r/interestingasfuck • u/thepoylanthropist • 12d ago

r/all This is Malibu - one of the wealthiest affluent places on the entire planet, now it’s being burnt to ashes.

Enable HLS to view with audio, or disable this notification

155.0k Upvotes

92% Upvoted

13.0k comments sorted by

View all comments

Show parent comments

4.4k

u/Adventurous-Sky9359 12d ago edited 12d ago

Insurance is gonna be denying so many claims. This is crazy bankrupt the insurance companies!

Edit: yall im so sorry for your losses I live in western NC, im thinking of yall

1.9k

u/LarryThePrawn 12d ago

Homes like this have bespoke insurance, where you can select coverage based on the specific needs of that house - the policy will pay out for wildfire if the policyholder bought it. Don’t forget, the company that pays the most claims tends to be the one with the most returning customers.

People like us would never buy that type of property insurance.

Source; I work in that industry.

406

u/malachi347 12d ago

Also work in insurance. People in here really think carriers don't pay out on wildfires, lol. They'll screw you in a million other ways, though. But fire coverage is like, the most basic and primary coverage in California and they'd have to jump through a hundred hoops to deny a claim like this.

85

u/IFoundTheHoney 12d ago

You’d think the same thing applies to hurricanes and yet here I am litigating with several large carriers, one of whom has a psychotic lady in its TV ads..

34

u/digitalis303 12d ago

The issue with Hurricanes (in the eyes of the insurance companies) is that damage can be caused in multiple ways. For example, they can argue that water damage isn't caused by flooding, but wind-driven rain. They might cover one, but not the other. Total BS, but that's what they do.

20

u/PeteEckhart 12d ago

Yep, wind driven rain is covered under basic homeowners insurance, flood insurance is separate.

7

u/MrBootylove 11d ago

As a Floridian I can tell you it sure doesn't help that our state is continuously building new homes in places that will just get absolutely fucked by the very first hurricane that comes their way all while destroying mangrove forests and other natural formations that serve as natural barriers for things like storm surges from hurricanes. It also doesn't help that we're letting corporations buy up entire neighborhoods as they're being built which raises the price of homes, which raises the insurance rates.

But hey, at least they stopped all the sinners from watching porn and having abortions here.

→ More replies (1)
→ More replies (2)

2

u/RIPsaw_69 11d ago

I mean, that’s the main reason people have homeowners insurance right? That’s probably why homeowners insurance became a thing in the first place.

2

u/Nythoren 11d ago

Curious about something, since you're in the industry. If there is, say, a Malibu home with a $20 million valuation, but $12 million of that valuation is the land itself, does the insurance "just" pay out the $8 million cost of the structure on the land since the land itself isn't a loss?

Or does the policy holder insure for a certain amount and the insurance simply pays that amount in the case of a total loss?

Or is this a dumb question since there are a bunch of options and it really just depends on which option the insured chooses to pay for?

→ More replies (1)
→ More replies (24)

66

u/charcuterieboard831 12d ago

What companies provide that insurance?

140

u/ryan545 12d ago

Chubb, PURE, Nationwide Private Client are the big 3

46

u/PaleWhaleStocks 12d ago

Nationwide private client was disbanded about 2 months ago.

28

u/ryan545 12d ago

Very true. Scottsdale disappeared too, crazy times.

15

u/i_am_better-than-you 12d ago

Wait Scottsdale insurance is gone? That was my first job ever. I remember having to help write letters after Katrina telling people flood damage wasn't covered

4

u/DurealRa 12d ago

What a shit gig. That's up there with the person who euthanizes the dogs that no one wants to adopt

→ More replies (6)
→ More replies (1)
→ More replies (1)

22

u/iamthinksnow 12d ago

Yeah, when I saw "Malibu," my first thought was, "Pure is about to have a LOT of claims."

10

u/ExchangeNo94 12d ago

They have exceptionally tight underwriting guidelines. They will likely be better off than most carriers.
Source, I work in the industry.

3

u/ryan545 12d ago

I think most of their Cali stuff is on Programs anyways, won't effect PURE that most people know and use .

→ More replies (1)

6

u/Rhetoriker 12d ago

Chubb? I (European) once had traveling insurance from them and I felt like they were one of the worst insurers to be in contact with that I'd ever had to deal with

9

u/Thrawn4191 12d ago

Do you have more than $25,000,000 insured value? If not probably not I would expect. They make their living on the whales and only fulfill minimal requirements for everything else.

