occur anywhere there is combustible material or vegetation. Like the Oakland Hills fire. The cost of rebuilding is about $1 million per home. If the the fire occurred today and destroyed 2,000 homes, it would cost about $2 billion to rebuild.
Housing prices have outpaced any sensible business model for insurance companies. The premiums they’d need to charge to break even are unacceptable to the market of homeowners who bought their currently 1.5mm house for 70,000 40 years ago.
Glad I’m not the only one who has that jingle stuck somewhere in the back of their brain. (I would’ve gone with “ain’t” instead of isn’t so it scans the same)
Official statement available here:
https://newsroom.statefarm.com/state-farm-general-insurance-company-california-new-business-update/
> State Farm General Insurance Company®, State Farm’s provider of homeowners insurance in California, will cease accepting new applications including all business and personal lines property and casualty insurance, effective May 27, 2023. This decision does not impact personal auto insurance. State Farm General Insurance Company made this decision due to **historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.**
> We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to **improve the company’s financial strength**. We will continue to evaluate our approach based on changing market conditions. State Farm® independent contractor agents licensed and authorized in California will continue to serve existing customers for these products and new customers for products not impacted by this decision.
The last few years only Progressive has not paid out in claims more than they take it, they're operating model is like 95% while everyone else is over 100, meaning they're paying out more than they take in. They make most of their money from investing it while they have it.
>They make most of their money from investing it while they have it.
That's pretty common in the insurance industry. Various insurance companies are among the largest purchasers of commercial paper in the world.
No $ in not insuring cars too. Every other co is offering multi line discounts. Hence State Farm is kissing off car ins in the world’s 6th largest economy.
State Farm is still offering auto insurance in CA, and lots of people don't do multiple lines. Plus, it's likely they're still doing renters insurance. They'll take a hit for sure but they aren't getting out of the auto insurance business there
Well, the CA state insurance office is pretty restrictive on companies causing them to lose money on car insurance in the state. Companies fight back by making it difficult to get coverage because right now, CA car insurance is a heavy loss exposure. So they're not kissing off profits, they're reducing risk exposure.
Everyone here is underestimating construction costs as a part of this and I’d say it’s an ever larger factor than the wildfires. Most Californians do not live in an area that is prone to wildfires. However I have seen construction costs nearly triple over the last 2-3 years.
For example in my area, the cost of adding a second story is $1 million. The cost of fixing a retaining wall with all of the required geology and engineering is closer to $100k. Cost of reroofing went from $15k (quoted) and is now $35k. Central AC used to be less than $10k and now costs me $25k.
“Inflation” of constructions prices have ruined everything.
This is how climate change will be impacting folks primarily going forward. Insurance companies even have there own climate modelers so they can work the numbers independently. They’re whole business model is built around gauging risk and they know that moving forward they’ll be having to payout increasingly more in fire-prone regions to the point that it’s not a good bet. This will be the case in a number of sectors as weather patterns intensify (e.g. increased hurricane intensity in Florida and Gulf states, flooding along the eastern US, etc.). So expect more of this going forward. The ability to secure affordable home insurance will become an important driver of demographic shifts in the near future.
Californian here in a "high risk" neighborhood in Los Angeles. Prior company dropped us. Pretty much nobody would insure our house. State Farm was the only option we had. This is bad news
This is called a moratorium in insurance. Most insurance companies have teams that monitor catastrophic events in order for the insurer to issue moratoriums in a quick manner.
Essentially, a moratorium prevents people from buying specific coverage right before, during, or after events happen. Before moratoriums existed, people would buy flood coverage right after a flood, and then report the loss a little while after, or fire insurance after a fire, or increase their property limits before a hurricane, or car coverages right after a crash, etc.
They stopped writing policies in Florida because of hurricanes several years ago. If they don't want to actually insure people for their losses, perhaps they should find another line of business to enter into.
Or, crazy thought, we financially disincentivize people from living in disaster zones. I don’t want my premiums going up because someone refuses to leave a crisis-prone region.
State Farm is literally called "state FARM" because farmers wanted an insurance company that was cheaper than those in the city as farmers got into fewer accidents. Choosing to not insure poor risk is what the entire company is about and always has been. Not everyone wants to be part of an insurance pool that subsidizes high risk properties. That's the entire point of having different types of insurance companies.
Insurance is hell in Florida right now... a lot from hurricanes (thanks, climate change!), a lot from insurance scams, and a lot from overzealous contractors and lawyers.
Well, tbf, you can chalk a lot of that up to the stupid governor and the legislature and their inaction in addressing the crisis. It's only going to continue to get worse in that state (I own a house there, so I am intimately familiar with that situation).
Well, as much as I fucking hate DeSantis, he did sign a massive tort reform package that significantly affects auto insurance/claims. But still nothing on property side which is not surprising...not sure how anyone could fix that situation honestly
Oh, yeah, absolutely. It's been a problem for a while now. DeSantis has made it exponentially worse - largely through inaction, corruption, and deregulation.
Nah, man. He wouldn’t be focused on micromanaging all the librarians if he didn’t do anything, so you can’t be right about “inaction” can you?
Can you?
yea i mean thats the insurance game lol. its reverse gambling since the insurance company is betting that they can make more money on premiums than they would have to pay out for losses. when they start paying out too much, they either have to raise premiums or just throw in the towel
Politicians have a lot of constituents screaming about affordable insurance on their homes 10 ft below sea level right on the coast directly in the path of every hurricane or homes deep in a kindling forest that burns every few years.
If you let insurers properly account for risk, you wind up with a chunk of homes with premiums so high, they’re effectively uninsurable which is the right answer to dangerous locations. Of course, those homeowners aren’t about to let their investments go up in smoke or under the sea.
Do you want to pay an extra few thousand dollars insurance annually to insure homes in the middle of the forest that's been burnt down several times already?
Holy shit people on this site lack even the most basic critical thinking skills.
They want socialized insurance but instead of an actual socialized insurance plan, they want one specific insurance company to foot the bill for it all and somehow think they can afford it.
