To the extent that the information is accurate, I agree. If you make an agreement with a company and buy insurance based on your statement that you don't have a pool, but then you do have a pool, I don't see any reason why we should be upset that you didn't get away with lying to the insurance company.
I pointed them to my address on Google Maps which has my correct location, but they said their system isn't wrong and the address coordinate mapping can't be changed anyway. Go away.
Then another insurance company told me the same thing. I thought maybe I was going to be uninsurable completely based off of a computer error.
Luckily, Lemonade has smarter systems and got my location right, so I was able to get insured with them. But I'm not sure what I would do without lemonade.
Insurers with better information will be able to judge risk better, so they can undercut competitors on lower risk or avoid taking on higher risk. That really is what a competitive insurance market should be like right?
Distribution is also a huge factor in who wins. You can have the best product, but if you can't get it out to enough people, whether direct to consumer or through agents, you're going to struggle. A lot of startups have focused on direct-to-consumer plays, but there's value in taking a hybrid approach to distribution and incorporating agents into your distribution strategy. It's surprising sometimes, for those of us with a tech background, to see how sticky human insurance agents have proven to be. I can make a better potato chip than Frito-Lay, but if I can’t get stores to stock it, it doesn’t matter how good it is.
Should be. But states like California cap insurance rates in such a way that insurers are dropping (non-renewing) policies, since they can't charge market rates.
Or is it about risk? Those places have a fair few large disasters, and one is sinking while denying it.
Now you frame this like I am too high risk or people in this capacity are too high risk, but that is the whole problem. Insurance cos are inconsistently making these determinations and the state's governance is directly responsible for the lack of regulation and enforcement. Nothing in my area has changed, but the insurance company has enacted the equivalent of ex post facto evaluation due to the state of CA. As example, my roof in great condition, passed inspection when purchase property a few years ago. I don't have certificates or invoices for repairs done to it in the 50 years of my home's life because I've only owned the property for a few years. The insurance company canceled my insurance stating I refused to provide such an invoice. They also claimed I'm now in a dangerous fire zone (I'm not) which I wasn't a year ago. They also claimed to need invoice of repairs for my plumbing, which again, is in wonderful condition. They stated simply providing inspection receipts wouldn't cut it and expensive certificates were needed. Anyways, I doubt you will read this but it's ridiculous and I'm not the only one in this state going through it.
The evidence I’d look for is something like their revenue vs payout over maybe the last 5 years?
I think a lot of this stuff can be very unintuitive, because we look around, and everything seems fine, and nothing seems to have changed, but they’re operating at a bulk statistical level, and their models revised on recent trends are probably telling them that they can’t profitably insure you for the amounts they’re allowed to charge. Some of that is that labor to rebuild/replacement cost has gotten much more expensive (we see that in our insurance rate changes despite being in an area with very little catastrophic risk).
And CA politicians’ response is probably some crowd pleasing but ultimately harmful “you can’t profiteer off our people, you’re not allowed to raise rates more than 3%” or something. So the only winning move becomes not to play except in the areas where you can make that work.
It does sound like they were just trying to find a way that they could cancel your policy without getting in trouble with the state insurance commission, though I don’t know enough about insurance to say if/why they’d need to.
The solution was to complain vociferously to the folks that maintained data sources. In those days it was Google, someone else, and it turned out the remainder of the defective commercial products were put out by a predecessor of, I think, the folks who eventually published or supplied the data for HERE We Go. Basically, every few months I would call them or write messages to them, social engineering who might be in a position to fix it. They did respond pretty quickly, for a bigcorp, but it took a few years for the prior versions of their database to cycle out of usage.
(The federal government, for mostly historical reasons, does not generally regulate insurance except for health insurance, and that only started with Obamacare. So each state has its own DOI, and agents and carriers have to get licensed in each state. It's a dumb, byzantine system going back to Paul v. Virginia in 1869, when the Supreme Court ruled that issuing a policy of insurance is not a transaction of commerce. I don't think that reasoning applies today, but Congress has specifically exempted insurance from things like anti-trust legislation since then. Sweeping insurance under federal regulation would, in theory, cause a giant mess since there's so much law and process built around the current state-by-state system. IMO it would be worth it because the current system is completely ridiculous, but so it goes.)
I think that is very reasonable law: If n organisation makes decision about your relations, you should be able to force them to process correct information.
(I have used that clause ones, when a bank wrongly reported that I had an open account of a certain type, which resultet in that I could not open that type of account at another bank.)
For example the insurance company had the correct address for the person (no need to correct) but the wrong information about the location of the address.
I worked it for a year and was unsuccessful in removing it. Ironically, my wife passed away but the accident is now associated with her car. They did figure out however, that I’m no longer eligible for a multi-driver discount.
That is some breathtaking hubris.
Me too. So. many. lemons :-)
(The article and other things I'm reading suggest that cancellations are because footage finds trampolines and pools --- in which case I don't even understand how anybody can have sympathy. It's fine to have insurance risks on your property! But disclose them!)
Their job, I think, is to accept the quote, pay the premiums, and to keep living life.
Even then, it took me several calls and interactions to get them to send me the actual detailed insurance contract. They tried to fob me off several times with a brief summary document.
I would be surprised, based on my experience, if people are actually confronted with the paperwork as you suggest. The default flow of my home purchase made it clear that my request to review the coverage contract was so far outside the norm that they weren’t really sure how to handle it.
My guess is that it probably would have been possible. At that point, we’re already under contract (which means our offer has been accepted), and finalizing the loan and home owner’s insurance was part of closing.
The reason I didn’t dig into it too much at the time is I figured that the bank was probably a more sophisticated purchaser than I would have been, especially given the time pressure of needing to make a (reasonably) quick decision.
So I decided that, despite my immense annoyance and not being able to see the homeowners insurance agreement before the closing was complete, that I’d accept the bank’s choice, and use my first year of homeownership to learn the contract and decide if I wanted to change carriers.
