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Comment by Neonlicht | Hacker News Reader

I live in the Netherlands. My insurance already doesn't cover a flood (it also doesn't cover war or a nuclear reactor blowing up).

It is the government that picks up the bill in real disasters I suggest everyone reads the fine print on their contracts.

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Government doesn't pick up bills, taxpayers do. And it introduces moral hazard when the people engaging in risky behaviors (buying homes in high fire-risk areas) don't bear the costs of those risks.

This creates larger, systemic risks and is simply unfair. Someone in Montana should not have to pay to rebuild homes in California.

No doubt the people in Montana expect help when their own houses burn down though

It's the difference between paying a few hundred dollars a year on your own insurance because it's incredibly unlikely your house burns down, and many thousands a year because your suburb burns down once or twice a decade.

We shouldn't be back stopping the insurance costs for anyone. If they can't pay it, maybe that tells them something about the place they are choosing to live in.

> Government doesn't pick up bills, taxpayers do. [...] Someone in Montana should not have to pay to rebuild homes in California.

Are Montana residents' taxes currently paying for rebuilding homes in California? How does that work - I actually don't know but I thought FEMA doesn't rebuilt homes?

I significant amount of the homes destroyed were "uninsurable" which they called an "insurance crisis" and they created an insurer-of-last-resort called the California FAIR Plan, which was socialized fire insurance:

https://en.wikipedia.org/wiki/California_FAIR_Plan

However if you look at the "Key Statistics" fact sheet, you'll see that, guess what:

>The FAIR Plan’s Highest Wildfire Exposures

>This map shows the five areas with the highest wildfire exposure concentrations each in Northern and Southern California. Each quarter circle represents a 7-mile radius where risk is concentrated.

https://www.cfpnet.com/key-statistics-data/

Pacific Palisades is one of many cities where a wildfire would bankrupt the entire system, because the plan didn't actually charge people what the actual cost of replacement value of the homes is. The system apparently has about $700M in assets, and it is predicted to have over $7B in exposure right now.

I think it's pretty clear that they're going to have California tax payers bailout the system so that people living in the best real estate all of CA rebuild their homes in a place where people probably shouldn't be building in the first place, and continue to have their insurance subsidized by normal folks who could never afford to live in places that valuable.

> I think it's pretty clear that they're going to have California tax payers bailout the system so that people living in the best real estate all of CA rebuild their homes in a place where people probably shouldn't be building in the first place

Fascinating (and thanks for sharing all that info), but I still don't see how this money would be coming from Montana residents.

My understanding is that it entirely possible that the FAIR plan might be bailed out by the Feds.

God I hope not. That would set a terrible president. Every other state insurance plan would eventually start running itself in a "obviously insolvent but it looks sane if you squint and market it with the morals of a used car salesman" manner but they'd be fools not to if the feds are in the business of picking up the tab.

>That would set a terrible precedent.

The existing precedent is the National Flood Insurance Program.

https://en.wikipedia.org/wiki/National_Flood_Insurance_Progr...

> Government doesn't pick up bills, taxpayers do.

Is this an interesting comment to make? Yeah... the tax payers foot the bill because like we elect the representatives to maintain the government.

> Someone in Montana should not have to pay to rebuild homes in California.

Is this a joke? Should I, as a Californian, also be able to say "oh, my tax money? You damn well not send it to Montana to help subside program XYZ that doesn't help me."

Yes, you as a Californian should not have to pay for Montana state programs/subsidies.

The optics of very rich people building under (or impossible to) insured homes in a area where they will inevitably be destroyed by a fire then expecting the taxpayer to bail them out when it happens are terrible. There's no argument you can make where people will want to do that

> Someone in Montana should not have to pay to rebuild homes in California.

Montana receives way more Federal aid per capita than California. So it's fair to say that Californians shouldn't be paying for road maintenance in Montana.

But obviously, more rugged individualism is the solution /s

I agree that Californians should not pay for Montana road maintenance.

Federal taxes pay for interstate highways and many large infrastructure projects in states, so indirectly CA pays for MT roads and vice versa.

can you explain this concept of moral hazard?

https://en.wikipedia.org/wiki/Moral_hazard

You realise that America was literally founded because of this? Your reasoning will inevitably lead to the dissolution of the country.

Besides Montana receives tax payer money from the people living in those California mansions.

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