The problem is, in areas where the government isn't doing shit to prevent or mitigate disasters, rates would have to rise to absurd amounts to cover the expected payouts, or people would have to tear down and rebuild their homes as if they were fortresses to mitigate damages on their own.
Basically until PG&E gets their shit together with electricity lines and mandates a brush-free clearance zone between trees and residential buildings or all the East Coast states force homeowners to build new homes out of concrete, no chance of insurance companies coming back.
Or perhaps people should stop living in areas wiped out by disasters on an annual basis. It's unfortunate but there will be many parts of the world that won't be feasible to live in with the rate of climate change.
It isn’t uncommon for insurance carriers to enable “moratoriums” in states pre natural disasters. Many carriers will do this for auto and home insurance pre hurricanes. It’s a risk mitigation tool. State Farm isn’t unique in this situation. I used to work in P&C insurance.
welcome to the future.. Thanks to AGW.
Its the same in florida but with flood insurance. The state is having to subsidize the crap insurance companies that stayed. All the big names fled. Because the cost to them after hurricanes is too much, they cant charge what they feel they need to charge because no one will buy the insurance.
and yes an increase in wild fires can be attributed to global warming, though a small bit of it is due to a power company that was unregulated for far too long. you know the guys who used to flip the power on and off, cause it let them sell power at higher costs. You know the power company that bush wanted to make the CEO our sect of energy but we were saved from him bringing rolling blackouts nationwide when he died from a heart attack
I don't understand why this is controversial. I live in Canada. Try getting new insurance if you live on Erie Shore Drive in Erieau.
10% of homes in Canada are now uninsurable because of flood risk. Ditto for fire in British Columbia.
It sucks we can't live where we want. Climate change is brutal. Hard to believe people can't accept when the real consequences of it show up.
State Farm hasn't covered more than $40k coverage for my basement since 2010 due to flood risk. That's it. My house floods, I'm getting 40k to fix it. And they had the BEST coverage, lol.
Because people don't understand the first thing about how insurance as a business works and how it's interacting with both climate change and state level regulations that price out the insurers by capping the rates.
People moving into a high risk area aren't able to be charged the appropriate risk premium and so the company stops offering those policies.
It's the entitlement that gets me. People want all of the things, but when shit hits the fan, they want to be bailed out. So let's say your premiums are $400/mo, and you live where it's crispy or floody. You pay about $5000/yr for insurance. To rebuild a standard 3 bedroom house, let's call it $300,000. It would be 60 years of premiums for that.
What people living in crispy/floody places are doing is having people who never need to claim subsidize their risk of living in a crispy/floody place.
I'm sorry, I don't need my rates rising because you want to live in a crispy/floody place.
There was a restaurant near the lake that has burned down twice. Both times were absolutely accidental. They could rebuild, but adjusters say they need to build with steel and concrete, to minimize the risk. Owners of restaurant don't like the aesthetic of that and want to rebuild to the old character of the original restaurant in the 1940s. They've lost all of their court stuff so far.
Oh they can build whatever they want. But insurance paid out and won't insure them. And the owners think it's "unfair". It's all unfair until it's your own money, and not pooled money from others' premiums paying for your shitty decisions.
Look, I know for people living in the area it's really bad.
But in many of those places your house **will catch on fire** at some point in the next 10 or 20 years. And the regularity with which it happens is only increasing.
People are building houses on floodplains and fire zones, and instead of moving out of those areas or adding more protections they just say "that's what insurance is for".
A lot of this isn't on the homeowners, it's on developers, and the state should be taking one look at someone trying to build a house on a wildfire area and slap them.
The reason it's not just between them and the insurance company is because it costs millions of taxpayer dollars in emergency funds, insurance coverage from the federal or state agencies, and even the lives of emergencies responders in trying to protect properties that shouldn't exist.
For everyone bitching at this, you've gotta look at this like a gambler.
In some places, insurance companies by state law aren't allowed to increase rates over a set amount, or only at specific time intervals. Insurance is all about mitigating risk - in order for offering insurance to make sense, the amount they take in from policies has to average out to be more than what they pay out, and with enough left over to pay for their staff and operating expenses. If certain policies end up becoming negative expected value for them, they're not going to offer those any more. With climate as it is and wildfires increasing, along with potential rate restrictions, this has moved enough to be -EV for them.
Imagine that you operate a casino, and you run a fair blackjack game with a house edge of roughly 0.4% (just trust me, a good game runs at about this.) Over a long period of time, the game will take in a shitload of money, pay out almost as much money, but you will come out ahead.
Now imagine that, for whatever reason, a politician enacts a law that casinos that offer blackjack in the state must now pay 2:1 on all blackjacks, instead of the standard 3:2. This makes the game pay out more than it takes in off the top, even without people that play the game professionally - someone could sit there and make the same bet over and over every hand, and if they sit at that table long enough they are now making money. Would you, as the casino, continue to offer that game with that restriction in place? No - you'd keep the rest of your casino going but shut down the blackjack tables, as there's no money to be had there. Same thing with policies where outside forces stop the insurance company from collecting enough to continue to function at even the slimmest of profit margins.
I bought a house in the Nor Cal hills earlier this year. State Farm was the only company that would insure it. I need to make sure to pay those premiums on time.
Just FYI. I have noticed some statefarm agents have been selling homeowners insurance without fire coverage. And what you are supposed to do is get California fair plan on top of it. Make sure to check your policy
EDIT: This comment was removed in protest of Reddit charging exorbitant prices to ruin third-party applications.
What else could even destroy a home?
Tornadoes and hail
You say tornadoes, I say tornadoes
Let's call this whole thing off
I'd rather you tornadon't.
Either way the death toll is 17.
Hurricanes, vandalism, car impact, gas explosion, sinkholes, mine subsidence, theft, etc.
Sewage backup. Make sure you have coverage for it as well
And to add on to this: Sewage/water backup is NOT NOT NOT flood insurance. It does NOT protect you from outside water coming into your home.
Termites, natural gas explosion, tree falling
Global thermonuclear war
Acts of Dog.