Its doesnt matter what mumbo jumbo they come up with, if you cave to peer pressure then accept the risks. Or vote with your wallet.
How could I have signed a contract without seeing it? I wouldn’t have anything to sign!
But none of that was my point. My point was—if asking to see the agreement was this far outside the norm, then how many people are actually confronted with the paperwork? My guess, based on my anecdotal experience, is not many.
The first page or so will explain who the policyholder is, what is the effective date of the policy, and what forms constitute the insurance being provided. The rest of the policy is (usually) a set of forms approved by the state insurance commissioner that define, in particular, what is and is not being insured. Be aware that something that is very clearly defined on the first page of the first form is very frequently completely contradicted by something on the fifteenth page of the thirtieth form, which makes it very important to have the complete set.
In general insurance law is such that you ought to be able to read the entire policy and make sense of it - no tricks. In practice there are some wrinkles and it's good to consult a professional but if you read the policy you will at least have some awareness of the coverage you can expect.
Indeed. This is how I discovered that my own policy forbade me to own a dog belonging, even in part, to any of a long list of breeds: Pit Bull, Rottweiler, Cana Presario ... IIRC German Shepherd was on the list.
It’s frankly unrealistic to expect most people to remember their home insurance asking about trampolines 15+ years ago.
The risk of being sued is very different though.
However, that just circles back to few people asking what their insurance company might think.
What does the data say? Which is more dangerous, trampolines or bathrooms?
I've known a few people who have hurt themselves in the bathroom, but I dont know anyone who has hurt themselves on a trampoline.
Meanwhile, toddlers do active shooter drills like they are fire alarm drills.
Totally logical country you got there with a perfectly reasonable approach to risk.
Unfortunately this is the normal ebb and flow of populations. And the stage the US is at we just have to wait for severe economic disaster to remind people what trauma is.
This process is called subrogation and it is out of the control of the injured person.
Absolutely not my experience at all. Even still, the insurance company has no right to press charges.
False positive with similar circumstances would be a nightmare.
https://www.rnz.co.nz/news/national/508570/auckland-annivers...
This is part of the risk one takes buying property. It’s more than offset by the benefits of buying property. Or else everyone wouldn’t be telling me what an idiot I am for renting.
You’re (and I) are an idiot for renting because after you’re done renting you have no equity. Now compare the rental and mortgage similarly sized units and you’ll realize for about 20% more money you’re suddenly not igniting it on fire every month.
Not a good argument. This only holds true if your rent equals what your mortgage would be. I personally don’t care about similarly sized units — why would I compare those?
I specifically choose to rent small and inexpensive apartments and put the savings (compared to a mortgage) into other investments. So I do have quite a lot to show for myself after 20 years of renting.
I’ve been paying under $1,200 in rent for 10+ years in a neighborhood where houses are now pushing $800,000.
> Fellow renter here, what avenues do you have if your renters insurance is cancelled
The same as the homeowner does, shop for other options. Fortunately w/ renting it seems like insurance companies (thus far) don’t care that much and use it as an incentive. My partner’s car insurance provider reduced her total bill when she added rental insurance.
You’re either rent controlled or bullshit. Either way your situation is far from the norm and had you bought a house 10 years ago that’d put us right on the tail end of the crap housing market and you still would’ve ended up better buying.
Since you can’t seem to do math well, 10x12x1200=$144k just gone. If you had bought a house, and I’m correct on the 20% number, then you would’ve spent about $173k and still have the equity. Meanwhile my father-in-law bought a house around that same time for $350k and is sitting on about $1.2mil in equity now.
> The same as the homeowner does, shop for other options. Fortunately w/ renting it seems like insurance companies (thus far) don’t care that much and use it as an incentive. My partner’s car insurance provider reduced her total bill when she added rental insurance.
I don’t even know what you’re saying here. Above you claimed this was the downside of having a house, and now you’re saying you’ll just shop around. That would invalidate your first complaint about risk.
You clearly are too young to know what you’re talking about. I really hope you’re not actually investing with this mentality because if so you’ve just been getting lucky so far.
Neither. Shitty apartment and a lot of hunting lol. And it was under $1k until COVID started. Going to be $1300 at my next renewal in July.
> 10x12x1200=$144k just gone
Yes. I'll admit I'm not familiar with the logistics but I assume the government refunds the homeowner's property taxes and reimburses for costs like appliances, repairs, landscaping, etc. when the time comes for them to sell?
> Meanwhile my father-in-law bought a house around that same time for $350k and is sitting on about $1.2mil in equity now.
Good for him! I both can't buy a house in my neighborhood due to the cost and have no interest in owning a single family home.
> You clearly are too young to know what you’re talking about
Like I said, just stupid. I'm over 40.
But then you go on to claim you have a lot in investments, or something along those lines as it wasn’t clear. Your story’s dots aren’t connecting.
Thing is, I think you’re actually desperate to own a home, as am I. And now your justifying your desperation with this flawed idea that renting is somehow cheaper. There is no reality in which this is true, that’s why you see the bulk of people flocking to buy and all of us complaining that the party is over.
You’re wrong.
Yes that is correct. Ladd's Addition in, Portland, OR. The floor for fixer-upper houses within a half mile might be $500k but I see $800k+ very regularly. I'm sure you can find something to quibble with here though.
Somehow in my 40-year life I've always managed to find small, cheap, shitty apartments in good neighborhoods. I guess either I am the luckiest person alive or most people aren't excited to live in small, shitty, and cheap apartments?
> But then you go on to claim you have a lot in investments, or something along those lines as it wasn’t clear. Your story’s dots aren’t connecting.
I put a few thousand into index funds each month. I could easily buy a house with cash in a place where I'm not excited to live.
