While law provides a framework for contracts, regulations, and dispute resolution, insurance is based on actual risk based on historical data, industry trends, and on-site evaluations. No matter what the law says in the short term, we must acknowledge that reality is different. Insurance is more evidence based than law.
And very generally, if insurance won't cover it, you can't build it or make a business out of it.
I see this as the banal way that we will inevitably deal with the aftermath of ignoring climate change.
> if insurance won't cover it, you can't build it or make a business out of it
There are quite a few parts of the country where this isn't true. In some it recently became so. Where it's been true longer, land values are lower and folks build cheaper. (Go back further and most structures weren't built to be durable over decades.)
> Several insurance companies have either fled California, stopped writing new policies or otherwise reduced their exposure in the Golden State, citing business risks amid rising replacement costs and the inability to adequately raise premiums.
This is madness - I get preventing huge premium jumps (although given that it’s a competitive landscape and many do jump ship between providers year on year, I suspect it is protecting largely the less financially astute), but if the upshot is that providers end up withdrawing cover, then that’s an objectively worse situation.
Perhaps the more pertinent question is what if the US gov doesn't recognize the risk and allow insurers to raise rates. A now significant portion of the problem is the fact that California's FAIR plan will potentially be insolvent. In this case, the market was correct, not the gov.
Which regulation? Arguably the CA insurance market is broken because of poorly considered price regulation. On the other hand, regulation to help ensure the solvency of insurers seems like a good thing.
What is ironic, is that those with insurance probably will get a full payout for the entire value of their home.
But those who decided to build out of fireproof materials and install a sprinkler system, now have an almost worthless home, since it's now located in a barren wasteland, and the insurance won't be paying out since your house wasn't burned down.
There is an absolute incentive to make sure that if any disaster destroys the region, that you aren't the only one to survive.
I don't think that's really true. Most of the value of homes destroyed in LA was in the location, not the building. Insurance will pay out on the cost of reconstruction - but in a lot of cases that's probably 10% of the "value" of the home pre-fire.
Equally, the land hasn't moved. If people wanted to live in the LA hills before the fires, they still will now. Certainly the prospect of a fire will reduce the value, but it won't make it zero.
If you had "decided to build out of fireproof materials and install a sprinkler system" then you would have paid significantly lower premiums on your insurance, and the home is not worthless unless you decide to sell it soon.
The price drop might be a bonus due to the insane CA property taxes.
There are very little materials able to prevent a house from getting burned by wildfire. In my experience, unless you remove all the house opening and make the wall and roof out of concrete you are doomed because heat will find a way in and fire will take from the inside.
In this debate, it's worth remembering that there are two separate risks that are worth insuring against: 1) the risk of losing your home in a wildfire or natural disaster and 2) this risk and/or expected damage going up over time. I.e. the risk that the annualized probability of incurring major damage will go up, say, a decade from now, in the area where you happened to purchase your home. This can be due to environmental conditions, urban mismanagement, crime rates, etc.
A lot of people seem to automatically expect to be insured against the second risk when they insure themselves against the first, but it is not obvious to me that this should be so. At the very least, that should be written explicitly in the contract and priced accordingly. But I'm also not sure it is actually possible for an insurance company to reasonably price it, as this is not the kind of predictable, reproducible risk that insurance is usually well suited for.
> there are two separate risks that are worth insuring against: 1) the risk of losing your home in a wildfire or natural disaster and 2) this risk and/or expected damage going up over time
You're comparing risks and costs. The first is stochastic. The second can be almost completely controlled by renewal and rate-increase frequencies as well as coverage limits.
> “They accept that hurricanes are a fact of life in Florida,” she says. “They just work around them and prepare for them rather than avoiding the area.”
How do you work around wildfire ? I guess you could make a bunker like house, all in concrete with very little window.
Rich LA properties are going to look like Albania lol
For reference Albania has thousands of bunkers all around its countryside.
Fireproofing. It isn't totally a coïncidence that the fire stopped at the urban boundary. Urban fires used to be common. We made them rare because our cities are productive enough to be worth fireproofing.