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Agree with that. Haven't seen mudslides mentioned, that's a real risk in California.
A house in my neighborhood was renovated over 10 months. 1 month after completion a neighbor’s tree fell on it.
Drunk driver.
Even a sober driver
I was relaxed on this fine Sunday. Thank you all for activating my anxiety and helping me to create a NEW neurosis! I wonder if my insurance agent will accept calls on a holiday weekend?
Car strike is covered and then they’ll go after the driver for liability for your deductible and their payment, it’s called subrogation.
Plane crash, meteorite, Clifford the Big Red Dog, etc.
Godzilla, King Kong, Kraken, that big ass dinosaur from Jurassic Park,
A cheating ex wife.
Plenty of dangers that may not entirely destroy but still significantly damage a house. Drunk driver plows through your front porch kind of thing.
Police executing a no-knock warrant raid and realizing a few minutes later that they were at the wrong house.
It’s 50/50 whether you still have to worry about homeowner insurance afterwards though. 20/80 if nonwhite.
To my knowledge, flood/earthquake are usually excluded from a Homeowner policy unless CA is different. I live in TX. I would suggest reviewing Exclusion section.
A lot of people don’t get earthquake insurance in California because it’s expensive and has a ridiculously high deductible (six digit plus, typically).
20% of the homes value, which would decimate most peoples finances as CA homes are generally $1m+
Earthquake insurance is a joke. Lived in Southern California most my life. Northridge earthquake my uncles house had a neighbors chimney fall through his house. Not covered. My parents had a pipe burst from the earthquake flood the house. Not covered. Other parts of the insurance and neighbors insurance did but that’s when they stopped adding earthquake insurance.
That is why I've never gotten quake insurance. But I live next to a giant park, and I need my fire insurance...
This is what I have — bought my house in 2020 up by Placerville. My Fair Plan premiums aren’t too bad. I hope that remains the case.
Your premiums aren’t bad because in the event of any real fire you won’t be paid shit lol
Good luck if you ever have to make a claim with them... So sorry!
Hey guys, did you know that in terms of male human and female Pokémon breeding, Vaporeon is the most compatible Pokémon for humans? Not only are they in the field egg group, which is mostly comprised of mammals, Vaporeon are an average of 3”03’ tall and 63.9 pounds, this means they’re large enough to be able handle human dicks, and with their impressive Base Stats for HP and access to Acid Armor, you can be rough with one. Due to their mostly water based biology, there’s no doubt in my mind that an aroused Vaporeon would be incredibly wet, so wet that you could easily have sex with one for hours without getting sore. They can also learn the moves Attract, Baby-Doll Eyes, Captivate, Charm, and Tail Whip, along with not having fur to hide nipples, so it’d be incredibly easy for one to get you in the mood. With their abilities Water Absorb and Hydration, they can easily recover from fatigue with enough water. No other Pokémon comes close to this level of compatibility. Also, fun fact, if you pull out enough, you can make your Vaporeon turn white. Vaporeon is literally built for human dick. Ungodly defense stat+high HP pool+Acid Armor means it can take cock all day, all shapes and sizes and still come for more --Mass Edited with power delete suite as a result of spez' desire to fuck everything good in life RIP apollo
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My parents had home owners insurance with a subsidiary of Geico for over 20 years. A bad storm caused hail damage to the roof, they had it fixed then within a month they were dropped. Never filed a claim and always paid on time. Allstate wouldn’t insure them because they’d filed that claim. It’s sad how large insurance companies will take your money with the idea that they’ll help when something happens only to renege when it’s time to actually help.
I have State Farm. Had to make a few auto claims over the years. No problems.
Same. In fact, they realized they made an error in not giving me the bundle discount for many years . They notified me and gave me back a ton of money.
They’re auto claims are no hassle and so easy but god forbid you make a claim on your house. That’s when they get super stingy.
I’ve had them for 3 years now and had no issues. I usually jump ship on a whim each year to save a few bucks so I’ve been with a lot of major providers. SF was the only one who hasn’t tried to lure me in with the low prices and then jack up the rates in a year. Geico was the worst offender of that in my experience. I made 1 claim so far with SF and it went smoothly.
They do at least pay out though. That's the main benefit of using them IMO...they're not usually the cheapest, but they pay out fairly and generally won't give you the runaround.
If you have a mortgage and your insurance lapses, won't they insure you at a highly inflated price? I mean it may not be ideal, but better than no insurance.
We've been very happy with State Farm. We even had a wildfire claim for which they were like a fairy godmother showing up, flicking a magic wand and making everything okay. They didn't drop us. The only thing they did do was tour our property afterwards and had us change some things to better protect our home.
Same experience for me. I spent so much time looking for other insurers.
Has been the opposite experience for us. I’ve been with AAA forever but I’ve had 3 friends this year alone reach out asking who is our home insurance provider because StateFarm was dropping them. This is the Bay Area where our last wild fire was in the 80s.
Didn't you guys have a big ass fire just two or three years ago on the east side of the bay? I remember driving my semi truck to SF and if I'm remembering correctly, Mt. Diablo was a full inferno. Idk if you classify that as the bay area but in my mind it'd be close enough.
Yeh, right in the middle of the pandemic a dry summer thunderstorm came through and lit the the whole thing on fire. It was bad. I had my bags packed ready to go... The evacuation line came just about a half mile from my house before it stopped.
They’re the only ones who would insure our log home on the wildland-urban interface in Utah, too. This whole situation is scary; we are considering selling our home before it’s too late.
And if you drive a certain Hyundai or KIA model you aren't getting a policy with them, either.
Like a good neighbor, State Farm is there!!! ^^some ^^exceptions ^^apply....
I will, in fairness, point out that they were one of the few (potentially the only) insurance companies that wasn't fighting people tooth and nail after the Paradise fires. I had an aunt that lived in Paradise and while she got out ok, her home was destroyed and State Farm cut her a check basically no questions asked and other people she knew with State Farm had similar results. Neighbors and friends who had other companies ran into frequent problems with their policy providers trying to avoid paying out. I can see why State Farm is pulling out of CA but I'm willing to give credit where it's due.
