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re: Does insurance violate the basic laws of economics?
Posted on 3/1/24 at 11:16 am to Jack Daniel
Posted on 3/1/24 at 11:16 am to Jack Daniel
quote:
No, “owning” things people can’t afford is what creates the need for insurance.
that's overly simplistic and not necessarily a blanket truth.
I own my house (or will own it outright in a little over a year from now).
my house took significant damage from Hurricane Ida.
If I pay for all of those damages out of pocket (which I ended up doing thanks to my homeowner's insurance company filing bankruptcy in Ida's wake), then you have to tack that $70k on to what I paid for the house.
but the value of my house doesn't increase by $70k despite me spending that on it.
meaning I just added $70k to the cost of my house while the value remained stagnant.
So if I sell it, I take a $70k hit (with some movement due to market at time of sale obviously).
Had I sold it "as is" prior to repairs, then the value is nowhere near what I paid for it and I lose big there.
I can afford the house.
I paid to fix it.
throwing away $70,000 isn't a very wise financial decision whether you can afford it or not.
2
Posted on 3/1/24 at 6:40 pm to Nutriaitch
quote:
I own my house (or will own it outright in a little over a year from now). my house took significant damage from Hurricane Ida. If I pay for all of those damages out of pocket (which I ended up doing thanks to my homeowner's insurance company filing bankruptcy in Ida's wake), then you have to tack that $70k on to what I paid for the house. but the value of my house doesn't increase by $70k despite me spending that on it.
????
Your house is worth one number damaged from the hurricane and unlivable and a higher number after you’ve paid to fix it
Posted on 3/2/24 at 5:55 am to Nutriaitch
quote:
that's overly simplistic and not necessarily a blanket truth.
I own my house (or will own it outright in a little over a year from now).
my house took significant damage from Hurricane Ida.
If I pay for all of those damages out of pocket (which I ended up doing thanks to my homeowner's insurance company filing bankruptcy in Ida's wake), then you have to tack that $70k on to what I paid for the house.
but the value of my house doesn't increase by $70k despite me spending that on it.
meaning I just added $70k to the cost of my house while the value remained stagnant.
So if I sell it, I take a $70k hit (with some movement due to market at time of sale obviously).
Had I sold it "as is" prior to repairs, then the value is nowhere near what I paid for it and I lose big there.
I can afford the house.
I paid to fix it.
throwing away $70,000 isn't a very wise financial decision whether you can afford it or not.
So how did you come to have a homeowner's insurer that filed bankruptcy and could not pay your claim? Did you choose them because you thought you were being smart to get a lower premium instead of paying more for a more stable company that has been around a long time?
Why were you unable to process a claim against the Louisiana Insurance Guaranty Fund? Was your company not signatory to the fund?
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