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Thousands of Los Angeles homeowners were dropped by their insurers before the Palisades Fire
(www.cbsnews.com)
Perhaps the most interesting part of the article:
this post was submitted on 11 Jan 2025
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An insurance company takes the data it has about whatever someone wants to insure, uses its actuarial system to find out what its risk value is, and then charges you slightly more than that value over time.
You will probably never need the service, but if you do, they’ll help you out. Because they’re charging more than the actual risk value, over time and over a large enough subset of clients, they’ll make some profit, even while paying to replace or fix people’s houses. Which is fine, they are providing a service and there’s absolutely nothing wrong with profiting from providing a service. You win, they win, everyone benefits.
In return, you get the peace of mind of knowing that if the worst happens, you’ll be at least somewhat better off and able to afford to rebuild.
If the risk of event X gets too high in an area, and the company isn’t allowed to say, “You’re covered for everything but X,” the company would either need to charge enough to cover essentially the value of the house on such a short timeframe as to be untenable, or stop providing coverage. They don’t have infinite money, so if they‘re forced to provide coverage at a lower rate than the risk level, and something like a massive hurricane or flood or fire happens, they go bankrupt. Now no one gets their house rebuilt.
Just because a company only operates where they make a profit doesn’t make them a scam. They aren’t a charity or a public service.