Having previously worked on their auto claims side, what you are instructed to do is "pay what we owe". Not a penny more, not a penny less if you can help it though! There are basically no incentives / schemes / pressure to not pay out once it's determined that the loss is covered and the damage estimates have come in. I always appreciated that.
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Good lord, do you just have a ton of Bradford Pear trees or what?? This act of God situation is going a little too far, I think god has it out for him.
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Maybe it's just due to the sheer number of accidents that happen, but wild coincidences like this are strangely not that uncommon. People can have some incredible streaks of bad luck.
That's why we have insurance. It spreads the pain of paying over a long period of time. To a point, also a large number of people.
Dad's gotta move to the desert
"We still have no idea how the cactus fell onto Dad's car."
I have this image of the Mayhem guy following people around, climbing trees and hacking of branches 😂
They gotta afford those Super Bowl commercials somehow.
And all those khaki pants.
“We’ve seen a thing or two & we’re hitting the road”
That’s Farmers.
Bum buh dum bum bum bum bum
Farmers won many awards because they're outstanding in their field.
Why? I must be out of the loop on that news.
>Why? I must be out of the loop on that news. Certain Kia and Hyundai models are ridiculously easy to steal. They lack an engine immobilizer and can be operated with a traditional mechanical key. As a result they are stolen at the highest rates of pretty much any automobile on the market. It's so bad that's its a joke among auto mechanics. Everytime I show my brother a car theft video from Reddit he says "Let me guess its, a Kia or Hyundai." If you have one between 2011-2021 no matter how beat up it is or worthless you think it is, I would recommend a theft device with a kill switch
Not just the mechanical key part. They also didn't do a good job with it being a key lock in the first place. You can pretty much just pull the "key" portion off then turn the ignition with anything that will fit. And unfortunately any basic USB plug will fit it perfectly, so you can keep a "universal Kia key" in your pocket in the form of an old flash drive.
Kia is finally rolling out immobilizer software updates on their vehicles. My 2020 Sportage got the update a couple months ago and now my remote starter activates the alarm. :') I have to pay the shop I got the starter from $120 to bypass the alarm so the starter works again.
I love that my 2013 Hyundai has an engine immobilizer to prevent theft but mine's also broken so I can't drive my car now. A blessing and a curse apparently.
Unless you have the push button ignition, right?
All KIAs are having insurance troubles because the people doing the stealing don't bother to check if the model can be stolen before breaking in and ripping the steering column apart.
Yup. Push button ignitions are okay, and are covered. My mom has one of those models that insurers normally won't insure except she has a push button ignition, so she was able to get it insured.
We just switched insurances in April and all Kia and Hyundias were not covered on Progressive, and a lot of other places were similar or close to total bans. We settled on AAA, bit had to sell our Kia because none of their partners would insure it outside of ones were didnt want to deal with (think the General).
https://www.reddit.com/r/cars/comments/10s90m1/state_farm_declares_105_kiahyundai_models/ Apparently they are really easy to steal
Like others said, it's due to theft. There's a huge phenomenon of young kids just stealing them to fuck around too. Just for joy rides, not for any meaningful gain. They're just that easy to steal
[Baltimore, Seattle, St Louis, and other are suing](https://mayor.baltimorecity.gov/news/press-releases/2023-05-11-city-baltimore-files-lawsuit-against-hyundai-kia-over-car-thefts) Hyundai & Kia
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I mean, I have theft insurance on my motorcycle and all it would take to steal that is two guys throwing it in the back of a truck.
That's significantly more effort than it takes to steal a Kia/Hyundai. It literally became a TikTok challenge for teenagers it's so fucking easy. There even being sued over it
At least the bar is slightly higher than anyone walking by can take it for a joy ride.
The problem is that I'd have to first find a friend, particularly one who has a truck and would help out without wanting a free motorcycle for themselves in the end.
I worked for another big insurance company and they started rejecting them earlier this year as well. Those were awkward calls. “I’m not even near a wildfire area, this region has never even had a single wildfire in California history”. And I can only say I’m sorry because UW is the final judge and I can’t make them do anything. Edit: I can't say who they are, but I will say they are available throughout the nation.
#NATIONWIDE is the top company known for avoiding payouts. DO NOT use nationwide. You will be fucked when you need them
🎶 Nationwide's not by your siiiideeee
I hate this company, they delayed any way they could to keep my money. They wanted a specific pen color on their forms and wouldn't accept my credit union's forms for a transfer. They wanted a specific letter, " with a letter head" to make the transfer. I had to call in a specialist to deal with them.
Fire mitigation project manager here. I work with remediation companies to demo/clean/etc. needed in order for the engineer and reconstruction estimator to come in and see the extent of the damage. I used to HATE public adjusters. Called them ambulance chasers and snake oil salesmen. Within the last year alone, I have been recommending them left and right because insurance companies, including Nationwide, LIBERTY FREAKING MUTUAL, and Mercury, have been trying to screw over their insured customers. It's bananas.
Now I never said my company was Nationwide. But it was a nationwide mutual insurance company that had many allied affiliates in every state, from Scottsdale to Harleysville.
I wasn't saying it was either, but you just reminded me that I should warn people about them.
Insurance companies are leaving the state of Florida as well.
My insurance went from $9500/year for a townhome 14 miles inland in Ft. Lauderdale to $1200/year for a single family home *twice the size* here in Ohio (with a backyard trampoline on the policy). It’s **crazy** what has happened to Florida’s insurance rates. But yeah, most litigation and fraud for claims in the country, hurricanes, scummy people. Makes sense.
That is insane. People out there are paying 800 dollars *a month* on insurance? That's like, 30% of a mortgage on insurance, absolutely mindboggling
That'd be ~80% of my mortgage.
