Home insurance need - is home insurance mandatory?
by Guest » Wed Sep 24, 2008 05:40 am
Is Home Insurance absolutely necessary to own a home ?
Total Comments: 19
Posted: Thu Sep 25, 2008 03:44 pm Post Subject: insurance
Wanna add my ' 2cents2 ( LOL ). My family lives in CA. When my parents and sisters bought their homes, they HAD to have Home Insurance...Earthquake Insurance, in their loans. I was born and raised their. LOTS of earthquakes out there. But..I do agree with someone said. No law SAYS you have to purchase Home Insurance, except if you GET a loan for a new home. I live in PA..............I don't know about the 'Home laws' here.
Posted: Thu Sep 25, 2008 09:05 pm Post Subject:
Gary, I think you are expressing frustration about the cost of home insurance?
Yes.
In Florida a normal homeowner's premuim prior to all the recents hurricanes over the past 10 years was about $600 to $900 per year for an average home.
Now those premiums are $2,000 to 3,500.
That's $167 to $292 per month just for homeowners insurance.
Now using our non-actuarially sound methodology 386 homes paying $2,000 per year in premium equals $772,000 dollars paid in.
So if they pay out 1 fire per year the insurance company is still ahead $522,000 to pay out small claims and commissions! :wink:
It's real hard for me to justify paying $250 per month for homeowner's insurance and especially knowing the Gubment run Citizen's Insurance can't pay its claims anyway. :x
I never liked Properly and Casually Insurance....I hope I got that right?
Posted: Thu Sep 25, 2008 10:14 pm Post Subject:
I don't think insurance companies are worried about fires in Florida. I also don't think a total loss from a fire is much concern either.
Your figures are also not relative as they are, at best, reflective of a single home. If we are going to talk about the chances of _1_ home burning down then we'd also need to figure what the premium with be if this were the only home in question. That is, what would the premium be if there was a 1 in 386 chance of the entire home burning down. I'd guess just a little more then that $3,500 you mentioned.
But also, why are we limited the risk to fire and even then, only a total loss due to fire? Why not look at the possibility of wind damage in Florida. How likely is that?
Do I think carriers are over-charging in Florida? Probably. But I also _know_ their loss ratios are _well_ above 100%!
Posted: Fri Sep 26, 2008 12:22 am Post Subject:
And then you have some little hurricane come along...umm...like...say....Andrew.
Hurricane Andrew destroyed 25,524 homes and damaged another 101,241.
I know Andrew was a rare situation but I'm thinking those 126,000 homeowners who had insurance were pretty glad they did.
Posted: Fri Sep 26, 2008 12:52 am Post Subject:
Do I think carriers are over-charging in Florida? Probably. But I also _know_ their loss ratios are _well_ above 100%!
That's TRUE.
And playing devil's advocate if 386 homes valued at $250,000 each got flatten by a hurricane the total loss to the insurance company would be $96,500,000 vs premiums of $772,000 based on $2,000 annual premium per house.
Which brings me to my point.
Citizen's Insurance in Florida can't collect enough premium to ever pay for such a loss which makes me feel like I'm just throwing away the money spent.
They mathematically cannot pay those claims so all I'm really insured for is the 1 in 386 chance of a home fire.
In my humble opinion.
Posted: Fri Sep 26, 2008 05:48 pm Post Subject:
Hi Gary
Glad that my math was acceptable ....
Citizen's Insurance in Florida can't collect enough premium to ever pay for such a loss which makes me feel like I'm just throwing away the money spent.
They mathematically cannot pay those claims so all I'm really insured for is the 1 in 386 chance of a home fire.
But would there not be reinsurance in place? And don't the company's operating in Florida have operations elsewhere? So money would come from elsewhere to cover these claims. And not every policy is going to cover a hurricane - correct?
Don't worry Gary - P&C is very frustrating to me as well - and I sell it!
Posted: Fri Sep 26, 2008 08:06 pm Post Subject:
Ontario Broker we'd both get an F- if a real actuary saw our simple calculations but we're not trying to be actuarily sound we're just trying to make a point for discussion.
But would there not be reinsurance in place? And don't the company's operating in Florida have operations elsewhere? So money would come from elsewhere to cover these claims. And not every policy is going to cover a hurricane - correct?
I couldn't tell you whether or not the state of Florida has reinsurance or not. Citizen's Insurance is a state run entity. It's not an insurance company.
Yes, companies operating in Florida have operations elsewhere but that's not how they base their rates.
State Farm Florida.LINK. Separate and distict companies from their big brother. Those companies are more like wicked step-children and neither is writing new business.
State Farm Florida Insurance Company commenced business Feb. 1, 1999 and is the primary writer of homeowners and property liability insurance in the state of Florida.
My State Farm agent for all intents and purposes sells auto insurance only.
Posted: Fri Sep 26, 2008 08:16 pm Post Subject:
Ontario Broker we'd both get an F- if a real actuary saw our simple calculations but we're not trying to be actuarily sound
you got that right!
Posted: Mon Oct 13, 2008 10:10 am Post Subject:
"" And then you have some little hurricane come along...umm...like...say....Andrew.
Hurricane Andrew destroyed 25,524 homes and damaged another 101,241.
I know Andrew was a rare situation but I'm thinking those 126,000 homeowners who had insurance were pretty glad they did.
_________________
Enjoy every sandwich. - Warren Zevon ""
And then I think of the thousands of Homeowners still waiting for their turn in Court so they can *Maybe* be paid and begin rebuilding their Lives "After Katrina".
