I'm insured, but I'm considering dropping insurance for the most likely disaster: earthquakes.
I'm in CA, and even though I'm not on top of an active fault, I'm close enough to be impacted. When the big one gets here, if it's big enough to affect me, then everyone else will be affected. I don't have any reason to expect them to stay solvent if a third of the CA population files for benefits.
I've thought about taking the money I pay for earthquake insurance premiums, and instead putting it on polymarket, betting that an earthquake will happen. If it doesn't, then I'm no worse off than I was paying for insurance. If it does, then polymarket just distributes my "winnings".
The most convincing argument I could make is that the government could step in and keep the insurance agencies solvent. Sort of a too-big-to-fail situation.
If you own an older house then the economically rational choice is to drop your insurance and put that money into seismic retrofits instead. Better to prevent earthquake damage in the first place rather than hoping that insurance will cover repairs. There is even financial assistance available in some cases.
Alas, not. Most policies in California have a 15% deductible. That’s 15% of the insured value of your home. So for nearly all houses, a $25K bill is not covered. California policies are and have always been to cover catastrophic damage.
Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
2/3 of policies sold in California are assigned to the California Earthquake Authority (CEA), which is a semi-private/semi-public corporation that carries the principal risk. It was formed in 1994, when many private insurers discontinued earthquake insurance after the Northridge quake.
Insurance agencies serve primarily as vendors, customer service, etc., but the risk is carried by the CEA. The remaining 1/3 of policies are carried by a few private insurers who still underwrite policies.
In theory, that system should prevent insolvency. Remember that California is a huge state and even a very strong earthquake would still have fairly localized damage. For example, the 1906 earthquake (Richter 8.0) that levelled San Francisco did comparatively little damage to Petaluma, a city 40 miles to the north.
> Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
You have to have insurance if you want a mortgage so not having insurance is basically just a proxy for (mostly old) people who own their house outright.
I would carry a $50k deductible if I could. No insurer I've encountered would let me. I don't really care to insure against anything other than a total loss.
This article states that poor people cannot afford insurance. Is this a portal about insurance? Maybe they could help lower the cost for those in need?
This applies to us Europeans too, only that the most likely disaster is permanent unemployment, not a health issue. You americans have had practical full employment for decades.
It would be more useful to determine why insurance premiums are rising faster than almost every other homeowner expense. At the same time noting that insurance companies are making massive profits and squandering millions on executive salaries and advertising.
I'm insured, but I'm considering dropping insurance for the most likely disaster: earthquakes.
I'm in CA, and even though I'm not on top of an active fault, I'm close enough to be impacted. When the big one gets here, if it's big enough to affect me, then everyone else will be affected. I don't have any reason to expect them to stay solvent if a third of the CA population files for benefits.
I've thought about taking the money I pay for earthquake insurance premiums, and instead putting it on polymarket, betting that an earthquake will happen. If it doesn't, then I'm no worse off than I was paying for insurance. If it does, then polymarket just distributes my "winnings".
Convince me to keep my insurance.
The most convincing argument I could make is that the government could step in and keep the insurance agencies solvent. Sort of a too-big-to-fail situation.
If you own an older house then the economically rational choice is to drop your insurance and put that money into seismic retrofits instead. Better to prevent earthquake damage in the first place rather than hoping that insurance will cover repairs. There is even financial assistance available in some cases.
https://www.crmp.org/
I won't try because I did something similar. If it happens I can guarantee that the insurance companies won't be solvent.
Instead we are focused on investing our money as a form of self-insurance.
It's kind of like life insurance; term makes sense but whole life doesn't (vs investing the premiums).
As far as polymarket: I can't say there. I've never used it (though I know what it is).
>It's kind of like life insurance; term makes sense but whole life doesn't (vs investing the premiums).
But in term, you lose everything that you ever pay. Even If you consider the loss of interest in whole life, would the difference be huge?
The issue isn't the big one. The issue is a minor tremor that happens to crack a vital support beam, or cracks a pipe, and causes $25k of damage.
Alas, not. Most policies in California have a 15% deductible. That’s 15% of the insured value of your home. So for nearly all houses, a $25K bill is not covered. California policies are and have always been to cover catastrophic damage.
Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
2/3 of policies sold in California are assigned to the California Earthquake Authority (CEA), which is a semi-private/semi-public corporation that carries the principal risk. It was formed in 1994, when many private insurers discontinued earthquake insurance after the Northridge quake.
Insurance agencies serve primarily as vendors, customer service, etc., but the risk is carried by the CEA. The remaining 1/3 of policies are carried by a few private insurers who still underwrite policies.
In theory, that system should prevent insolvency. Remember that California is a huge state and even a very strong earthquake would still have fairly localized damage. For example, the 1906 earthquake (Richter 8.0) that levelled San Francisco did comparatively little damage to Petaluma, a city 40 miles to the north.
Hence the original question. I've always wondered the same thing.
> Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
Making the insurance executives ultra-rich.
>The homeowners most exposed to climate-driven disasters are, in many cases, the same ones least likely to have insurance when those disasters arrive.
I wondered whether this is a signal that the insurers don't want to insure for those risks and unsurprisingly there is a Wikipedia page for it! [1]
[1] https://en.wikipedia.org/wiki/Climate_change_and_insurance_i...
You have to have insurance if you want a mortgage so not having insurance is basically just a proxy for (mostly old) people who own their house outright.
I would carry a $50k deductible if I could. No insurer I've encountered would let me. I don't really care to insure against anything other than a total loss.
Related:
https://en.wikipedia.org/wiki/Moral_hazard
This article states that poor people cannot afford insurance. Is this a portal about insurance? Maybe they could help lower the cost for those in need?
This applies to us Europeans too, only that the most likely disaster is permanent unemployment, not a health issue. You americans have had practical full employment for decades.
It's all compromises.
It would be more useful to determine why insurance premiums are rising faster than almost every other homeowner expense. At the same time noting that insurance companies are making massive profits and squandering millions on executive salaries and advertising.
Everyone is one death away from losing everything anyway...