But why would I? I don't want a house. I like my cheap small shitty apartment because it's in a great neighborhood. My money's growing just fine. I have enough.
> And now your justifying your desperation with this flawed idea that renting is somehow cheaper.
You're wrong.
I said that renting can be an attractive decision despite having no home equity at the end.
I understand that owning a home can be an attractive decision as well.
I just think that people who are fanatical about how bad a decision renting is are generally wrong.
Because you’re not lighting rent money on fire every month. I’m sorry you can’t understand this, and all I wanted to do was help you understand. But it isn’t my money so keep the delusion, I don’t care anymore.
I'm not lighting it on fire! I'm getting a place to live.
The homeowner is also lighting money on fire every month! They don't get a check back from the roofing company when they sell their house. They don't get a rebate from GE for the stove they bought 20 years ago. They get the benefit of having a stove in their house and a roof on their home.
In 20 or 30 years or whatever I have a Vanguard account with a couple hundred thousand dollars in it. In 20 or 30 years the homeowner sells and gets a big check as a result. Why do I care if their check is bigger than my Vanguard account?
So you think your landlord is eating those costs and not passing them on to you in your rent? You seriously think they are running a charity?!?
Obviously not, but since my rent is low enough then I don't care. They can only be passing $1200 in costs along to me because that's what I'm paying.
My rent being lower than costs for homes is what works in my favor. I lose money forever but it's a relatively small amount of money. The rest of my money can go somewhere else.
They can decide not to renew for any reason - including that they just decided not to do house insurance at all anymore.
> if their insurance is cancelled based on inaccurate information
In all highly advanced countries (G7 and similar), insurance is insanely strictly regulated. If they cancel your policy for a b/s reason, and your protests are ignored, then tell the regulators. They will fix it quickly and slap a huge fine on the insurer.
You have too much faith in the regulators, that's not how it works.
Insurance companies are violating these rules all the time, only when you can gather a critical mass of complaints against a specific one will anything happen.
Except that according to the article this "hypothetical bullshit scenario" is already happening and there are even several examples of it happening including one where a person was rejected for the condition of their roof when the roof was brand new, and another where a person was rejected because of trees that were nothing more than shadows.
Since you know that it's so easy to "tell regulators" and get things fixed quickly you should reach out to Douglas Heller, the director of insurance at the Consumer Federation of America, because he's under the impression that “The technology is way ahead of any consumer protections” and consumer groups feel that inspections via aerial images are "worrisome because of the limited rights customers have to challenge the images"
You can find Mr. Heller here (https://consumerfed.org/expert/douglas-heller/). I'm sure Douglas would love to learn about how none of this is a problem because "insurance is insanely strictly regulated" and your expertise would mean that he can better help the people currently struggling with this issue and potentially even save others from having to deal with it in the future.
> tell the regulators
I've definitely reached out to insurance regulators in the past and things got fixed. (In the USA.)
If insurance companies can cheaply inspect everyone’s house from space, the end result will be to lower prices for people with homes in perfect condition and raise them for everyone else.
This is potentially problematic because the people with houses in poor condition are the least able to afford added costs in general.
I'll note that there's nothing at all redistributive about sneaking a trampoline onto your property, too.
Further, I'll note that working class people also take pride in their houses and pay to keep them up, and they too are being asked to subsidize people who are getting rate breaks from false assessments.
Later
My municipality will make an interest-free loan of up to $25,000 to cover the kinds of property repairs we're discussing, if you're income-qualified (ie: not too rich to just pay to replace your own roof).
That said whether the regulators are effective in keeping costs down is a different issue. But my not-very-deep understanding is that risks are rising, e.g. large wildfires in the US West, and increased hurricane frequency and strength on the Gulf Coast, and the only way to deal with that for the insurers is to raise prices, or drop customers - sometimes to the point of abandoning the market altogether. This sounds like another piece in that trend.
I guarantee you income is correlated with state of home repair. If insurance companies can more easily access state of repair, lower income individuals will end up paying more than they did previously.
Regardless of whether that is fair, it is a change from the status quo, and it’s obvious why some people would consider that problematic.
Just don’t get insurance and nothing of yours will pay for anything belonging to anybody else.
California won't let them underwrite to accurately reflect the location risk, so they're pulling out instead. It's basically exactly what Tptacek said, only demonstrating it via the stupidity of California's law.
Every new data point partitions the statistical population size into two smaller parts, each with their own larger variance (ie the insurance company's risk). The insurance company could statistically combine the risk from each partition into the same original, but it's more likely they'll focus on the higher independent risk figures and raise premiums an outsized amount to cover each individually. And this effect is going to be more pronounced the more lopsided the partition is, leading to similar monoculture incentives as we see in the mortgage/housing bubble. For example, I'd bet there's somewhat of a correlation between insurance claims and whether a house is painted beige.
That is how rates can go up even when the extra data is fundamentally sound. But there can also be just enough extra information to be damning, but not enough to exonerate. For example after the "Do you have a trampoline" question, is there a follow up of "Do you let guests use it" ? Or perhaps a more formal "opt out of all liability coverage for the trampoline" ? Likely not.
Then of course there are places where the model is irrelevant or even outright wrong, because the thing being singled out seems like it rocks the boat. Like the driver surveillance devices that penalize focused acceleration due to perceived association with racing, when it's much more likely that the driver is actually paying attention to driving. Or penalizing people for going over the posted speed limit, when it's actually safer to go the prevailing speed of the road.
Elaborating on my second criticism - let's say someone has a trampoline but never has guests at their house. The insurance company asks about the first condition, but doesn't ask about the second condition. If the customer lies about having a trampoline, it's likely that they are actually still being subsidized by their neighbors as their overall risk of liability claims is much lower.