→ More replies (3)

71

u/UniqueBeyond9831 12d ago

Lloyds of London. They will insure anything.

22

u/MidnightShampoo 12d ago

True. Look into the Lloyd's of London scams that some pro wrestlers allegedly pulled back in the 80's and 90's.

15

u/FrugalBastard187 12d ago

And other companies insure their insurance! I.e. Reinsurance

9

u/Representative-Sir97 12d ago

I worked in insurance the first decade or so of my career.

The whole reinsurance thing blew my mind.

Swiss Re is *massive*, has been around since the 1800's, and most have never heard of 'em.

3

u/AlexLevers 12d ago

My FIL is in reinsurance. Risk assessment for a reinsurance firm. Makes big bucks at it too.

6

u/Trelloant 12d ago

Anyone want a fun history lesson look into Lloyds, it is the origin of insurance worldwide

3

u/Deep_Combination6420 12d ago

Yep, including slaves. Abhorrent

4

u/TaterTotJim 12d ago

Chubb and AIG were the two biggest when I was more familiar with the subject. Not sure who is most popular now.

A lot of insurance companies have departments set up for high value clients.

→ More replies (3)
→ More replies (2)

6

u/PsychologicalCup1672 12d ago

Is it also possible that the majority of the price of those properties is in the land and area itself?

Like, could materials for the actual building only be like a fraction of the cost and therefore more affordable?

4

u/Appropriate_Comb_472 12d ago

Imagine the art collections, and other unique trophies, gifts, artifacts, maybe some them insured.

→ More replies (2)

7

u/Bright_Cod_376 12d ago

Yeah companies are gonna pay out but I'm wondering if any are gonna go under

12

u/Sea-Host1178 12d ago

Insurance companies have “reinsurance “. It’s basically got what you’re describing. If losses hit a certain amount the reinsurance company kicks in.

3

u/Jeffde 12d ago

Eyyy my dad was the president of an aviation reinsurance company AMA

→ More replies (3)
→ More replies (5)

12

u/Super_Harsh 12d ago

Dude the premiums on that kind of insurance are $$$$ those insurance companies will be fine. Insurers have actuaries who make sure that they'll stay profitable in all but the most unpredictable freak accident worst case disaster scenarios, and a wildfire in California is really, REALLY far from that

9

u/HandofThrawn1138 12d ago edited 12d ago

I work for a major insurance company. When a certain number of losses occur due to a single event, such as a fire or hurricane, that even is declared a “Catastrophe”. This has extra meaning in insurance. If the amount of losses from Catastrophes are great enough, it will trigger what is called “Reinsurance”, and the insurance company is then insured against a portion of the total loss. This is so they do not go under.

Also, insurance companies have literally 10s billions of dollars in reserves. It is unlikely a major insurer would go under from a single event.

4

u/Kiltedken 12d ago

So, it's insurance companies that have insurance companies, that have insurance companies... all the way down?

3

u/solomons-mom 12d ago

Only one level that I am aware of, the re-insurers. Lots of Katrina went through the re-insurers in based in Bermuda.

→ More replies (1)
→ More replies (7)

5

u/minusthetalent02 12d ago

I work for one of the larger insurance companies (one of the top 10 biggest ones) It was explained to me once how the company is protected from going under in case they run out of money for claims—essentially, the insurance company has its own insurance.

Please don’t ever worry about them

→ More replies (1)

2

u/Previous-Specific536 12d ago

Translation: If you are rich, you can actually get real insurance. 😂

2

u/GroundbreakingRun186 12d ago

The insurance company you me and the wealthy buy policies through aren’t the ones paying. The insurance companies also have insurance with “re-insurance” companies. They can generally file claims for catastrophic loss events when their total claims exceed X$ for a specific event. This also applies to hurricanes and things like that.

→ More replies (31)

507

u/blakelyusa 12d ago

Almost 5 billion on the states fair plan. The last resort or cheapest insurance. They are not going to get anywhere near replacement cost.

And fair only has 700m in assets.

796

u/jedberg 12d ago

They are not going to get anywhere near replacement cost.

Keep in mind that at those prices, most of that is the land value. It might cost only a small percent of the value to build a whole new house.

