Millions of homes are underinsured against natural disasters as construction costs keep rising

The costs of labor and materials have risen significantly in the past two years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.

You would think the lenders would stay on top of this if it means default.

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bloggs.fredbloggs.fred
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Yes, reconstruction costa are a factor, but the main point is that insurance companies aren't in the game to lose money. They'll pay out once, but after that you are often on your own, and perhaps uninsurable. Well, that's the way it is in the UK with regards to flooding. Many properties which have suffered extensive flood damage are not able to get insurance again for flood damage. That's not surprising with developers building on what is well-known to b a flood plain. The "once-in-a-100-years" flood has, shall we say, become somewhat more frequent. So if the insurance companies base their risk assessment (and so profit levels) on a flood every hundred years, they won't be happy if it happens every 10 years. Increased premiums simply won't cover the costs, particularly when - somewhat paradoxically - climate unpredictability becomes more certain.

--

Jeff
Reply to
Jeff Layman

wo years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.

lt.

In U.S. our industry regulators have done such a good job, the insurance co mpanies can't begin to cover the losses, and default into bankruptcy. Insur ance is a state run operation here, so usually the state can move in pick u p the pieces when that happens, but they struggle to make 25-50 cents on th e dollar compensation. The forest fire losses in California 2018 are an example of what happens.

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Reply to
bloggs.fredbloggs.fred

years and continue to rise, due to a construction labor shortage as well a s new tariffs on materials.

.

t-natural-disasters.html

I was dropping by my insurance agent today and when finished with the rest of the business I asked about my policy limits. They have a tool for accur ately estimating the costs of replacing a home. After entering a ton of da ta the numbers they came up with were some 20% lower than my policies. So I was able to lower my insurance by more than 10% and still have margin on the coverage.

Thanks.

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  Rick C. 

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Reply to
R Collins

I don't know about under insured, but after the recent hurricane, I was surprised to find so many people that didn't have ANY insurance on their homes. Thank goodness I did, and the insurance company (St. Johns) has treated us very well. I have a screened porch to finish up and then I should get paid for that and they will then also pay the depreciation they withheld and I will be back to whole again. I had according to the adjuster, I had $98k of damage. The ins. co. didn't pay for the chain link fence around the yard, but it was probably

35 to 40 years old and pretty rusty, but they did pay for our greenhouse which I didn't expect. So many stories of people having to fight their ins. co. but my company did good by us. One of my coffee buddies says he didn't have insurance but says he is happy he didn't spend that money every year on a policy, he says he came out ahead. He only had about $20k of damage, so ya, over 40 years of not paying for insurance he did come out ahead, I would not have.

Mikek

Reply to
amdx

te:

two years and continue to rise, due to a construction labor shortage as wel l as new tariffs on materials.

ult.

est of the business I asked about my policy limits. They have a tool for a ccurately estimating the costs of replacing a home. After entering a ton o f data the numbers they came up with were some 20% lower than my policies. So I was able to lower my insurance by more than 10% and still have margin on the coverage.

But you aren't done paying are you?

Insurance is about paying a small amount to cover the risk to a larger amou nt. If you own a thousand homes or are covered for a thousand years it com es out in the wash and you could self insure. Or if you live in an area wh ere the risk is not so much "if" as "when", you may well be better off not paying the insurance company since they add up all the risk in addition to profit. If you take the premiums and sock them away in some investment you can likely end up doing better than paying for insurance. But then you wo uld still have a risk of total loss of the property. Even if storms have a high likelihood of causing damage over 40 years where you are, there is st ill the possibility of the house burning down totally and it would take a l ot more than 40 years of premiums to pay for that.

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Reply to
R Collins

rote:

t two years and continue to rise, due to a construction labor shortage as w ell as new tariffs on materials.

fault.

rest of the business I asked about my policy limits. They have a tool for accurately estimating the costs of replacing a home. After entering a ton of data the numbers they came up with were some 20% lower than my policies . So I was able to lower my insurance by more than 10% and still have marg in on the coverage.

