Allstate: no new homeowners policies in Cali

It's a fine concept to think of it on your terms, twoback, but let's pretend for a moment that most, if not all, insurance companies pulled up stakes in a particular town or area. People still need insurance.

And before you say, well, they should move, let's get it clear that it's not at all reasonable to even suggest that.

 

Well, in their defense, would you live in Jersey if you didn't have to?

 

This is far from unprecedented. When I moved to this state 10 years ago, only one company was issuing homeowners policies. The rest had stopped because they has been hit too hard by weather-related claims the previous couple of years. As a result, I was paying very high insurance costs my first few years here. All of them have since returned to covering homes in this area, much to the relief of my bank account.

 

It's at least as reasonable as your intimation that insurance companies should be required to write policies they do not believe have a chance to be profitable.

 

That's not what the insurance companies are doing, though.

Not only is there a "chance" of being profitable, the chance is about 99 percent. Every year.

What they won't accept, however, is the 1-in-100-years 8.9 earthquake or Cat 5 hurricane that could cost them dearly.

They are demanding a 100 percent guarantee of financial success, because 99 percent isn't good enough (although other companies would die to have a 99 percent chance at being enormously profitable).

And even then, if they want to leave, then they should leave. Instead, they will still cover your car and offer you all kinds of other things (mortgage, credit card, financial planning) that have nothing to do with insurance . . . but won't insure a home.

By definition, insurance is the business of risk.

You can minimize it. You cannot eliminate it.

Allstate is trying to eliminate it.

 

Well that question is just silly. Everybody would live in Jersey if they had the option. Only the fools that think it is too expense choose to leave!

 

OK. Let me put it another way.

I'm much more concerned about people being able to GET insurance that they're required to have when they own a home than I am about the insurance company's ability to make a profit.

If that's an attempt on my part to ignore logical economics, I'll readily plead the fifth. But, then again, I care more about people than I do about big business.

 

Excellent point, BTE.

Twoback, my complaint with Allstate is their negligence on paying legitimate claims out to insured residents who paid their premiums for years... only to have Allstate renege on their end of the bargain when it was time to make a claim.

What they -- and other insurance companies -- are doing is not fulfilling the service in which they were contracted to perform. That sounds like either breach-of-contract or outright theft: take your pick.

 

One of the big problems is they're lying through their teeth and using circular logic. They say that they'll no longer write policies in Mississippi because there's a greater risk of hurricanes than there was before Katrina. Obviously, there's no greater or lesser risk than there was before. It's like saying that just because you got mauled by a bear once when you were in the woods, you'll get mauled every time. Even if you live in the city, which just happens to be fairly close to the woods. Makes no sense.
CNN had a very good report a month or two ago about one of the insurance companies -- I think it was Allstate, but I'm not sure -- using the three Ds to avoid paying large claims. They deny, dispute and delay. Deny claims, then dispute them and get them into court, and eventually delay the case, drag it out for months or years until the person runs out of money to pay the lawyers and either settles or gives up.
Absolutely despicable.

 

If those businesses go bankrupt, how will those people you care about feed their families? Or do you not care about the people who work for insurance companies, just those who are their customers?
I'm not defending the tactics of insurance companies, which many times (most times?) are despicable. I'm defending their right to operate where they see fit.

 

But to pull out of an area because there are too many claims -- claims which they happily accept the premiums for when everything is fine -- is bullshit.
For the insurance companies -- it's a form of gambling. And when the house has to pay they change the rules.

 

Perhaps this trend could make Cleveland a popular place to live again. Say what you want about the mistake by the lake, but it IS fairly natural disaster proof.