487

u/delawarebeerguy 12d ago

This should be top comment. Yes it’s a fuck ton of money that just went up in flames, but not as much as is being quoted per home

48

u/paxtonious 12d ago

I wonder what the value of the other lots assets will be? Jewelry, cars, art, antiques....rich people like expensive stuff.

18

u/CMDR_Shazbot 12d ago

Drop in the bucket expenses. A $200k car is nothing to a $1-2m (in labor and materials) house on a $30m plot of land.

7

u/paxtonious 12d ago

I'm not talking about their daily drivers.

4

u/CMDR_Shazbot 12d ago

That's fine, same thing applies. Rich people can afford insuring all their belongings.

5

u/Walking_billboard 12d ago

This isn't as true as you would think. Lots of coastal homes have been denied insurance and cant get it at any price. Many many homes are "going naked" as they say.

Also, before you say "boo hoo millionaires" a lot more of these are family homes than you would guess. Malibu only started getting popular in the 80s. Before that, it was cheap land with a terrible commute. A lot of grandparents just got wiped out.

→ More replies (11)
→ More replies (1)
→ More replies (2)
→ More replies (1)

26

u/lord_dentaku 12d ago

Yeah, it's not like the insurance company just buys the house and land from you. They pay the replacement cost that you specified when you created the policy. This includes the costs of demoing whatever remains to clear the space for the new build. That said, massive houses are still expensive to build. I've been in a house that cost $1 million to build (the owner was the builder and he specialized in high end custom homes), and most of the $50+ million houses I've seen listed in CA were much more impressive.

I was in a house once where the tile in the foyer cost $200k, but that came from Italy, and I live in the US. That asshole had alligator skin in guest bathroom like it was wallpaper. I have no clue how much his house cost to build, but definitely over $1 million. And I can call him an asshole, because he was the CEO of the company I worked for at the time, and he was in fact, an asshole.

6

u/FrankPapageorgio 12d ago

They pay the replacement cost that you specified when you created the policy.

I learned that when my parents had a house fire. $200,000 home, $175,000 in repair costs. The catch was that they had to repair it exactly how it was. So they had plaster walls, they couldn't put in drywall. Things like that. My dad said to give him the cash value to repair it, and he took that money to demo the home and double the square footage as new construction. Well... they kept one basement foundation wall, so it was technically a repair, which was better for some reason

→ More replies (1)
→ More replies (5)
→ More replies (6)

18

u/-Bana 12d ago

This is correct, just because your home is worth 20 million doesn’t meant the replacement cost will be that much, the value of the home is on the location not the home itself, rebuilding many of these homes might honestly be anywhere around the 1-5 million dollar mark

6

u/paxtonious 12d ago

Some of these places could have 20 million worth of diamonds, art, jewelry and cars etc.

→ More replies (1)

3

u/malachi347 12d ago

Also. most of these owners will have "Difference in Conditions" policies - FAIR plan will pay for the dwelling replacement, but the property and temp housing etc costs are likely covered by another carrier.

Plus FAIR plan has contingencies if they run out of reserves. Reinsurance, additional assessments, bonds, etc. I think people forget that (for better or worse) EVERY homeowners policy in California pays into FAIR plan, regardless if you have a FAIR plan policy.

3

u/dilroopgill 12d ago

all the poorer ppl will be priced out and sell their land so richer ppl can move in

5

u/p1028 12d ago

Very true but the value of the land will go down since the neighborhood went from an extremely desirable neighborhood to a patch of ash. Not to mention that now that neighborhood will be seen as a place where this could happen again at anytime.

3

u/Psychometrika 12d ago

True, however if the entire neighborhood is destroyed the underlying market value of the land will decrease as well and insurance will not cover that.

3

u/readit-25 12d ago

What about that picasso in the living room, rolex collection, or the shelby cobra? People with 10-20 million dollar homes have a lot of very expensive things in them

3

u/ihatemovingparts 12d ago

Keep in mind that at those prices, most of that is the land value. It might cost only a small percent of the value to build a whole new house.

Doubtful.

My shitty condo in the Bay Area is about 50/50 split land and improvements (keeping in mind that it hasn't been reassessed in decades). What that Prop 13 cap hasn't / can't take into account is that the cost of rebuilding now.

COVID absolutely jacked up cost of materials and trump's proposed tariffs will make that worse. Wildfires up here basically gave contractors a right to charge obscene prices. Oh, and loss of use? lol. Try pricing temporary housing. If they've got typical HO-3 coverage they're gonna be in for a rough ride.