And I've actually got to wonder if lying about having a trampoline is technically even fraud. Are home insurance companies legally obligated to pay/defend liability claims stemming from things you lied about? If not, then it would seem there is no fraud (unless you also lie for the claim) - the claim can just be denied, and liability coverage isn't relied upon by a mortgage.
In fact your price will propably increase since more overhead needs to be allocated to fewer customers.
That's exactly what insurance is. The whole premise is that they will dip into other people's payments to pay you if you ever encounter a covered issue. If insurance only ever paid you back some fraction X of your own contributions, why would you ever buy it? It would make infinitely more sense to deposit whatever you would have paid to insurance in a high yield savings account.
This is pretty basic? Like, it's an economics frequently asked question why buying an insurance policy isn't as irrational as playing the lottery, since both have negative dollar EV.
If a group of ten people all have a one in one-thousand per year chance of a million-dollar loss each year, then their annual premium will be:
10 x 0.001 x $1,000,000 = $10,000 (plus some administrative overhead and assuming a very basic risk model)
It has nothing to do with who is rich and who is poor or making anyone come out ahead of their own losses.
More importantly, each person in this group has a different chance of a million-dollar loss each year, and it's important if you're going to write a policy to get that chance as accurate as possible.
Some members of the pool have a 1-in-1000 chance per year, others have a 1-in-10 chance.
An efficient insurance market assess who has what risk, and offers premium commensurate with risk. If you're one of the 1-in-10 people you pay more.
A risk pool combines resources to pay out for losses that are otherwise individually unaffordable by each member of the pool. It is explicitly not a mechanism - nor is the intent to - have members with wildly different risk exposure pay the same premium. In fact the only way it can sustainably function is if each member's risk level is accurately gauged to some level of precision.
There are risk pools where the intent is to subsidize higher-risk members, where we believe that such subsidy is a social good - health insurance for example is one of those things.
But I don't see a good argument that home insurance is, or should be, one of these types of risk pools.
Insurance is for catastrophic losses. I don't pay for insurance to make a profit, I make it to avoid the large tail loss of having the house destroyed and having to pay the value of the mortgage to the bank.
But that's not what would happen. You would still have insurance because what we really have is 8 billion people in the world (or 300 million in America or 10 million in your state or 1 million in your city or 500 in your neighborhood/village) and each person in that group of people derives some utility from other people in that group not having to pay full price for their broken roof, whether that's because when you go talk to your neighbor he's not complaining about his roof all day or because your neighbor is your doctor and you want him in the hospital instead of running around trying to fix his roof all day or sitting at home wet because he can't afford it. The total amount of that utility multiplied by how much money the entire group makes might be less or more than the price of roofs for everyone in that group.
So it's both. You're trying to discover the network of people (or create/convince that network, sometimes by threat of violence in the case of government-mandated insurance) in whose interest it is to redistribute their wealth to a given person.
Is there some kind of theory of insurance they teach in business class where they explain this "discover the network" idea? It doesn't sound like the common definition of insurance at all.
I believe the perfect information case you say wouldn't happen is exactly what would happen. The only reason we have insurance is that perfect information is impossible in a chaotic world.
My home insurance offer free pest-control, because they know that if this is neglected, it will cost a lot more for them. Plus, it will be hard to prove that it was a cause of the home owners neglect.
At the risk of getting political, (governmental) healthcare is another one, where regular checkups can save you thousands in repair. It might look like a subsidy but in the end it becomes a net-benefit for everyone in the pool.
> At the risk of getting political, (governmental) healthcare is another one, where regular checkups can save you thousands in repair. It might look like a subsidy but in the end it becomes a net-benefit for everyone in the pool.
This is part of the theory behind the Affordable Care Act and its subsidies, in that the more people who have health insurance, the bigger and more diverse the pool, it becomes a win-win-win for insurers (bigger pool = good, more money, more customers, more profit) consumers (health insurance = healthier, better life) and the government and country overall (healthy population = better long term prospects for the country).
Of course, true universal healthcare programmes like the NHS simply abstract that away by removing the profit incentive entirely, cutting the insurers out of the equation and turning it into a more straightforward "the government pays for healthcare because a sick population is just a plain bad thing". It's as such not really a "risk pool" or "insurance" in any real sense, because the amount you pay into the system is completely disconnected from your risk of drawing out of it (and indeed, given the correlation of poor health and low income, likely inversely proportional).
Another poster here, Scoundreller, recently responded to one of my comments on another topic with this insight:
> The funny thing about insurance is that as it becomes perfect at assessing risk, it becomes worthless.
> Oh, you’re about to have a $x claim this year, your premium is $x + y% admin fee.
> Just self insure and save yourself the y%.
There's likely a point where the more accurately priced a policy is the less worthwhile that policy is to purchase, which really wouldn't be a good thing for the insurance industry. The use of aerial photography probably isn't enough to put them over that threshold, but the closer they get, the less attractive their offerings will be. Considering that the insurance companies mentioned in the article have billions in revenue and assets I'm not sure they have a compelling need to resort to this level of surveillance in order to make good money. None of them appear to be going broke due to rogue trampolines anyway.
Yes, if you could 100% guarantee that someone was going to have a $Y valued claim, their premium would fairly be 100% of $Y at least in order to allow for their contribution to the risk pool. Problem is, you cannot 100% predict the future, and there is no model capable of doing so, nor will there likely ever be. Nor can you predict that any other insured risk might not materialise in the meantime.
More to the point, it fundamentally misunderstands what insurance is and how it works, not least the commercial considerations involved. If there is a 100% risk of risk X materialising, the insurer won't rate your premium at the cost of risk X; it will simply exclude risk X from your policy and rate your premium based on all the other myriad risks that might arise that year in an attempt to win your business and collect premium for what, to them, is a better bet.
This already happens, incidentally; travel insurance policies will exclude pre-existing conditions or recurrences of previous illnesses as a matter of course, because if someone (e.g.) has cancer, the odds of them needing to claim on their policy - and as such draw down from the pool more than they paid in premium - skyrocket.