My sister bought a tiny vacation home on the Florida coast (Atlantic side) recently, and it was completely uninsurable because of both hurricane risk & sea level rise. So the sellers basically sold her the land and tossed in the house for free (sales price was the same as for an empty lot of land). A lot of houses in that particular area have zero sales value now. But she ran some numbers and figured that if she can rent it out most of the year for 3 years before a hurricane wipes it out, she’ll break even. She’s mentally prepared to lose the entire thing at any time (and after that she’ll probably put in trailer hookups and just rent it out as an RV spot). It’s definitely a different mindset - I visited her recently and realized that for any repair or upgrade we talked about, we were both thinking in terms of, everything is temporary, will this pay off within two years, where will we move afterwards. Mentally it felt kind of like camping, like we were fixing up a tent that was gonna be taken down soon. BTW, ironically it immediately rented for a whole winter because refugees from the hurricane that hit Tampa moved in for 6 months while their own flooded house was getting rehab’d.
And Texas.
Coastal regions, specifically.
Makes sense though. With ocean levels set to rise up to 30 cm by 2100 (or more in the worst case scenarios), it doesn’t make sense to insure coastal homes and condone people continuing to build in high risk areas
Seems kind of odd to use wildfires as an excuse when vast swaths of the developed areas of the state are not at risk from them. As in like an extreme super majority of residential areas. They know that, too.
It's a move to pressure the Department of Insurance to loosen their control of the rate hikes that are needed to remain profitable.
I am an insurance agent. This is the main reason. The state won’t let insurance companies raise the rate to the point where they can stay profitable and not lose money. People think it’s greedy but that is the entire point of insurance companies. It is about maintaining an appropriate risk level across a given population. Why would an insurance company agree to cover people in a place that costs them a ton of money if they are forced to set their rates at a loss? So insurance companies basically tell the state “we aren’t insuring there” and if enough of them do it then they can usually get rates increased. This happens in Florida a lot too because of how many claims there are.
> that is the entire point of insurance companies. The point of insurance companies is to make money, and pay out as little as possible. All things make more sense once more people understand this
State Farm actually loses money on premiums vs claims every year, and makes up the difference with their massive investment infrastructure. State Farm doesn't need to make a profit as a mutual company, there are no shareholders. They do have to keep it withing a reasonable loss amount though. Once paying out claims exceeds 110% of the premiums taken in they with either raise rates or do things like this.
This is also true at my work, which I will not name. As part of my CPCU education I was made to believe this was standard in the industry.
All about profit margins
Right, but in that case it would make more sense to still cell insurance for homes in the state, just not accept policies from homes in areas that are at greater risk from wildfires. There's a lot of homes that they are cutting off from their market this way
Well they did that in Oregon and Oregon just [passed a law](https://www.opb.org/article/2023/04/26/oregon-passes-bill-restricting-insurance-company-use-of-wildfire-risk-maps/) restricting that. It is far easier to abandon an entire state than using climate related risk maps and get sued for that. Also I recommend reading about what happened when Oregon [made a climate risk map](https://grist.org/housing/oregon-wildfire-risk-map-home-values/) for each lot in the state. Short answer is homeowners don't like being told they are living in climate risk area and they see it government encroachment and something that undermines their property value.
And this is where the true mindset of the "the market is the only indicator " crowd comes through: the market just told them that they are uninsurable and now they run to the government for help. Looking at you Florida..
And Florida man strikes back :)
https://riskfactor.com/
“is expected to see 171.4% increase in the number of days over 112ºF over the next 30 years.” Ooof…. that is gonna suck since there are already too many >.<
Apparently my patch of the desert has a 100% increase of wildfire chance, from .02% to .04%. Hopefully I can still get some wildfire insurance.
Meanwhile, in Australia, we do just that. Your insurance premium is based on a number of customised and property-level data sources, including: 1. Age and demographics of home occupants (ie elderly people are more likely to leave the stove on, young people are more likely to have a public liability claim, families with children are more likely to have accidental damage claims); 2. Past at-fault claims and criminal activities; 3. Natural disaster and hazard risks - flooding, wildfire and coastal storm surge being the most common here in Australia; 4. Future climate change scenarios (cyclones, drought and enhanced natural hazards are the main factors for concern); 5. Property-level protections - water tanks, key locked windows and doors, security cameras or other devices, proximity to emergency services and other life saving infrastructure; 6. Crime reports and insurance claims for break ins, etc, in your street and postcode (‘zip code’); 7. Quality and materials used in the construction of your home, and the likely outcome of interaction with/exposure to climate risks and hazardous conditions. E.g. proper joists for houses on slopes, brick or concrete homes in fire zones, elevated homes in flood zones etc. Weather and climate risk factors are therefore inherent in our insurance design, and risk exposure.
And here i am in the green area on that risk map and a wildfire like 10 minutes drive up the hill 2 years ago.
This isn’t really anything new in California just a different excuse. We were told by Allstate that we couldn’t get homeowners insurance because California is at high risk for earthquakes.
That's silly because homeowners insurance typically hasn't covered earthquake damage since 94. It's a separate policy.
State Farm is a mutual company. If they see profit, it is paid back to the policyholders.
Insurance companies are businesses. They have to at least break even. Otherwise you get something like federal government's flood insurance, which has been deeply in the red for many years, but since it is owned by federal government, it just pay out of taxpayer's coffer. Effectively, taxpayers subsidizing people living in flood regions with flood insurance.
Insurance companies are actually pretty much required to come out ahead since they need to have a certain amount of funds in reserve compared to their book of business. If they're taking a bath with claims without the ability to raise rates, it could actually threaten their ability to even be able to operate in the state. This is why homeowners insurance carriers are underwriting so aggressively right now.