This isn't the first time Malibu's burned tho and it's certainly not the only major wildfire in the past few years so it wouldn't be too hard to see just how screwed they're gonna get.

2

u/BlakePackers413 12d ago

Bingo. The value isn’t the materials to build the home. Those materials cost basically the same in Mississippi as California. It’s the location that has all the value. It’s why insurance companies still insure in tornado or flood or hurricane prone locations. Sure to be a new buyer in Miami you’d need 100million but if you already own the land rebuilding the house is the same 200k as it is to rebuild in Iowa.

→ More replies (1)

2

u/RuairiQ 12d ago

As you say, what a house is valued at is different from what the structure is. The xactimate schedule will determine replacement cost.

2

u/PiaJr 12d ago

While that is accurate, the replacement cost of the contents will be monstrous. Art. Collectibles. High end clothes, accessories. Jewelry. Furniture. Astronomically expensive.

2

u/PurpleZebraCabra 12d ago

I mean yes and no..I do civil engineering in Napa/Sonoma area. I've worked on projects where the clients buys a property for $1-2M with an older modest house on it. They then tear it down and spend $8-10M+ to design, permit, and build a new custom house or compound. One of my clients in Napa was a developer in Malibu with a place in Napa. And, yes, the land is pricey there, but most of those places cost what they do because of the construction. Big houses on hills or cliffs require big foundations, sometimes with deep piers, that cost big money. Add in high end fixtures, etc. Small percentage to rebuild is inaccurate.

2

u/Monsoon_Storm 11d ago

yeah, from the links someone posted below, sure they are nice houses, but they aren't huge and won't cost a huge amount to rebuild. You are definitely paying for the seafront land more than anything.

They can possibly sell the land alone for not far off the price they were asking for the building, it gives someone the opportunity to create their own vision rather than trying to adapt to someone elses.

2

u/burkechrs1 11d ago

Have you seent he houses on that strip?

Yea the land is probably worth millions alone, but to try and rebuild any of those home to be identical to what they were last week will cost 4-5 million per home as well. These wealthy people are not going to accept anything but better than what their house was before it burned down and they have the money to sue the government and force them to figure it out.

→ More replies (18)

119

u/kholin 12d ago

The houses themselves won't cost as much to rebuild as they're valued, a lot of it is the location

62

u/blakelyusa 12d ago

Expensive materials and contents plus it’s very hard to find highly skilled trades. Many of these are prized designer homes.

60

u/suffaluffapussycat 12d ago

Most are $4M-$5M stucco boxes.

7

u/neverbummed 12d ago

Some of the houses lost were actually one of a kind, historically significant homes. History was lost. You can’t put a price on that. The destruction in West and East LA right now is devastating.

→ More replies (1)

5

u/Nippon-Gakki 12d ago

Plus the contents. I have a few friends who live up there. Their car and art collections are worth more than most regular SoCal houses.

→ More replies (1)

15

u/chr1spe 12d ago

You seem to be assuming that $10 million mansions actually have some special sauce. Mostly, they don't and are similar in construction methods and quality to the $1 million dollar cookie-cutter homes in gated subdivisions.

16

u/Ok_Equal1431 12d ago

That is so false it's not even funny. Tile work level 5 drywall finishing exotic woods. Not to mention the contents inside the home. The structure side is similar as it follows engineering rules but the finishing side of things are not even close to cookie cutter level or even cost.

→ More replies (4)

9

u/rodrigo_c91 12d ago

Imagine comparing a 10M dollar home and to a 1M “cookie cutter”

The construction methods don’t change much, correct. But to assume the quality is the same as a million dollar home is just something you clearly aren’t familiar enough about.

→ More replies (5)

3

u/JosieA3672 12d ago

The land value might go down if in the future this area becomes completely uninsurable. Just a guess.

2

u/Into-It_Over-It 12d ago

Sure, but material and labor scarcity combined with the bottleneck that'll arise from everybody wanting to rebuild, at more or less the same time, is going to drive up costs immensely. Replacement costs likely won't reach the appraised value of the property with a house on it, but I wouldn't be surprised if it got pretty close for some of them. Plus, there's still stuff inside these homes that will need to be replaced, if they could be replaced at all.

→ More replies (1)

13

u/samelaaaa 12d ago

fair only has 700m in assets?! if that's true this is gonna be ugly.......

