[HN Gopher] AAA is limiting coverage in Florida, citing natural ...
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AAA is limiting coverage in Florida, citing natural disaster threat
Author : croes
Score : 36 points
Date : 2023-07-15 17:26 UTC (5 hours ago)
(HTM) web link (thehill.com)
(TXT) w3m dump (thehill.com)
| cco wrote:
| I've read that a decent driver here has been home insurance
| lawsuits. Florida accounts for 79% of all home insurance
| lawsuits, my eyes bulged when I read that.
|
| https://news.fiu.edu/2022/the-big-reason-florida-insurance-c...
| throw9away6 wrote:
| Yes it's not just a hazard problem but also a Set of rules that
| encourage fraud and waste
| [deleted]
| thenerdhead wrote:
| In other words, it goes to show that if you don't have
| competition in a place where claims will absolutely be filed, you
| will go broke. Smart move, but makes me feel insurance owes more
| to humanity than leaving people to fend for themselves.
| rs999gti wrote:
| You mean more insurance companies?
|
| There isn't competition because insurers' odds against
| hurricanes and floods are bad.
|
| They can't collect enough premium before a payout occurs, so
| there will not be insurers that will take the FL home insurance
| bets without higher premiums.
| thenerdhead wrote:
| https://figafacts.com/category/insolvency/
| Spooky23 wrote:
| Insurance companies can price that risk.
|
| The problem is of the "fuck around and find out" variety.
| Florida is creating a lot of new, hard to price risks. Risk
| managers hate unknown probability, high impact events.
|
| How many oceanfront high rises built of reinforced concrete
| are potential at risk of catastrophic failure due to poor
| regulatory environment?
|
| How will climate change and various environmental risks in
| Florida impact risk?
|
| On the car side, how many uninsured accidents will take place
| due to the crackdown on undocumented or under documented
| drivers?
|
| On the liability side, what kind of crazy torts will result
| from the weird crackdowns on teachers and doctors?
| [deleted]
| mint2 wrote:
| "In a place where claims will absolutely be filed"
|
| Insurance isn't supposed to work like that - there isn't a way
| these houses can be covered at a reasonable rate without
| forcing other customers to subsidize them.
| thenerdhead wrote:
| Rates are much higher in tornado alley. So that argument is
| pretty hard to use.
| brucethemoose2 wrote:
| No surprise there.
|
| Here in Florda, there are thousands of _huge_ 2-3 story mansions
| on the keys and beach... including right where we are, on the
| left side of Ian 's landfall. These places should be empty public
| beaches or hardened hotels, but alas they are just banks of big
| houses that will get flooded and torn up by the next hurricane.
|
| And there are tons of developments built in low, swampy areas
| next to big rivers.
|
| And did Ian scare anyone? Did it affect zoning? Nope. Real estate
| is as crazy hot as ever here, with prices shooting up and low
| lying swamps being mowed down for new neighborhoods. Newcomers
| here know nothing about hurricanes, and tons of them view
| increasing flood risk as hysterical "climate alarmism" when I
| talk to them about it, just like before Ian and Irma.
|
| I am no fan of insurers, but they are smart to get out.
| Homebuilding in SW/SE Florida is nuts.
| dnstalk wrote:
| Miami-Dade and Broward requires buildings to be built to modern
| hurricane standards ("best in the world") but the rest of the
| state has resisted adopting the same standards.
|
| https://www.wunderground.com/cat6/South-Floridas-Hurricane-B...
| brucethemoose2 wrote:
| I am not worried about wind, the houses here are still built
| like bunkers. Oak trees, cages, signs all got ripped up by
| Ian, but our neighborhood's houses were fine.
|
| But the only thing that protects against flooding is building
| elevated, with an empty 1st floor or stilts or whatever.
| LatteLazy wrote:
| The more people build the more they get subsidies for insurance
| because you cannot upset people. The more subsidies they get
| the more people build.
| JimtheCoder wrote:
| Doesn't this boost GDP and keep people employed?