But while bad/old power lines may have been what literally sparked this fire, they're not the root cause. Burying them will improve things (and is probably a good idea—though there's also the concern of earthquakes shearing through buried lines), but as long as the area remains bone-dry, any spark will cause the same outcome, and sparks can come from a wide variety of sources.
[+] [-] raffraffraff|1 year ago|reply
And very generally, if insurance won't cover it, you can't build it or make a business out of it.
I see this as the banal way that we will inevitably deal with the aftermath of ignoring climate change.
[+] [-] JumpCrisscross|1 year ago|reply
There are quite a few parts of the country where this isn't true. In some it recently became so. Where it's been true longer, land values are lower and folks build cheaper. (Go back further and most structures weren't built to be durable over decades.)
[+] [-] pjc50|1 year ago|reply
[+] [-] flanked-evergl|1 year ago|reply
> Several insurance companies have either fled California, stopped writing new policies or otherwise reduced their exposure in the Golden State, citing business risks amid rising replacement costs and the inability to adequately raise premiums.
[+] [-] bdavbdav|1 year ago|reply
[+] [-] draw_down|1 year ago|reply
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[+] [-] stuaxo|1 year ago|reply
[+] [-] mgh95|1 year ago|reply
[+] [-] orangepanda|1 year ago|reply
[+] [-] amluto|1 year ago|reply
[+] [-] femiagbabiaka|1 year ago|reply
[+] [-] bdavbdav|1 year ago|reply
[+] [-] baq|1 year ago|reply
From a single family perspective, there will be a lot of tragic stories of people who are in an impossible situation with regards to moving.
[+] [-] londons_explore|1 year ago|reply
But those who decided to build out of fireproof materials and install a sprinkler system, now have an almost worthless home, since it's now located in a barren wasteland, and the insurance won't be paying out since your house wasn't burned down.
There is an absolute incentive to make sure that if any disaster destroys the region, that you aren't the only one to survive.
[+] [-] leoedin|1 year ago|reply
Equally, the land hasn't moved. If people wanted to live in the LA hills before the fires, they still will now. Certainly the prospect of a fire will reduce the value, but it won't make it zero.
[+] [-] Ferret7446|1 year ago|reply
The price drop might be a bonus due to the insane CA property taxes.
[+] [-] aucisson_masque|1 year ago|reply
There are very little materials able to prevent a house from getting burned by wildfire. In my experience, unless you remove all the house opening and make the wall and roof out of concrete you are doomed because heat will find a way in and fire will take from the inside.
[+] [-] pjc50|1 year ago|reply
[+] [-] mppm|1 year ago|reply
A lot of people seem to automatically expect to be insured against the second risk when they insure themselves against the first, but it is not obvious to me that this should be so. At the very least, that should be written explicitly in the contract and priced accordingly. But I'm also not sure it is actually possible for an insurance company to reasonably price it, as this is not the kind of predictable, reproducible risk that insurance is usually well suited for.
[+] [-] JumpCrisscross|1 year ago|reply
You're comparing risks and costs. The first is stochastic. The second can be almost completely controlled by renewal and rate-increase frequencies as well as coverage limits.
[+] [-] Bostonian|1 year ago|reply
[+] [-] aucisson_masque|1 year ago|reply
How do you work around wildfire ? I guess you could make a bunker like house, all in concrete with very little window.
Rich LA properties are going to look like Albania lol
For reference Albania has thousands of bunkers all around its countryside.
[+] [-] JumpCrisscross|1 year ago|reply
Fireproofing. It isn't totally a coïncidence that the fire stopped at the urban boundary. Urban fires used to be common. We made them rare because our cities are productive enough to be worth fireproofing.
[+] [-] JumpCrisscross|1 year ago|reply
Blaming the insurers is trying to financially engineer one's way out of a physical problem.
[1] https://www.renewableenergyworld.com/power-grid/outage-manag...
[2] https://www.nytimes.com/2025/01/15/business/economy/los-ange...
[+] [-] danaris|1 year ago|reply
[+] [-] rjbwork|1 year ago|reply
https://slatestarcodex.com/2020/03/30/legal-systems-very-dif...