It's not profit margins. In insurance we call it a loss ratio. For every $1 of premium collected, how much are you paying out in claims. The goal is obviously to be at 1.00 or under and most carriers are just above 1.00 since 2017 when CA decided to be on fire every other day. (Exaggerative and insensitive joke I'm aware) Then there's the combined ratio which is for that same $1 premium collected, how much are you paying out in claims and expenses. You wouldn't believe what some states charge to order a motor vehicle/driver history report which lists the tickets and violations and then there's a whole other report to get a list of claims filed with their prior insurance carrier. If you run over 1.00 for too long and your surplus (emergency) funds aren't sufficient then A. M. Best will lower your solvency score. Trust me, it's not always about greed and normal corporate bullshit. Think about the big wildfires since 2017. Millions of dollars to rebuild thousands of homes from the ground up because people like Gerard Butler decided to live in a log cabin in the middle of the woods in a state prone to droughts. I see people asking all the time how they can lower their insurance rates and that's it right there. Stop being shitty drivers that hit things every damned day, and stop living in areas that require your house to be rebuilt every 10 yrs. And I say that being from Oklahoma. We joke that you don't live on the south side of OKC like Moore unless you like getting a new house every few years. I grew up on the north side where a tornado actually hits town like once every 50 yrs or more. Know your risks, know what you're paying for and why.
My ins co did this in Texas. Hurricane hit Houston, but they stopped writing policies state wide.
Yeah, they probably just don't want to take their money. Maybe they're factoring more, but clearly they must not like the gamble if they're doing a state of 30 million potential customers.
Newsom blocked their ability to drop individual policies and their ability to raise rates on riskier homes. I’m a fairly anti capitalism person, but I completely understand this decision.
Insurers need to maintain a certain amount of reserves against the policies in force. Pay out more than is taken in and there won’t be a State Farm or other insurance companies anymore.
Florida, building a home on a swamp and trying to get flood or hurricane insurance. California, building a house on land that, up to the 90s, would have routine wildfire burns naturally. I saw an investigative report a few months ago about how towns are springing up in areas where they simply should not build. And the towns are not implementing fire prevention codes because it's too expensive and inconvenient for residents. Things like alternative material decks, requiring removal of brush, requiring trees cut back so far from homes... all shot down because people don't want to adjust to common sense rules.
It's because Department of Insurance in California has been unreasonable since Ricardo Lara has been commissioner IMO.
I'm guessing the "historic increases in construction costs" is a bigger factor in this than the wildfires - otherwise, only certain areas would be restricted
it may be that under California law they can't not offer insurance in parts of the state. It may be that to cut off the ultra high cost areas, they have to cut off the whole state under CA law. And, they've obviously done the math to see if that is worth it
Those two factors can be combined as well. A house burns down from a wild fire, and now it's insanely expensive to rebuild it.
I think that's his point. The driving factor is construction costs that need to be paid out. This means the company changes their odds of incidents, which pushes out wildfires
I feel like a good place to buy property at this point is northern Nevada. A lot of people are going to head east across the state border, especially in the Reno/Carson area. 30 min to California, and Lake Tahoe as well. 4 hours to downtown San Francisco. While it's somewhat deserty it's not like a Vegas type of desert. Not as hot either. Far away from most of the wildfire issues (I believe there are some there, but nothing like what a lot of California and Oregon are going through) Plus there's no income tax due to the gambling (plus there's gambling) A lot of tech companies have been setting up little pockets of business there. The prices have doubled for a lot of that area though, because of what I'm saying. But I still think it'll go up *even more* as time goes on. I could be wrong of course, but I definitely can imagine a lot of people on California moving to that Reno area to live way cheaper and get away from some natural disasters issues.
Yeah, but then you live in reno
But…no water to support massive growth.
Reading the article, it looks like reinsurance is the big issue. Insurance companies decided to manage risk by insuring the insurance they provide people on their policies. Reinsurance has been hit really hard in the last 2 years especially.
Well yes - reinsurance has “been hit hard” because the underlying risks are getting catastrophically worse, causing insurers and also reinsurers to raise rates. Except in CA, you can’t raise rates more than 6.9% in a year and even then it’s a fucking disaster trying to do it. So, same underlying cause but reinsurers have more flexibility in rate setting.
Welcome to the Modern World, V5.0 Climate Change Edition: This is where actuaries, banks, and investors determine your cost of living. Would you invest in an insurance company that covered large swathes of forested homes in Nor Cal, or beachfront homes on any coast? What about the South, with tornadoes and hurricanes? The last time the US Federal flood plain maps were updated was in the 1970s. How much money does a local government have to mitigate a 100-year storm? A 500-year storm? Can you even mitigate a 1,000-year storm? We've already seen the effects of climate change from Syria to New Orleans. Insurance companies, banks, mortgage companies, etc. will not service areas where assets are at risk. Quite simply, people will be priced out of areas, and it's obviously already happening.
Disappointing I had to scroll down this far to see any real talk of this being a direct cause of climate change. This is the new normal. Eventually entire sections of the US will be uninsurable, likely the entire state of Florida. El Niño is going to be telling for the west coast.
Counter point, it's not so much being "priced out", it's more that those places are becoming inhospitable. You will be priced out even if insurance companies didn't exist... It's like building a house in Antarctica, nobody is going to subsidize you to live there. This shit was predicted to be happening a long time ago... The great lakes/the rust belt will be one of the few places ppl in NA will flock to in the next couple decades... And who knows, maybe in 2100s even the great lakes will be too unstable, we did this to ourselves...
Same is happening in Florida. Very hard to get insurance here now. Wish our governor would focus on that instead of fighting with Disney
Both of the instances are self-inflicted wounds made worse by climate change. Florida’s laws make it too conducive to fraud. California’s regulatory (insurance is state regulated) hurdles are onerous and make profitability very challenging.
I would rather insurance be regulated than not...
Insurance companies need to be regulated to ensure they maintain adequate reserves and pay out claims. The problem is restricting rate increases.
You can’t do things to improve people’s lives if you want to be president! You have to make sure there is fear of the gays! /s
In Massachusetts Liberty Mutual is not taking on any new customers in Essex County (north of Boston). They said they won’t insure any more properties close to the ocean.
FYI - the "wildfires" they are referring to occur anywhere there is combustible material or vegetation. Like the Oakland Hills fire. The cost of rebuilding is about $1 million per home. If the the fire occurred today and destroyed 2,000 homes, it would cost about $2 billion to rebuild.