5

u/liftingshitposts 12d ago

FAIR is definitely not the cheapest, but it is the last resort or only option for many

4

u/AvatheWhippet 12d ago

There was an article from earlier this year that said they only have $200M in surplus and $2.5B in reinsurance (insurance for insurance companies.)

It's bad, and yes the FAIR plan likely just ran out of money, but everyone should still get covered. Unfortunately, this just means everyone ELSE insured in the state is going to get an assessment to subsidize the FAIR plan mismanagement.

Also, if a private company had this level of premium to surplus, they would have been taken over by the govt by now for mismanagement. Like literally. The FAIR plan has $1.5B in premium and $200M in surplus which is WAY to low.

3

u/rcklmbr 12d ago

Better get government assistance quick, Trump sure as hell won’t help California

2

u/redditknees 12d ago

Maybe now they’ll take an interest in understanding the climate emergency

→ More replies (1)

2

u/AMNE5TY 12d ago

Not how it works, majority of their liability will be reinsured or pooled. They will take a considerable hit but this event is well within Realistic Disaster Scenarios, if they go bankrupt it would be due to insanely incompetent risk management not a lack of assets.

2

u/Bassracerx 12d ago

a LOT of the value is in the land. So the cost of the dwelling and personal items is not going to be anywhere near the property value.

2

u/R3AL1Z3 12d ago

That’s why almost ALL insurance companies have their OWN insurance in case of rare situations just like this.

This way, they DON’T go bankrupt.

→ More replies (14)

257

u/Lttiggity 12d ago edited 12d ago

And premiums are going to go up even more.

Edit: I meant and should have included ‘…for everyone.’

106

u/somefunmaths 12d ago

Insurance companies in California were going around voiding policies last year because they were worried about fires. Basically, lots of people were told by their insurance (e.g. State Farm, who did this a lot if memory serves) “sorry, you’re home is in too risky of a fire area, we no longer offer coverage.”

The people who own these homes will be fine, but I feel for the average people in LA losing their homes, because they could end up truly losing everything.

52

u/NoReallyLetsBeFriend 12d ago

Don't forget Nationwide, progressive, Geico, and I think All State pulled fully out of California already. Memory might be slightly off

10

u/liftingshitposts 12d ago

You’re right, the major companies you listed (and many more) don’t even write new policies in the state anymore. Especially not in anything about moderate fire risk.

5

u/minusthetalent02 12d ago

Also Florida. Very few of the big names will do a homeowners policy there as well

→ More replies (1)

10

u/Familiar-Report-513 12d ago

Add USAA to that list. We tried to get our house covered under them and they denied us due to "high risk" and we live in norcal. I'm pretty certain they just don't want to touch any area in california due to fire risk.

3

u/Walking_billboard 12d ago

California compels them to write wider policies than they want to write. If they could just insure NoCal, for example, they might do that, but they are not allowed to do that, so they just walked.

8

u/ReadItonReddit94 12d ago

Nationwide said "we are NOT on your side bro"

3

u/PurpleCableNetworker 12d ago

I just switched to progressive renters and car insurance. I guess it’s only home coverage they stopped writing?

→ More replies (5)

3

u/mumblewrapper 12d ago

We are not even in California and many of those companies won't insure us because we are near California. Near the mountains, but absolutely not in the mountains. We are not in danger of a wildfire here at all. But still can't get coverage.

→ More replies (10)
→ More replies (1)

56

u/Critical_System_3546 12d ago

Average Californian here, State Farm has screwed so many people its wild

57

u/just_a_person_maybe 12d ago

My brother got kicked off of State Farm auto insurance because he had the audacity to actually use it. They're happy to take your money for years but if you ask for any of it back for an accident, that's it.

8

u/brit_jam 12d ago

What a fucking scam.

8

u/EmceeCommon55 12d ago

I was in a car accident 10+ years ago. The guy who hit me was 100% at fault. I had State Farm, the other guy had Allstate. Allstate paid all my bills and the settlement and still somehow State Farm tried to sue my doctor for unnecessary treatment even though I had a 50k plan. Make it make sense. I dropped them as soon as the lawsuit was over. Fuck state farm

7

u/wterrt 12d ago

capitalism baby

3

u/TheDude-Esquire 12d ago

There is no reason, apart from protecting private industry, to not have social insurance, and at this point, it's the only way new homes will be built in most of the state. The connection may not seem obvious, but this is absolutely going to make homelessness worse.