Which makes it odd that there are people who can't get insurance at all because of one factor like a tree or a roof. Instead of these companies (rightly or not) excluding those risks they're just dropping the customers or refusing to insure them.
> Problem is, you cannot 100% predict the future, and there is no model capable of doing so, nor will there likely ever be.
As insurance companies get more data about you from constant surveillance and data brokers it's possible for them to assume things with far more certainty. Worse, they don't seem to care too much about accuracy either. Your health insurance could cost you more next year because data shows more people in your zip code are spending more time in fast food drive thru lanes. People have had their DNA leaked! Predicting the future (accurately or not) is getting easier every day.
> This already happens, incidentally; travel insurance policies will exclude pre-existing conditions or recurrences of previous illnesses as a matter of course
I think that's reasonable for things that nearly certain to happen. It's easy to exclude cancer in a travel insurance policy and still provide some value. It's a lot less likely when it comes to something like flood insurance where your house either floods or it doesn't, although there are certainly houses in places that flood so regularly that they shouldn't be insurable at all and no one should live there. There's a balance that's difficult to strike because the incentive is for insurers to drop anyone who has any real risk.
If the goal is redistribution, then using accurate risk data as a starting point seems preferable.
No, risk assessment and/or management is an internal operational concern.
The goal of insurance providers, home or otherwise, is to charge fees such that the insurer collects as much revenue as possible while simultaneously expending as little as possible to remedy claims.
Any justification legally available to an insurer supporting denying or reducing a claim will be employed.
(no, this is not some hippie collective thing, in many countries this is the norm, see https://en.wikipedia.org/wiki/Mutual_insurance)
It's a common misconception that co-operatives/mutuals somehow don't need to make money or will actively try to not make money, but in reality if they don't they tend to die fairly quickly.
Nobody will see lower prices. Perhaps these perfect homes might see slightly smaller increases year to year.
> houses in poor condition
The point of the thread is that they're dropping people for random noise in satellite photos. The house might be perfect, it's just the photo that's wrong. But they don't care.
I'm not that optimistic.
Insurance companies are very keen to get as much risk as possible off their books before the climate gets even more extreme in its volatility
Good goes with bad, so long as the bad goes, some good going too is undesirable but OK because they are aware if the catastrophic climate events looming
The insurance companies are behaving logically, probably legally IANAL, but for people who are simply caught in the wash it is unfair
This is part of the huge systematic disruptions we are all going to have to adapt to, or die from, due to climate change
Worrying times
There are good drivers and bad drivers. There are also good homeowners and bad homeowners. I live in Florida, but chose not to live in a flood-prone area. We also have hurricane clips on our roof, and we just changed all our windows to impact-resistant windows (with the help of a state-sponsored program, actually). Our insurance isn’t that high at all. Could it be lower? Sure, I’d love that. And maybe a national program would do that.
Modern building codes require things like impact windows and that the building be rated for high winds. Older buildings should be retrofitted with things like impact windows, but I would only call those homeowners “bad drivers” if they can afford to do so but don’t. I wouldn’t blame an elderly person on fixed income for not affording to do this and call them a “bad driver”.
I’ve walked around San Francisco quite a bit since my company is based out of there, and I’ve seen a lot of people retrofitting their houses with those diagonal beams for earthquakes. San Francisco is waiting for the “big one”; is anyone who can’t dump money into living in a safer building, or retrofitting the one they own, the equivalent of a “bad driver”? Obviously not.
FYI in Tampa, also called the “Bay Area” to locals, we’re also waiting for “the big one” (a CAT-4 or CAT-5 coming directly into shallow Tampa Bay, which would cause an enormous storm surge). That last happened in 1918 or so and it actually permanently changed the geography where it came in, creating an area known as Hurricane Pass. All we can do is prepare and be responsible to our communities.
Anyways, you can’t lump all people in a geography, regardless of behavior, into one group. It does a disservice to the people who are doing the right thing.
Unless your building has been fully retrofitted for [insert local disaster] or you chose to live outside of [insert worst geography in your area to live with regards to local disaster], then you’re a “bad driver” too.
What prevents it is there are no customers willing to spend $1m on our cars.
This is the Law of Supply & Demand, and how markets work.
Specifically that high levels of LDL alone are not what causes plaque buildup, and why not. Higher LDL cholesterol goes with lower chance of death, found a review of 19 cohort studies over 68,000 people, published in the British Medical Journal, for one.
Why shouldn't I want them to be running drones over our houses? Worrying times... for pirate trampolines!
I think there's a sort of weird subtext in the "risk pooling" discussions on this thread that "risk pooling" is a way for people who don't replace their old roofs to get protection from the people who do. But that's not at all the concept! You refusing you repair your roof isn't an act of god; it's just recklessness.
1. pre-emptively dropping or refusing coverage
2. claim inspectors concluding the company has no liability for a particular incident.
It doesn't all need to be #2 (and probably should not be), but it also doesn't all need to be #1 either.
Also, it depends on the jurisdiction, but while the insurer can try to void the whole contract, courts don’t always let them do it, especially if the policyholder convinces the court it was an innocent mistake or oversight rather than a deliberate lie.
I just checked my insurance policy. The word "trampoline" never once occurs in it. I don't think my insurer cares about trampolines.
If I think about it: given the absurdly large payouts for some injury lawsuits in the US, I understand why American insurers might be particularly sensitive to things that might induce injury, like trampolines. Given Australian courts tend to be much more modest in the damages they award, I can see why Australian insurers might not see them as something worth paying any special attention to.