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ount. If you own a thousand homes or are covered for a thousand years it c omes out in the wash and you could self insure. Or if you live in an area where the risk is not so much "if" as "when", you may well be better off no t paying the insurance company since they add up all the risk in addition t o profit. If you take the premiums and sock them away in some investment y ou can likely end up doing better than paying for insurance. But then you would still have a risk of total loss of the property. Even if storms have a high likelihood of causing damage over 40 years where you are, there is still the possibility of the house burning down totally and it would take a lot more than 40 years of premiums to pay for that.

In every case the insurer looks to make money. Not only do they have to acc ount for the risk versus premium, there are also the many costs of running a business, advertising etc. So in every case, if the insurer gets it right , you can expect to lose overall by insuring. IOW if you can financially su rvive the loss, don't insure. Most insurance policies people hold they'd be better off without.

There are always folk who think they've found those edge cases where their ins co has it wrong and they stand to profit in the long term. They're usua lly wrong.

NT

Reply to
tabbypurr

ast two years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.

default.

he rest of the business I asked about my policy limits. They have a tool f or accurately estimating the costs of replacing a home. After entering a t on of data the numbers they came up with were some 20% lower than my polici es. So I was able to lower my insurance by more than 10% and still have ma rgin on the coverage.

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amount. If you own a thousand homes or are covered for a thousand years it comes out in the wash and you could self insure. Or if you live in an are a where the risk is not so much "if" as "when", you may well be better off not paying the insurance company since they add up all the risk in addition to profit. If you take the premiums and sock them away in some investment you can likely end up doing better than paying for insurance. But then yo u would still have a risk of total loss of the property. Even if storms ha ve a high likelihood of causing damage over 40 years where you are, there i s still the possibility of the house burning down totally and it would take a lot more than 40 years of premiums to pay for that.

ccount for the risk versus premium, there are also the many costs of runnin g a business, advertising etc. So in every case, if the insurer gets it rig ht, you can expect to lose overall by insuring. IOW if you can financially survive the loss, don't insure. Most insurance policies people hold they'd be better off without.

I don't agree. Insurance is about minimizing losses, not necessarily about preventing cataclysmic disaster. While I would continue living a rich, fu ll like if a house burned down, I prefer to spend the bit of money to deal with the loss in a substantial way. It's more about piece of mind than it is preventing a non-surviable loss.

Car insurance is the bad one. Insurance is always limited to some max doll ar amount. Your liability is never limited. If you are at fault in a seri ous accident you could end up losing everything even with insurance.

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  Rick C. 

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Reply to
R Collins

Which is why I have a $2M umbrella policy. Make it worthwhile for the insurance company to mount a defense and hopefully the injured person will be happy with the insurance company's money and leave mine alone.

Reply to
krw

past two years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.

s default.

the rest of the business I asked about my policy limits. They have a tool for accurately estimating the costs of replacing a home. After entering a ton of data the numbers they came up with were some 20% lower than my poli cies. So I was able to lower my insurance by more than 10% and still have margin on the coverage.

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r amount. If you own a thousand homes or are covered for a thousand years it comes out in the wash and you could self insure. Or if you live in an a rea where the risk is not so much "if" as "when", you may well be better of f not paying the insurance company since they add up all the risk in additi on to profit. If you take the premiums and sock them away in some investme nt you can likely end up doing better than paying for insurance. But then you would still have a risk of total loss of the property. Even if storms have a high likelihood of causing damage over 40 years where you are, there is still the possibility of the house burning down totally and it would ta ke a lot more than 40 years of premiums to pay for that.

account for the risk versus premium, there are also the many costs of runn ing a business, advertising etc. So in every case, if the insurer gets it r ight, you can expect to lose overall by insuring. IOW if you can financiall y survive the loss, don't insure. Most insurance policies people hold they' d be better off without.

if that's your aim, insurance has no place at all

That's your call - but it's really the only way you can win with insurance.

prefer to spend the bit of money to deal with the loss in a substantial wa y. It's more about piece of mind than it is preventing a non-surviable los s.