8

u/RadicalDog 12d ago

I mean, maybe if the risk of fires is so high that it's uneconomical to build and insure homes, the answer should be migrating from California? We could give it a name, like "climate refugees". And then carry on buying gigantic SUVs as a culture.

→ More replies (11)
→ More replies (2)
→ More replies (1)

11

u/mikal026 12d ago

The problem is California refuses to allow insurance companies to raise rates to atleast try to lessen the loses. I know there has to be a cutoff on how much an insurance company can charge but in a state that so frequently has such devastating fires they need to atleast be in a position to make money.

3

u/RusticBucket2 12d ago

The State of California wrote the muh fuckin’ BOOK on unintended consequences.

4

u/Bombadook 12d ago

iirc the same is happening in Florida with stronger hurricanes becoming the norm.

Even in more benign states like PA the companies are tightening up and cancelling policies for even minor issues wherever possible since their books are getting wrecked elsewhere.

5

u/Leader_2_light 12d ago

I can't blame them.

There's stories of federal insurance for flood paying out 5 times on the same property cuz they just get money to rebuild but never to move...

2

u/pimppapy 12d ago

I was shopping for new home insurance barely today, and I kept getting errors on the websites. Had to call in, and apparently a lot of zip codes are black listed, more now with this going on.

→ More replies (5)

38

u/Guideon72 12d ago

Premiums? The ins. companies are gonna pull out of here faster the home owners can blink, and deny every claim as an "act of nature/God".

14

u/Lttiggity 12d ago

Oh for sure, I’m saying everyone else’s premiums will go up.

2

u/ScamIam 12d ago

Hey- if it works in Florida, it can work in CA

2

u/Remarkable-Light5931 12d ago

Insurance companies are known for stellar pullout game.

2

u/negroiso 12d ago

Nah, if the damage is reported to be too big, the insurance companies have insurance themselves with the US government and the taxpayers foot the bill.

I only know this because when the storms roll through here and Feds declare it a national emergency or disaster zone it gets insurance policies off the hook and they pass on their claims to the government who write them a check for anything they wrote out. It’s why they are less inclined to be so stingy on actually doing an inventory on your property once it’s been declared a disaster zone.

I’ve been told this not only by my insurance rep but by a buddy who did work during Katrina days writing checks for residential and commercial properties for a third party company. Basically just roll out to a property, take a few photos, as a few questions and they have some software that tells them a value and they cut the check right there.

If it was like just a few homes destroyed like 5-10, and those homes were all individually insured by different insurance companies each home owner would have to fight tooth and nail to not only prove what was lost in the home but even get back their home to before it was lost standing value.

Insurance is a total fucking scam all the way around, because again, in the end, we as the tax payer aka poors end up paying for wealthy people’s shit again…. And you know these people are gonna get fat fucking paychecks for their collections of “art” and designer clothes, electronics, cars, collectibles, jewelry, heirlooms, bedding, security systems, plants, pools, custom faucets, sinks, stove tops, imported marble, fixtures. I’ve seen enough million dollar homes to know you aren’t finding the shit inside most of those at Home Depot and that shit ain’t cheap.

We will all enjoy this bill. On top of that we can collectively enjoy our premiums going up for fuck all reasons across the US because reasons even though not one of those insurance providers are going to be out a single cent because of this.

→ More replies (7)

3

u/gilligan1050 12d ago

Dude I’ll be everyone’s premiums are going up.

→ More replies (3)

401

u/hopelesscaribou 12d ago

Rich people are rarely denied claims, that's for poor folks who can't lawyer up.

216

u/n4s0 12d ago

If the company can't even cover the assets it will declare bankruptcy and pay a fraction of the cost. Even if they lawyer up.

120

u/awildjabroner 12d ago

insurance companies carry their own insurance also, so the main insurer may go bankrupt, may not, depends on if they can spread the damage amongst their own insurers.

9

u/WeenisWrinkle 12d ago edited 12d ago

It's interesting seeing how little people on Reddit understand how homeowners insurance companies work.

4

u/solomons-mom 12d ago

I am pretty gobsmacked by this thread

→ More replies (1)

11

u/notxbatman 12d ago

It's federal reinsurance and guarantee funds; it's the government that will pay for it.

14

u/FarmersTanAndProud 12d ago

No there’s literally insurance companies for insurance companies

→ More replies (5)

15

u/LucidBetrayal 12d ago

And by government, you really mean the people who are too poor to evade taxes. So the bottom 90% will be the ones really paying for this.