Also, even in the US: it might seem obvious to someone who grew up there, but for an immigrant from a country with a different insurance system, it wouldn’t be obvious
1. A person is at a friend's house for dinner
2. Upon leaving to go home, they trip and fall trying to navigate an unlit path to their car
3. Their injury lands them in the hospital and requires a week or so of recovery time in which they could not work, and as they contract out they lose that money
4. The health insurance that fully covered their injury, looks at the medical records and finds that the injury occurred on another property and calls the people involved and finds out about the unlit path
5. They deny payment for the medical treatments and tell the injured person to sue the friend for medical payment because they are at fault and they have home owner's insurance
6. Forced to sue the friend or be out tens of thousands of dollars, the injured person adds to the claim for lost wages (hey, the friend isn't paying for it anyway, the insurance is)
This is how you end up with such lawsuits that the USA is famous for -- people are forced to sue other people in order to not go bankrupt, and things get piled on that.
In Australia, if you are seriously injured, you will be sent to a public hospital, where the government will fit the bill for your treatment. If it is a workplace injury or a motor vehicle accident, they might seek to recover costs from the compulsory private insurance in those cases, but otherwise they wouldn't. Many people also have private health insurance, but the private system usually doesn't get involved in accidents and trauma, it prefers to focus on things with greater predictability and profitability (e.g. hip replacements).
Every country is different, but I suspect in many other countries with either public or hybrid public/private systems, it is going to be a similar story
> This is how you end up with such lawsuits that the USA is famous for -- people are forced to sue other people in order to not go bankrupt, and things get piled on that.
It isn't just about lawsuits, it is also about damages payouts. In the US, there is a very broad constitutional right to a jury trial, which extends to civil lawsuits; and (in many cases) the law entrusts the jury, not just with deciding whether the plaintiff has factually proven their case, but also with awarding damages. American lawyers have mastered the art of emotionally convincing jurors to make big awards (especially if the defendant is a big corporation, or an unsavoury private individual). And big awards create precedent for bigger awards in the future. Even though judges can reduce jury damages awards, and often do, I think that only partly reverses the impact of juries in encouraging their growth. Also, the fact that many states have elected judges makes them hesitate about reducing jury damages too much, since that might offend the voters and threaten their re-election chances
Compare Australia: we also have a constitutional right to a jury trial, but it only applies to the most serious federal crimes; it does not apply to less serious federal crimes, nor state crimes (regardless of seriousness), and there is no constitutional right to a jury in civil cases. Sometimes, you can get yourself a jury in a civil case (depending on various complex legal factors), but in practice the majority of civil trials don't have one. And even when there is a jury, the norm is the jury only decides whether the plaintiff has proven the facts of their case, and damages is wholly up to the judge. Judges tend to be much more conservative in awarding damages, and as a result, the runaway damages inflation which has happened in the US, has been far less of a thing in Australia. And all judges in Australia are appointed (both state and federal), and the process is mostly insulated from politics, so Australian judges are far less afraid to offend public opinion
The big damages are punitive damages, not damages for compensation. Since we have rather lax consumer protection laws we rely on the companies being afraid of having to deal with a huge lawsuit payout if they act suitably antisocial. Like the McDonalds hot coffee lady only asked for medical bills, but because McDonalds corporate refused to give her those, and continued to keep coffee boiling hot regardless of people getting injured that they knew happened constantly, because it made them money, the jury made it a point to award a ludicrous judgement to teach them a lesson.
For example, in the 2014 Florida case Cynthia Robinson v. R.J. Reynolds Tobacco Company, et al, the jury awarded US$23.6 billion in punitive damages as well as US$16.9 million in compensatory damages, for the death of the plaintiff's husband, a smoker who died from lung cancer at the age of 36. I'm sceptical any Australian judge would ever award US$16.9 million (at current exchange rates, AU$25.7 million) compensatory damages for a single person's death. The trial judge cut back the astronomical punitive damages award, but left the compensatory award intact. In the end, the plaintiff never got any of that money (the appeals court ordered a retrial, on grounds unrelated to the damages, and the defendant prevailed at the second trial). Still, I think it goes to show, it is not just high punitive damages, high compensatory damages is an issue too.
For example, compare how the UK and the US handle compensation for lost future earnings in wrongful death cases. In the UK, judges are guided by the "Ogden tables", actuarial tables published by the British government. The judge will use the deceased's age to look up a multiplier in the tables, which will be multiplied by their income at the time of death, to derive a net present value of future earnings. While the tables are technically only a guideline, and judges have the discretion to deviate from them, plaintiffs rarely succeed in practice with convincing judges to do so.
By contrast, in the US, there are no such formal guidelines – it is largely determined by expert witness testimony before a jury. Expert witnesses have a lot of scope to argue for higher estimates, and often succeed in convincing a jury with those arguments. The result is unsurprising – compensation for lost future earnings is more generous in the US than in the UK.
http://ndl.ethernet.edu.et/bitstream/123456789/28878/1/53.pd...
Are you trying to say that one system is bad and another is good? They are different for different reasons, which can be explained by the structure of the society and what we expect courts to provide for us as opposed to other areas of government or private parties.
The argument though is, a lot of the difference is nothing to do with the factors you cite such as social safety nets, it is about the use of juries in civil cases, especially to decide damages. David Bernstein (professor of law at George Mason University) puts the argument better than I can in a 1996 journal article – https://www.cato.org/sites/cato.org/files/serials/files/regu... – see in particular the discussion of juries on PDF pages 3 onwards, and his recommendation on PDF page 6 that state legislatures should remove the power to decide damages from juries and transfer it to judges only
Why are you arguing this? For what purpose would it serve to give up the right to a jury trial in order to mitigate the extreme outlier cases which bump up the averages and which do not actually get any money into the hands of the plaintiffs? You want to destroy a constitutional right because... the tobacco industry got an unfair award, or because you think people are too dumb and swayed too easily by lawyers that we can let them decide life or death but can't let them decide how much money someone is owed?
Why take this position? What justice is it serving and why would society be better off for doing it?