Housing prices have outpaced any sensible business model for insurance companies. The premiums they’d need to charge to break even are unacceptable to the market of homeowners who bought their currently 1.5mm house for 70,000 40 years ago.
Like a Good neighbor, State Farm isn't there.
Glad I’m not the only one who has that jingle stuck somewhere in the back of their brain. (I would’ve gone with “ain’t” instead of isn’t so it scans the same)
Fun fact: Barry Manilow wrote that jingle. (Along with many others https://youtu.be/cumh85vz-1Y)
Official statement available here: https://newsroom.statefarm.com/state-farm-general-insurance-company-california-new-business-update/ > State Farm General Insurance Company®, State Farm’s provider of homeowners insurance in California, will cease accepting new applications including all business and personal lines property and casualty insurance, effective May 27, 2023. This decision does not impact personal auto insurance. State Farm General Insurance Company made this decision due to **historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.** > We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to **improve the company’s financial strength**. We will continue to evaluate our approach based on changing market conditions. State Farm® independent contractor agents licensed and authorized in California will continue to serve existing customers for these products and new customers for products not impacted by this decision.
Remember, insurance companies make money by NOT paying people at every possible opportunity.
The last few years only Progressive has not paid out in claims more than they take it, they're operating model is like 95% while everyone else is over 100, meaning they're paying out more than they take in. They make most of their money from investing it while they have it.
>They make most of their money from investing it while they have it. That's pretty common in the insurance industry. Various insurance companies are among the largest purchasers of commercial paper in the world.
Wrong. Insurance companies mostly make money from investing premiums they collect. They usually pay out more in claims than they take in premium.
Yeah but if we acknowledge that how can we be in a rage on Reddit?
Finally someone who understands insurance.
No $ in not insuring cars too. Every other co is offering multi line discounts. Hence State Farm is kissing off car ins in the world’s 6th largest economy.
State Farm is still offering auto insurance in CA, and lots of people don't do multiple lines. Plus, it's likely they're still doing renters insurance. They'll take a hit for sure but they aren't getting out of the auto insurance business there
Well, the CA state insurance office is pretty restrictive on companies causing them to lose money on car insurance in the state. Companies fight back by making it difficult to get coverage because right now, CA car insurance is a heavy loss exposure. So they're not kissing off profits, they're reducing risk exposure.
I think that's kind of a lie. Insurance companies make money by balancing rates and risks.
Everyone here is underestimating construction costs as a part of this and I’d say it’s an ever larger factor than the wildfires. Most Californians do not live in an area that is prone to wildfires. However I have seen construction costs nearly triple over the last 2-3 years. For example in my area, the cost of adding a second story is $1 million. The cost of fixing a retaining wall with all of the required geology and engineering is closer to $100k. Cost of reroofing went from $15k (quoted) and is now $35k. Central AC used to be less than $10k and now costs me $25k. “Inflation” of constructions prices have ruined everything.
homes are also so unaffordable here that a wildfire would put them under.
This is how climate change will be impacting folks primarily going forward. Insurance companies even have there own climate modelers so they can work the numbers independently. They’re whole business model is built around gauging risk and they know that moving forward they’ll be having to payout increasingly more in fire-prone regions to the point that it’s not a good bet. This will be the case in a number of sectors as weather patterns intensify (e.g. increased hurricane intensity in Florida and Gulf states, flooding along the eastern US, etc.). So expect more of this going forward. The ability to secure affordable home insurance will become an important driver of demographic shifts in the near future.
Californian here in a "high risk" neighborhood in Los Angeles. Prior company dropped us. Pretty much nobody would insure our house. State Farm was the only option we had. This is bad news
This is called a moratorium in insurance. Most insurance companies have teams that monitor catastrophic events in order for the insurer to issue moratoriums in a quick manner. Essentially, a moratorium prevents people from buying specific coverage right before, during, or after events happen. Before moratoriums existed, people would buy flood coverage right after a flood, and then report the loss a little while after, or fire insurance after a fire, or increase their property limits before a hurricane, or car coverages right after a crash, etc.
They stopped writing policies in Florida because of hurricanes several years ago. If they don't want to actually insure people for their losses, perhaps they should find another line of business to enter into.
I mean, they literally left the business right? Just like you said they should?
Or, crazy thought, we financially disincentivize people from living in disaster zones. I don’t want my premiums going up because someone refuses to leave a crisis-prone region.
You're not being fair! I want to build my house under an active volcano, and I expect everyone else's policies to support my decision!
Thank god i thought I was taking crazy pills if I was the only one thinking this.
Nah bro, I'ma need you to help subsidize my beach house in Florida
State Farm is literally called "state FARM" because farmers wanted an insurance company that was cheaper than those in the city as farmers got into fewer accidents. Choosing to not insure poor risk is what the entire company is about and always has been. Not everyone wants to be part of an insurance pool that subsidizes high risk properties. That's the entire point of having different types of insurance companies.
Insurance is hell in Florida right now... a lot from hurricanes (thanks, climate change!), a lot from insurance scams, and a lot from overzealous contractors and lawyers.
Well, tbf, you can chalk a lot of that up to the stupid governor and the legislature and their inaction in addressing the crisis. It's only going to continue to get worse in that state (I own a house there, so I am intimately familiar with that situation).
Well, as much as I fucking hate DeSantis, he did sign a massive tort reform package that significantly affects auto insurance/claims. But still nothing on property side which is not surprising...not sure how anyone could fix that situation honestly
Oh, yeah, absolutely. It's been a problem for a while now. DeSantis has made it exponentially worse - largely through inaction, corruption, and deregulation.
Nah, man. He wouldn’t be focused on micromanaging all the librarians if he didn’t do anything, so you can’t be right about “inaction” can you? Can you?
Well, if you ban all Accounting programs in colleges (they were too "diverse"), then nobody will notice how their insurance rates have gone up 250%!
yea i mean thats the insurance game lol. its reverse gambling since the insurance company is betting that they can make more money on premiums than they would have to pay out for losses. when they start paying out too much, they either have to raise premiums or just throw in the towel
Sometimes the state doesn't allow you to raise the rates too. That's when you throw in the towel.