When nawlins flooded there were many many houses that could have been fixed up within the capabilities of a practical owner. Insurance companies dragg ed the process out so long that these people had no home to live in for yea rs, years of stress, and by the time the insurance co acted the building wa s condemned due to water damage & mould. Who were the winners there, the in sured or the uninsured?

When people take out BG boiler insurance, they are often told their easily cheaply repaired boiler is unfixable, and that they should pay BG thousands for a new one. Who is better off there, the insured or the uninsured, who from not paying the premiums have not only enough saved to pay the repairma n, but also enough to buy 2 new boilers when the time finally comes?

I could go on. Point is insurance is partly of value, partly a problem, and partly an illusion. People like to just see it as some sort of magic comfo rt blanket. It isn't.

llar amount. Your liability is never limited. If you are at fault in a se rious accident you could end up losing everything even with insurance.

No I couldn't.

NT

Reply to
tabbypurr

he past two years and continue to rise, due to a construction labor shortag e as well as new tariffs on materials.

ans default.

th the rest of the business I asked about my policy limits. They have a to ol for accurately estimating the costs of replacing a home. After entering a ton of data the numbers they came up with were some 20% lower than my po licies. So I was able to lower my insurance by more than 10% and still hav e margin on the coverage.

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ger amount. If you own a thousand homes or are covered for a thousand year s it comes out in the wash and you could self insure. Or if you live in an area where the risk is not so much "if" as "when", you may well be better off not paying the insurance company since they add up all the risk in addi tion to profit. If you take the premiums and sock them away in some invest ment you can likely end up doing better than paying for insurance. But the n you would still have a risk of total loss of the property. Even if storm s have a high likelihood of causing damage over 40 years where you are, the re is still the possibility of the house burning down totally and it would take a lot more than 40 years of premiums to pay for that.

to account for the risk versus premium, there are also the many costs of ru nning a business, advertising etc. So in every case, if the insurer gets it right, you can expect to lose overall by insuring. IOW if you can financia lly survive the loss, don't insure. Most insurance policies people hold the y'd be better off without.

Not sure what you are saying... or more accurately, why.

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I've already explained why I have insurance. It is about comfort. Knowing I will not have to deal with the full financial impact of loss compared to having to pay the full costs on my own is what insurance is about for me. Also there is the fact that since the insurance company is an interested p arty, they will help with various aspects of the recovery process.

I prefer to spend the bit of money to deal with the loss in a substantial way. It's more about piece of mind than it is preventing a non-surviable l oss.

ed up within the capabilities of a practical owner. Insurance companies dra gged the process out so long that these people had no home to live in for y ears, years of stress, and by the time the insurance co acted the building was condemned due to water damage & mould. Who were the winners there, the insured or the uninsured?

y cheaply repaired boiler is unfixable, and that they should pay BG thousan ds for a new one. Who is better off there, the insured or the uninsured, wh o from not paying the premiums have not only enough saved to pay the repair man, but also enough to buy 2 new boilers when the time finally comes?

nd partly an illusion. People like to just see it as some sort of magic com fort blanket. It isn't.

Insurance companies come in all forms. Some of them try to minimize paymen ts to the detriment of the insured's well being. What's your point?

dollar amount. Your liability is never limited. If you are at fault in a serious accident you could end up losing everything even with insurance.

Not much of an argument, that. I guess that's your way of saying I'm right .

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  Rick C. 

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Reply to
Rick C

the past two years and continue to rise, due to a construction labor short age as well as new tariffs on materials.

means default.

with the rest of the business I asked about my policy limits. They have a tool for accurately estimating the costs of replacing a home. After enteri ng a ton of data the numbers they came up with were some 20% lower than my policies. So I was able to lower my insurance by more than 10% and still h ave margin on the coverage.