Makes one want to go right out and buy Insurance....... NOT!
Posted: Thu Sep 25, 2008 03:44 pm Post Subject: insurance
Wanna add my ' 2cents2 ( LOL ). My family lives in CA. When my parents and sisters bought their homes, they HAD to have Home Insurance...Earthquake Insurance, in their loans. I was born and raised their. LOTS of earthquakes out there. But..I do agree with someone said. No law SAYS you have to purchase Home Insurance, except if you GET a loan for a new home. I live in PA..............I don't know about the 'Home laws' here.
Posted: Thu Sep 25, 2008 09:05 pm Post Subject:
Gary, I think you are expressing frustration about the cost of home insurance?
Yes.
In Florida a normal homeowner's premuim prior to all the recents hurricanes over the past 10 years was about $600 to $900 per year for an average home.
Now those premiums are $2,000 to 3,500.
That's $167 to $292 per month just for homeowners insurance.
Now using our non-actuarially sound methodology 386 homes paying $2,000 per year in premium equals $772,000 dollars paid in.
So if they pay out 1 fire per year the insurance company is still ahead $522,000 to pay out small claims and commissions! :wink:
It's real hard for me to justify paying $250 per month for homeowner's insurance and especially knowing the Gubment run Citizen's Insurance can't pay its claims anyway. :x
I never liked Properly and Casually Insurance....I hope I got that right?
Posted: Thu Sep 25, 2008 10:14 pm Post Subject:
I don't think insurance companies are worried about fires in Florida. I also don't think a total loss from a fire is much concern either.
Your figures are also not relative as they are, at best, reflective of a single home. If we are going to talk about the chances of _1_ home burning down then we'd also need to figure what the premium with be if this were the only home in question. That is, what would the premium be if there was a 1 in 386 chance of the entire home burning down. I'd guess just a little more then that $3,500 you mentioned.
But also, why are we limited the risk to fire and even then, only a total loss due to fire? Why not look at the possibility of wind damage in Florida. How likely is that?
Do I think carriers are over-charging in Florida? Probably. But I also _know_ their loss ratios are _well_ above 100%!
Posted: Fri Sep 26, 2008 12:22 am Post Subject:
And then you have some little hurricane come along...umm...like...say....Andrew.
Hurricane Andrew destroyed 25,524 homes and damaged another 101,241.
I know Andrew was a rare situation but I'm thinking those 126,000 homeowners who had insurance were pretty glad they did.
Posted: Fri Sep 26, 2008 12:52 am Post Subject:
Do I think carriers are over-charging in Florida? Probably. But I also _know_ their loss ratios are _well_ above 100%!
That's TRUE.
And playing devil's advocate if 386 homes valued at $250,000 each got flatten by a hurricane the total loss to the insurance company would be $96,500,000 vs premiums of $772,000 based on $2,000 annual premium per house.
Which brings me to my point.
Citizen's Insurance in Florida can't collect enough premium to ever pay for such a loss which makes me feel like I'm just throwing away the money spent.
They mathematically cannot pay those claims so all I'm really insured for is the 1 in 386 chance of a home fire.
In my humble opinion.
Posted: Fri Sep 26, 2008 05:48 pm Post Subject:
Hi Gary
Glad that my math was acceptable ....
Citizen's Insurance in Florida can't collect enough premium to ever pay for such a loss which makes me feel like I'm just throwing away the money spent.
They mathematically cannot pay those claims so all I'm really insured for is the 1 in 386 chance of a home fire.
But would there not be reinsurance in place? And don't the company's operating in Florida have operations elsewhere? So money would come from elsewhere to cover these claims. And not every policy is going to cover a hurricane - correct?
Don't worry Gary - P&C is very frustrating to me as well - and I sell it!
Posted: Fri Sep 26, 2008 08:06 pm Post Subject:
Ontario Broker we'd both get an F- if a real actuary saw our simple calculations but we're not trying to be actuarily sound we're just trying to make a point for discussion.
But would there not be reinsurance in place? And don't the company's operating in Florida have operations elsewhere? So money would come from elsewhere to cover these claims. And not every policy is going to cover a hurricane - correct?
I couldn't tell you whether or not the state of Florida has reinsurance or not. Citizen's Insurance is a state run entity. It's not an insurance company.
Yes, companies operating in Florida have operations elsewhere but that's not how they base their rates.
It's Allstate Floridian Insurance Co. LINK.
or
State Farm Florida. LINK. Separate and distict companies from their big brother. Those companies are more like wicked step-children and neither is writing new business.
State Farm Florida Insurance Company commenced business Feb. 1, 1999 and is the primary writer of homeowners and property liability insurance in the state of Florida.
My State Farm agent for all intents and purposes sells auto insurance only.
Posted: Fri Sep 26, 2008 08:16 pm Post Subject:
Ontario Broker we'd both get an F- if a real actuary saw our simple calculations but we're not trying to be actuarily sound
you got that right!
Posted: Mon Oct 13, 2008 10:10 am Post Subject:
"" And then you have some little hurricane come along...umm...like...say....Andrew.
Hurricane Andrew destroyed 25,524 homes and damaged another 101,241.
I know Andrew was a rare situation but I'm thinking those 126,000 homeowners who had insurance were pretty glad they did.
_________________
Enjoy every sandwich. - Warren Zevon ""
And then I think of the thousands of Homeowners still waiting for their turn in Court so they can *Maybe* be paid and begin rebuilding their Lives "After Katrina".
Makes one want to go right out and buy Insurance....... NOT!
FK,
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