|
| Build a big house, weather knocks it down, build a bigger
| house, weather knocks it down...
| WarOnPrivacy wrote:
| > Doesn't this boost GDP and keep people employed? Build a
| big house, weather knocks it down, build a bigger house,
| weather knocks it down...
|
| No because the people who most need the wages can't afford to
| live where the work is.
| JimtheCoder wrote:
| But if the mansions are getting built, which they appear to
| be, the workers must be getting there somehow...
| WarOnPrivacy wrote:
| > But if the mansions are getting built, which they
| appear to be, the workers must be getting there
| somehow...
|
| I did geothermal for mansions a long while back and it's
| mostly specialized contractors bringing in a small crew.
| It's not a ton of employed people and not locals.
|
| Where I've seen high numbers of local employees making
| good wages are in areas constructing a lot of dense
| housing, particularly townhomes.
| brucethemoose2 wrote:
| There is a ton of both around here (south of Tampa)
| brucethemoose2 wrote:
| It is comical to see construction crews, yard guys and
| such cram into the tiny key roads to build and keep up
| the mansions.
| Spooky23 wrote:
| In Hilton Head, SC, the hotel housekeeping and security
| workers mostly get bussed in from 2 hours or more away.
|
| Florida is similar. It gets pretty poor and gritty within
| 30 minutes of most fancy places.
| brucethemoose2 wrote:
| After Ian, many workers' homes got trashed, and there was a
| _massive_ worker vacuum. Contractors poured in from all over
| the country to fix stuff at inflated prices, with priority
| pretty much dictated by wealth.
|
| For instance, we had tree choppers and stump grinders from
| Georgia. They drove heavy equipment all the way down here.
|
| Honestly I dunno what happened to mega mansions that really
| got hit. I don't go down to Port Charlotte much.
| LispSporks22 wrote:
| How does the flood insurance program work? I thought it was
| basically government subsidy for getting insurance where it
| would not make for an insurer to insure. Is the cost with that
| included just too high now?
| brucethemoose2 wrote:
| The government produces floodmaps that dictate your "flood
| zones" and affect your rate, and you can either buy public or
| government approved private insurance.
|
| We are in a lower risk flood zone, but insurance is really
| expensive now, yeah, and getting much worse. Also it doesn't
| really cover all the possessions in your home, at least for
| us.
|
| The insurance scheme doesn't matter. The fundamental problem
| is that too much stuff is built in flood prone areas, and
| _someone_ has to foot that bill when all that stuff gets
| trashed. Its like building neighboorhoods on the lip of
| volcano. The cost is unpredictable and potentially huge, but
| inevitable in the near term, which must be a nightmare for
| insurers.
| WarOnPrivacy wrote:
| > We are in a lower risk flood zone, but insurance is
| really expensive now, yeah, and getting much worse.
|
| An additional problem is that flood risk is based on area
| elevation rather than dwelling elevation.
|
| In a zone where houses range from 2' to 40' elevation,
| those dwellings are all rated the same for surge risk.
| time0ut wrote:
| As mentioned in the article, Farmers just announced they are
| exiting the state as well. And not just for home owners. They are
| winding down auto and umbrella products as well. They are no
| longer writing new policies and won't renew existing ones. My
| understanding is that they were forced to withdraw the others in
| order to pull out of the home owners market. Pretty dire issue.
| It sucks for the people who built in safe areas to code...
| rdtsc wrote:
| I guess people might flock to Florida because it's warm there and
| it doesn't have an income tax? I can see out of state buyers get
| what looks like a house they can afford, only to find out they
| are on the hook for a huge insurance bill every month.
|
| If insurance companies exit from an area, what happens to
| mortgages then in that area? Banks like to protect their mortgage
| properties and force people to buy insurance, even escrow the
| insurance to make sure it's always paid.
| WarOnPrivacy wrote:
| > I can see out of state buyers get what looks like a house
| they can afford, only to find out they are on the hook for a
| huge insurance bill every month.
