How would that work? Buy a unit for $1.5M and sit on it, while paying insurance premiums. Building falls down and you get your $1.5M back after a huge amount of hassle?
Or just buy naked insurance premiums? Wouldn’t surprise me if that were a thing.
Insurers won’t insure you without an insurable interest.
I've got a plan for infinite money. I'll just buy a car, take insurance on it, crash it, collect insurance money. I can't lose!
Surely the insurance companies are also aware of this fact.
You'd be surprised what insurance companies overlook sometimes. An actuary told me one company he worked for accidentally sold an insurance policy for death due to cancer, but didn't ask applicants whether or not they currently had cancer. So that was quite expensive lesson on selection bias for that company, lol.
There was a freakanomics episode about someone taking out a bunch of life insurance policies against seniors in hospice.
Assuming you get everything you want and then some sure. But settlements are compromises - I doubt any of the homeowners at end of the day are in the black. But their losses are less than if they had not sued. Not a great investment by any means
Insurance companies win on average. So the premiums collected are probably going to exceed the anticipated payout.
And your plan only works if you can actually get insurance on a unit at this point.