Because I'm interested in comparative law and the differences between the legal systems of different countries, and my honest opinion is this is a matter in which the US system is worse than that of the other major English-speaking countries.
I can also point to examples of the opposite, where I think the US system does it better – e.g. the abolition of the dock.
> For what purpose would it serve to give up the right to a jury trial in order to mitigate the extreme outlier cases which bump up the averages and which do not actually get any money into the hands of the plaintiffs?
Bernstein's primary argument isn't about outliers, it is about predictability and consistency – judges are much more consistent in the damages they award than juries are. Where juries are in charge of damages, it can turn into a lottery, where some successful plaintiffs win big, and others win small, just based on the luck of the jury pool draw. He argues that's unfair to those less lucky successful plaintiffs, and I think he is correct there. Of course, there can be a similar phenomena with random selection of trial judges, but the variability due to different judges tends to be significantly smaller than the variability due to different juries, since judges are subject to pressures for consistency which do not exist for juries
> You want to destroy a constitutional right because...
Under US constitutional law as it stands, there is no federal constitutional right to a jury trial for civil cases in state courts. The 7th Amendment right to jury trials in civil suits only applies federally, it has not been incorporated against the states under the 14th Amendment. This is unlike the 6th Amendment right to jury trials in criminal cases, which has been incorporated under the 14th (except for the vicinage clause). The piecemeal application of the incorporation doctrine seems rather arbitrary and difficult to rationally justify, but that's SCOTUS precedent as it stands.
Some state constitutions have a state constitutional right to civil jury trials, others don't. For those that don't, there would be no constitutional obstacle to a state legislature implementing Bernstein's proposal to remove damages decisions from juries and shift them to the judge–which is already the norm in every other major English-speaking country. As to those states who do have such a state constitutional right, whether Bernstein's proposal would be compatible with it depends on precisely how that right is worded, and how the state courts choose to interpret those words.
> you think people are too dumb and swayed too easily by lawyers that we can let them decide life or death but can't let them decide how much money someone is owed?
I'm opposed to the death penalty so I don't believe any jury should be deciding life or death.
That said, criminal matters and civil matters are so different, it is rational to hold that juries should be required for one and not the other. Criminal matters are supposed to have a very high burden of proof (beyond a reasonable doubt), where requiring 12 ordinary people to make a unanimous decision can be viewed as an additional protection against wrongful convictions. Civil matters are decided on a much weaker standard (balance of probabilities), so it is not clear whether juries are as necessary for civil cases.
(When I bought a house, the sales contract was maybe 50 pages. I went to the escrow company to sign. The escrow agent was visibly annoyed that I leaned back in the chair and set about reading every page. One of the pages that needed to be signed said nothing but "I have read and understood this contract.")
Except, Courts have ruled that you can, at least sometimes, get out of the fine print of a contract by claiming you didn't read it. For example, see the notable 1962 Supreme Court of California case, Steven v. Fidelity Casualty Co [0].
In 1957, plaintiff purchased a life insurance policy covering plane crashes, from a vending machine in Los Angeles, with his wife as the beneficiary. His itinerary took him from LA to Chicago, and from there to Dayton, Ohio. On his return from Dayton to Chicago, he'd scheduled a one night stopover in Terre Haute, Indiana. In the morning, he went to the airport in Terre Haute, and was distressed to discover the flight had been cancelled due to technical issues, and he was going to miss his connection in Chicago. The airline agent referred him to a charter airline, who organised a charter flight for him and a handful of other passengers back to Chicago. Sadly, the charter flight crashed, and he died.
His widow sought to claim on the life insurance policy. The insurer denied the claim, on the grounds that the fine print of the policy said that it only applied to scheduled air carriers, not charter flights, and hence the flight on which the insured died was excluded. His widow sued the insurance company in the name of her deceased husband. The trial court sided with the insurer, on the grounds that this clause was clearly stated in the fine print of the policy, which the policyholder was expected to have read, and he had signed to say that he had.
However, on appeal, the Supreme Court of California overturned the judgement, and ruled for the widow. It held that, for consumer insurance contracts, any clause or exclusion which the policyholder could not have reasonably expected, must be pointed out prominently, not buried in the fine print. Since, it ruled, the policyholder had no particular reason to expect the exclusion of charter flights, and the insurer had not prominently stated that exclusion in the policy (e.g. by using a larger font), it was not legally binding.
And, from what I understand, the rule established in this 1962 case is followed in California law to this day, and has also been adopted by the courts of several other US states
Why should anyone think the fine print is irrelevant? Everything in a contract is relevant, or it wouldn't be in the contract.
That means there will always be an argument around what a reasonable party would consider a surprising clause, but contract law disputes deal with nuance, edge cases, and what a reasonable party would expect all the time. With rulings like this corporations will air on the side of caution when taking big swings in forming their agreements since litigation is so costly and the outcome so uncertain. Consumers gain a little power back (though still far from equal footing).
This should only apply when there are large power imbalances, such as individual people entering agreements with vast multinational corporations. When big corps ink deals with each other caveat emptor should reign; they have equal opportunity to review and understand the terms and therefore have to live with the consequences.
It's not unreasonable to expect a party to a contract to read all of it. If one's case is based on "I didn't read it", the other party should prevail.
> Consumers gain a little power back (though still far from equal footing).
The consumer can always say "no". An important feature of a free market is there are no forced contracts. Saying "no" is the ultimate power.
Walter, you are a very smart guy. And this is a site which attracts people with above average intelligence and education. It is easy to forget that not everyone is as smart or well-educated as we are.
I know a guy who has been diagnosed with borderline intellectual functioning (i.e. his IQ is above the cutoff for intellectual disability, but only just). He blames it on his alcoholic mother drinking when she was pregnant. He's able to live independently, he drives a truck for a living. But no way is he ever going to be able to comprehend all by himself the dense fine-print of a contract. The law has to look after people like him, not just people like you or me. There are literally millions of people like him out there – around 13% of the population has an IQ in the borderline range.