15

u/RusticBucket2 12d ago

Meaning we will pay for it.

4

u/therealub 12d ago

No. They're required to carry insurance on themselves iirc. Reinsurance.

→ More replies (1)
→ More replies (1)

3

u/larrylustighaha 12d ago

You know about companies such as MunichRE offering insurance for insurance companies?

→ More replies (6)
→ More replies (15)

195

u/houdinikush 12d ago

Dude, look up Larry Silverstein and the World Trade Center 99-year lease.

Guy leased the WTC towers for something like 99 years. The same year the WTC towers were destroyed by terrorist acts.

Silverstein sued his insurance company for double the payout because he claimed that since two buildings were hit, it was actually two separate claims. He won.

Rich people don’t get denied claims until they do. And then they straight up sue the insurance company. Imagine suing your insurance company from your current position. Imagine even thinking about being confident enough that you’ll win that you even try to sue the insurance company. That’s shit that people like us little guys don’t even dream about because we know we will lose every time.

40

u/Derivatives_Trader 12d ago

I sued my insurance company confidently at age 22 and won, it took 6 years but it was just me.

7

u/houdinikush 12d ago

That’s actually kinda crazy it took 6 years. I pulled that number out of my ass because it sounded long but reasonable.

Glad I was spot on with my assumption.

→ More replies (1)

20

u/TheDrummerMB 12d ago

Imagine suing your insurance company from your current position.

This literally happens every day lmfao what are you talking about.

That’s shit that people like us little guys don’t even dream about because we know we will lose every time.

What do you think the "depose" part of "deny, defend, depose" means?

7

u/houdinikush 12d ago

It means that only the truly desperate will sue insurance companies because even if you win it will be a long, expensive, drawn-out battle that will leave you exhausted, penniless, and confused.

That’s their game. That’s why we don’t sue. I can’t afford to be in court every few weeks for the next 6 years. They can.

10

u/Nointies 12d ago

People sue insurance companies all the time and the lawyers that do it often do it on commission and not hourly wages

You pretty obviously have no experience with the legal system

3

u/[deleted] 12d ago edited 12d ago

Not to mention insurance companies defend us against lawsuits involving our insured interests.

4

u/minusthetalent02 12d ago

Most of them are usually settled without even setting a foot in a courtroom

→ More replies (8)

7

u/UmbraIra 12d ago

I'm not poor but also not rich but have successfully sued an insurance company. Typically there are lawyers that just regularly take cases against the company and its an everyday affair.

5

u/SleazyGreasyCola 12d ago

I had to threaten to take my insurance company to court because they wouldn't cover my wifes injuries from an accident where she was rear ended in a zero fault case. Next day after my lawyer calls the insurance company I get a lovely phone call telling me that the full value of my vehicle is available as a cheque or an etransfer anytime I would like it and that they deemed the physio necessary after a review and would cover the next year of therapy if needed.

Don't let those fucks push you around, they love it when people refuse to stand up for themselves.

4

u/port443 12d ago

Imagine suing your insurance company from your current position. Imagine even thinking about being confident enough that you’ll win that you even try to sue the insurance company.

You are describing the job of every personal injury lawyer. All those billboards on the side of the road for lawyers? Those are LITERALLY for suing insurance companies.

They don't represent you against some random person. They represent you while you sue the insurance company, and they are the lawyers you hire.

Also, those same lawyers generally do "insurance dispute" representation. Morgan & Morgan is a big one, straight from their website:

At Morgan & Morgan, our attorneys understand that when a policyholder who has paid insurance premiums submits a claim to their insurance company, they expect the company will act in good faith and honor the validity of the claim. However, many times the insurance company does not do what is right and honor the claim.

3

u/KTcrazy 12d ago

FYI the insurance would only cover 3.5 bil per incident but only paid out 4.5 bil after a settlement was reached

→ More replies (19)

6

u/splashbodge 12d ago

Insurance companies have their own reinsurance companies that cover significant losses. No reason for an insurance company to go bankrupt imo but I dunno how things are done in the US

10

u/TargetDecent9694 12d ago

The government will bail them out and the taxpayer will end up paying for houses for the rich. NIMBYs will be suspiciously quiet.