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arger amount. If you own a thousand homes or are covered for a thousand ye ars it comes out in the wash and you could self insure. Or if you live in an area where the risk is not so much "if" as "when", you may well be bette r off not paying the insurance company since they add up all the risk in ad dition to profit. If you take the premiums and sock them away in some inve stment you can likely end up doing better than paying for insurance. But t hen you would still have a risk of total loss of the property. Even if sto rms have a high likelihood of causing damage over 40 years where you are, t here is still the possibility of the house burning down totally and it woul d take a lot more than 40 years of premiums to pay for that.

e to account for the risk versus premium, there are also the many costs of running a business, advertising etc. So in every case, if the insurer gets it right, you can expect to lose overall by insuring. IOW if you can financ ially survive the loss, don't insure. Most insurance policies people hold t hey'd be better off without.

nce.

ng I will not have to deal with the full financial impact of loss compared to having to pay the full costs on my own is what insurance is about for me . Also there is the fact that since the insurance company is an interested party, they will help with various aspects of the recovery process.

n, I prefer to spend the bit of money to deal with the loss in a substantia l way. It's more about piece of mind than it is preventing a non-surviable loss.

ixed up within the capabilities of a practical owner. Insurance companies d ragged the process out so long that these people had no home to live in for years, years of stress, and by the time the insurance co acted the buildin g was condemned due to water damage & mould. Who were the winners there, th e insured or the uninsured?

ily cheaply repaired boiler is unfixable, and that they should pay BG thous ands for a new one. Who is better off there, the insured or the uninsured, who from not paying the premiums have not only enough saved to pay the repa irman, but also enough to buy 2 new boilers when the time finally comes?

and partly an illusion. People like to just see it as some sort of magic c omfort blanket. It isn't.

ents to the detriment of the insured's well being. What's your point?

x dollar amount. Your liability is never limited. If you are at fault in a serious accident you could end up losing everything even with insurance.

ht.

That sure is one gross failure to comprehend.

NT

Reply to
tabbypurr

You need liability on a house also. And from what I understand, they won't sell you the liability if you don't buy the other half of the policy. Mikek

Reply to
amdx

:

ast two years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.

default.

he rest of the business I asked about my policy limits. They have a tool f or accurately estimating the costs of replacing a home. After entering a t on of data the numbers they came up with were some 20% lower than my polici es. So I was able to lower my insurance by more than 10% and still have ma rgin on the coverage.

, I

on

I
n

o.

ably

ouse

e is

came

not

r amount. If you own a thousand homes or are covered for a thousand years it comes out in the wash and you could self insure. Or if you live in an a rea where the risk is not so much "if" as "when", you may well be better of f not paying the insurance company since they add up all the risk in additi on to profit. If you take the premiums and sock them away in some investme nt you can likely end up doing better than paying for insurance. But then you would still have a risk of total loss of the property. Even if storms have a high likelihood of causing damage over 40 years where you are, there is still the possibility of the house burning down totally and it would ta ke a lot more than 40 years of premiums to pay for that.

o account for the risk versus premium, there are also the many costs of run ning a business, advertising etc. So in every case, if the insurer gets it right, you can expect to lose overall by insuring. IOW if you can financial ly survive the loss, don't insure. Most insurance policies people hold they 'd be better off without.

bout preventing cataclysmic disaster. While I would continue living a rich , full like if a house burned down, I prefer to spend the bit of money to d eal with the loss in a substantial way. It's more about piece of mind than it is preventing a non-surviable loss.

dollar amount. Your liability is never limited. If you are at fault in a serious accident you could end up losing everything even with insurance.

y.

"Need"? Houses don't travel down the road at 70 MPH. Shoot everyone who c omes on your property and you don't need liability insurance on your home.

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  Rick C. 

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Reply to
Rick C

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