|
| While true, the influx of move-ins also _played a meaningful
| part_ in raising insurance costs.
|
| The sudden spike of buyers with NY & CA sized dollars massively
| inflated FL home prices. This further stretched tight JIT
| construction inventories which further drove up home
| replacement/repair costs.
|
| What eases the above? More building. Where's the building
| happening? All over but with little regard to historical risk -
| whether an area sees 30 landfalls in 150 years or maybe one.
| civilitty wrote:
| Florida is a battleground state so the Federal government will
| step in at the taxpayers' expense as usual:
| https://en.wikipedia.org/wiki/National_Flood_Insurance_Progr...
| kadoban wrote:
| Florida is not a battleground state. Maybe a couple of
| decades back it looked like one.
| acdha wrote:
| The state of Florida is likely going to end up as the insurer
| of last resort, which causes some interesting political
| tensions because it means that a lot of working-class people
| are going to be subsidizing the well-connected people who are
| wealthy enough to own the waterfront property which is most at
| risk from flooding.
| snowwrestler wrote:
| This is the beauty of "forever" cultural wedge issues: if you
| can get people to vote you into office based on transgender
| rights or abortion, then they won't ever vote you out of
| office, even if your decisions cost them tons of money.
| sagarm wrote:
| That's already happening: https://www.miamiherald.com/news/bu
| siness/article270752777.h...
| acdha wrote:
| Yes - I'm expecting it to get brutal after the next major
| storm or two. We had family in Miami and before they moved
| they were looking at some hefty increases just due to the
| last few rounds of flooding. More frequent, more widespread
| is really going to reset actuarial models.
| maweaver wrote:
| Everyone thinks of flooding in Florida, but the real risk is
| wind. When a hurricane hits, a relatively small area is subject
| to flooding. But huge swaths of the state are hit with high
| sustained winds. If the winds compromise the roof and rain gets
| into the house, you're looking at a huge amount of damage to the
| home.
|
| For that reason, insurers are very strict about roof age. Roofs
| are very expensive to replace ($15-$20k+), so it becomes a fight
| between homeowners trying to save money with a roof that works
| just fine (in their mind at least) and an insurance company that
| keeps raising rates or threatening to drop if they don't replace
| it.
|
| Enter roofing contractors. In Florida you can assign your
| benefits to them and they gain the ability to sue on your behalf.
| So they go to desperate homeowners and offer to find a reason for
| roof replacement that homeowners insurance will cover, and sue
| the insurance company if they refuse. To give you an idea of the
| scope of this, 79% of insurance lawsuits come from Florida.
|
| Although other factors do exist, this is a large part of the
| reason insurance is so expensive here even for those not in a
| flood-prone area.
| howard941 wrote:
| > In Florida you can assign your benefits to them and they gain
| the ability to sue on your behalf.
|
| Not anymore. The legislature took this away at their last
| special session. They also took away attorneys fees when an
| insured sues and wins against his insurer.
| paulddraper wrote:
| And this might be obvious, but the failure mode is the wind
| dislodging/damaging a sufficient number of shingles and
| rainwater soaking/flooding the house.
|
| Very destructive.
| brucethemoose2 wrote:
| Ian's flooding zone was pretty populated. And it was tracking
| for a direct hit on Tampa for awhile (except for the Euro
| model, which was right all along), which would have been quite
| a flooding disaster.
|
| You are right about the roofing issue though, like said below
| even a damaged roof can destroy your house. Honestly I forgot
| about this because flooding was such a thing for some
| acquaintances.
| WarOnPrivacy wrote:
| BTW, it's not just home insurance. Auto insurance is spiking.
| We're seeing 30% you-suck-for-living-in-FL surcharges - this is
| above/beyond the existing hikes from ever-increasing vehicle
| repair costs.
|
| That 30% surcharge especially sucks for people who can't even
| afford collision/replacement coverage.
| klyrs wrote:
| Hurricane-driven floods wreck cars too. You don't suck for
| living in Florida, but actuarily speaking, your most expensive
| assets are at significant risk.
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