> The consumer can always say "no". An important feature of a free market is there are no forced contracts. Saying "no" is the ultimate power.
Some products, people need to buy to meet their basic human needs and to function in society. For many of those products, there are only a small number of vendors available. If all of them demand you sign an incomprehensible barrage of legalese, you can't realistically say "no" to doing so. It might not be a "forced contract" in an abstract theoretical sense, but it sure is in a practical sense.
If someone is borderline on this, it's fine if the court steps in to give him some slack.
But the defense in the case under consideration was not lack of mental acuity, unclear legalese, ambiguity, coercion, or power imbalance.
It was "didn't read the contract".
A person with borderline intellectual functioning can absolutely have capacity to understand a contract sufficiently to agree with it when its terms are explained to them in clear plain English, yet lack the same capacity when they are presented in dense legalese. Legal doctrines of "capacity" tend not to deal with that situation very well, because they focus on the capabilities of one of the parties rather than the form in which the contract is presented. Also, a lot of people with mild cognitive issues (not just borderline IQ, also other issues like age-related cognitive decline, early stage dementia, early stage hepatic encephalopathy, etc) are unaware of those issues, in denial about them, or too ashamed to admit them, so may not benefit from legal rules designed to apply to them specifically, whereas they can stand to benefit from legal rules (like demanding unexpected clauses to be stated prominently to be enforceable) designed to apply to everybody.
I don't know if it really is the case that your insurance can be voided over material misrepresentations unrelated to your claim, but certainly there's no moral argument that it shouldn't work that way.
This doesn't stop expensive lawsuits, even if they ultimately don't pay the claim.
Whereas your ability to sue for a non-existent policy (or one where that was unambiguously canceled) is... much less.
Because it’s creepy.
Also, what is the aerial photo of a roof going to indicate in terms of “cataclysmic climate events looming”?
Also is it a coincidence or a pun that your name is worik and it is common for you to sign your posts with something about worrying?
Yes climate change has caused an upheaval in some geographical regions.
But there are many economic forces at play, from the treatment of real estate as an investment making every home a million dollars to insurers all being reinsured by a ever smaller pool of reinsurers.
I suppose you could offer an explanation for the satellite photo, but in that case you’ve already been dropped, so getting your policy reinstated is going to be a much bigger lift.
Obviously, if I add rooms or extend vertically, they need to know. But "remodel" covers a lot.
My point is more that a totally reasonable and brief occurrence becomes permanent and without context in satellite imagery.
If risk is assessed perfectly, they know that Alan's & Charles' houses will not have a fire, but Bob's house will burn. Alan and Charles (and all the others) pay only the $0.25 overhead/profit, while Bob must pay the $125,000 ratings +profit.
Insurance basically disappears, as it adds no value, and we go back to being self-insured.
Sure, an undeclared pool is a problem. However, the insurance company should have to put the pictures into evidence and allow a legal rebuttal. Bureaucracies get things incorrect like "wrong address" all the time. People need the right to challenge these behemoths.
We've been through this once already in the US--it was called "rescission" in healthcare until the ACA made it moot by requiring coverage of preexisting conditions. It's a bad thing and invariably needs to be made illegal.
Your friend brings over a trampoline for Timmy's birthday party, you can take the risk of injury with no intent to claim on insurance. You can remove it before inspection.
Now you get pinged out of the blue by a satellite.
Adults don't need constant supervision. Should you believe they do, why not leave a multi-camera drone above your suburb and every insured house can be monitored for infractions 24/7.
There is no reason for the insurance company to withhold the image as evidence of a problem. Google Maps knows where my trampolines are, why is the insurance company hiding their cards?
An insurance company that surveils you 24/7 and makes sure you comply, is not covering any risk, it's a protection racket.
Yes, if they do a scheduled inspection, it is easier to defraud them.
If my insurance goes up, and it has, because of people defrauding insurance companies then I would fully expect my insurer to protect their bottom line and my rates by dropping those customers playing unfairly.
What I don't agree with is insurance companies punting the decision making process to an algorithm. At that rate we end up with Google "support" from a company that, as paying customers, we should be able to have a conversation with.
The last thing I'll mention is that it goes a long way to know your insurance broker. As an example I've known mine for the last ~15 years and they have helped remediate a number of, what I'll describe as standard process issues, when I've contacted them and in a few cases even proactively.
There is no defrauding going on. You don't own someone's behaviour or property simply because you "insure" them.
You get to reject claims and put your opinion on what "fraud" is, through the proper channels.
Taking photos and dropping customers is going around the proper channels and tyrannizing your customers.
How that is not obvious to everybody involved, is beyond me.
Drop the pretense and install a command economy again like the 1940s. You are leaning in that direction anyway.
Taking photos from public airspace isn't "tyrannizing" anyone, as much as you seem to want it to be.
> You are leaning in that direction anyway.
The irony...
“What’s the big deal the data is already available, relax”. On top of that, it comes with an air of condescension as if no one had ever thought about that before.
One concern with things like this is that it’s different when you have to send someone out to inspect a home vs inspecting thousands of homes at a time. Once you have data in that volume, you can start to infer things that do borderline encroach on privacy.
What is the case here, and it might be what you were trying to point out, is that this kind of data is already collected regularly and is by the books legal. The concern here is simply at the application.
At this point the cats out of the bag and the best we can hope for is at least some level of protection through legislation.
I acknowledged that all this info is already out there.
That insurance companies can demand to inspect your home.
And even further that that this aerial footage is already widely available.
My comment was specifically calling out that collecting data one house inspection at a time is different than collecting data at high volumes.
But let’s gloss over the fact that someone didn’t even fully disagree with you, but even then you couldn’t get over that one point that you didn’t like.