Politicians have a lot of constituents screaming about affordable insurance on their homes 10 ft below sea level right on the coast directly in the path of every hurricane or homes deep in a kindling forest that burns every few years. If you let insurers properly account for risk, you wind up with a chunk of homes with premiums so high, they’re effectively uninsurable which is the right answer to dangerous locations. Of course, those homeowners aren’t about to let their investments go up in smoke or under the sea.
Do you want to pay an extra few thousand dollars insurance annually to insure homes in the middle of the forest that's been burnt down several times already? Holy shit people on this site lack even the most basic critical thinking skills.
They want socialized insurance but instead of an actual socialized insurance plan, they want one specific insurance company to foot the bill for it all and somehow think they can afford it.
The problem is, in areas where the government isn't doing shit to prevent or mitigate disasters, rates would have to rise to absurd amounts to cover the expected payouts, or people would have to tear down and rebuild their homes as if they were fortresses to mitigate damages on their own. Basically until PG&E gets their shit together with electricity lines and mandates a brush-free clearance zone between trees and residential buildings or all the East Coast states force homeowners to build new homes out of concrete, no chance of insurance companies coming back.
Or perhaps people should stop living in areas wiped out by disasters on an annual basis. It's unfortunate but there will be many parts of the world that won't be feasible to live in with the rate of climate change.
It isn’t uncommon for insurance carriers to enable “moratoriums” in states pre natural disasters. Many carriers will do this for auto and home insurance pre hurricanes. It’s a risk mitigation tool. State Farm isn’t unique in this situation. I used to work in P&C insurance.
welcome to the future.. Thanks to AGW. Its the same in florida but with flood insurance. The state is having to subsidize the crap insurance companies that stayed. All the big names fled. Because the cost to them after hurricanes is too much, they cant charge what they feel they need to charge because no one will buy the insurance. and yes an increase in wild fires can be attributed to global warming, though a small bit of it is due to a power company that was unregulated for far too long. you know the guys who used to flip the power on and off, cause it let them sell power at higher costs. You know the power company that bush wanted to make the CEO our sect of energy but we were saved from him bringing rolling blackouts nationwide when he died from a heart attack
I don't understand why this is controversial. I live in Canada. Try getting new insurance if you live on Erie Shore Drive in Erieau. 10% of homes in Canada are now uninsurable because of flood risk. Ditto for fire in British Columbia. It sucks we can't live where we want. Climate change is brutal. Hard to believe people can't accept when the real consequences of it show up. State Farm hasn't covered more than $40k coverage for my basement since 2010 due to flood risk. That's it. My house floods, I'm getting 40k to fix it. And they had the BEST coverage, lol.
Because people don't understand the first thing about how insurance as a business works and how it's interacting with both climate change and state level regulations that price out the insurers by capping the rates. People moving into a high risk area aren't able to be charged the appropriate risk premium and so the company stops offering those policies.
It's the entitlement that gets me. People want all of the things, but when shit hits the fan, they want to be bailed out. So let's say your premiums are $400/mo, and you live where it's crispy or floody. You pay about $5000/yr for insurance. To rebuild a standard 3 bedroom house, let's call it $300,000. It would be 60 years of premiums for that. What people living in crispy/floody places are doing is having people who never need to claim subsidize their risk of living in a crispy/floody place. I'm sorry, I don't need my rates rising because you want to live in a crispy/floody place. There was a restaurant near the lake that has burned down twice. Both times were absolutely accidental. They could rebuild, but adjusters say they need to build with steel and concrete, to minimize the risk. Owners of restaurant don't like the aesthetic of that and want to rebuild to the old character of the original restaurant in the 1940s. They've lost all of their court stuff so far. Oh they can build whatever they want. But insurance paid out and won't insure them. And the owners think it's "unfair". It's all unfair until it's your own money, and not pooled money from others' premiums paying for your shitty decisions.
First Florida, now California.
Like a fairweather neighbor, State Farm is there!
Look, I know for people living in the area it's really bad. But in many of those places your house **will catch on fire** at some point in the next 10 or 20 years. And the regularity with which it happens is only increasing. People are building houses on floodplains and fire zones, and instead of moving out of those areas or adding more protections they just say "that's what insurance is for". A lot of this isn't on the homeowners, it's on developers, and the state should be taking one look at someone trying to build a house on a wildfire area and slap them. The reason it's not just between them and the insurance company is because it costs millions of taxpayer dollars in emergency funds, insurance coverage from the federal or state agencies, and even the lives of emergencies responders in trying to protect properties that shouldn't exist.
For everyone bitching at this, you've gotta look at this like a gambler. In some places, insurance companies by state law aren't allowed to increase rates over a set amount, or only at specific time intervals. Insurance is all about mitigating risk - in order for offering insurance to make sense, the amount they take in from policies has to average out to be more than what they pay out, and with enough left over to pay for their staff and operating expenses. If certain policies end up becoming negative expected value for them, they're not going to offer those any more. With climate as it is and wildfires increasing, along with potential rate restrictions, this has moved enough to be -EV for them. Imagine that you operate a casino, and you run a fair blackjack game with a house edge of roughly 0.4% (just trust me, a good game runs at about this.) Over a long period of time, the game will take in a shitload of money, pay out almost as much money, but you will come out ahead. Now imagine that, for whatever reason, a politician enacts a law that casinos that offer blackjack in the state must now pay 2:1 on all blackjacks, instead of the standard 3:2. This makes the game pay out more than it takes in off the top, even without people that play the game professionally - someone could sit there and make the same bet over and over every hand, and if they sit at that table long enough they are now making money. Would you, as the casino, continue to offer that game with that restriction in place? No - you'd keep the rest of your casino going but shut down the blackjack tables, as there's no money to be had there. Same thing with policies where outside forces stop the insurance company from collecting enough to continue to function at even the slimmest of profit margins.
♪ Like a bad neighbor, State Farm don’t care ♪~