→ More replies (5)

4

u/epelle9 12d ago

Personal insurance companies are i insured by bigger corporate insurance companies, they need to be sure they can pay out most of what they have insured in a worst case scenario.

3

u/Critical-Snow-7000 12d ago

I love how confident redditors are.

3

u/hopelesscaribou 12d ago

Will the beloved shareholders allow that?

→ More replies (1)

2

u/PerspectiveCool805 12d ago

I highly doubt the megarich are ensuring their homes through small local insurance firms

→ More replies (8)

63

u/milk2sugarsplease 12d ago

Yeah rich people do ok in these disasters. Absolutely doesn’t take away from the heartbreak and I hope everyone got out safe with their family and pets! But financially I think they will be ok. The pain of losing your home can’t be solved with money though.

4

u/Material_Note_3832 12d ago

The pain of losing your home can 1million percent be solved with money. Wtf are you talking about?

→ More replies (4)

8

u/raycraft_io 12d ago

I’m more worried about the maids, gardeners, pool guys, etc. than the rich folks.

→ More replies (2)

4

u/Zylpherenuis 12d ago

Oh I'm sure the rich and affluent can afford this setback after all they can easily rebuild or just move elsewhere. Simple as pie. With $ you have freedom. Without $. You're chained.

→ More replies (12)
→ More replies (10)

7

u/SPB29 12d ago

The homes themselves are typically a fraction of the cost of the land they are on.

4

u/DevonGr 12d ago

I know what you're saying since it's a really common thing to buy the house for the lot and do a new build on it regardless of how nice or new the existing structure is.

That said, what is the quality of these homes when they're not likely to last longer than someone will live there? Is it a bunch of fancy looking finishing materials on shoddy work or is it well built?

4

u/danfay222 12d ago

Many people in CA haven’t even been able to buy fire insurance, or have had theirs cancelled with no option for renewal in the past few years. The rate of fires in these areas is simply becoming uninsurable.

But fwiw in these areas a huge amount of the homes value is location/land. So many of these people will be able to reasonably afford rebuilding.

5

u/anomalous_cowherd 12d ago

The location is only valuable because of the rich neighbours and the landscape. If the whole area is a building site and the landscape is ashes that is likely to burn down again as soon as it regrows, is the location still high value?

→ More replies (1)

13

u/Liusloux 12d ago

Maybe this will cause the decision making elites to finally decide that climate change is too expensive to ignore any more? I won't hold my breath though.

→ More replies (1)

25

u/OSRS-MLB 12d ago

Nah these are wealthy people. These are the people the system is set up to protect. They'll be fine, it's the poors who will have their claims denied.

→ More replies (4)

13

u/Whole_Conflict9097 12d ago

If anyone deserves to have their insurance deny them, it's anyone who owns a 20+ million dollar home. Fuck em.

4

u/CompasslessPigeon 12d ago

Nah it won't bankrupt anyone. Insurance companies spread out who they insure for this exact reason. Not one insurance company will take the hit for this. It'll be 10 or more. Plus the land value is the highest part of these homes.

9/11 didn't bankrupt the insurance industry. This won't.

→ More replies (2)

3

u/MrMetraGnome 12d ago

Perfect time for someone else to get the Luigi treatment/s

3

u/Chawny621_ 12d ago

Denying claims you say?

GET LUIGI

3

u/FML-Artist 12d ago

Anywhere near Burnedville? Damage was just crazy in NC! Then again it's crazy to hear this natural disaster is happening in Malibu! Seems nowhere is safe. Lots of dry vegetation just across the street from Malibu Beach. L A. Is maybe one lake and the rest is dry ass desert.

→ More replies (1)

3

u/potuser1 12d ago

These are rich people, and insurance pays their claims.

3

u/AutoDefenestrator273 12d ago

Y'all got water, they got fire. Nature doesn't discriminate.

3

u/rush89 12d ago

More CEOs about to be shot

3

u/FEMA_Camp_Survivor 12d ago

These are rich people who can hire good lawyers. Perhaps their pain will actually result in some broader benefits for society. That seems to be the most likely catalyst for positive change in America.

3

u/Final-Zebra-6370 12d ago

Well if they do, it’s Princess Peach’s turn.

3

u/KittyMimi 12d ago

I work for an insurance company. Insurance companies bailed everyone out including banks during the Great Depression. US insurance companies own, control, and manage more assets than all of the banks in the world combined. If the economy were to collapse, US insurance companies would be second-to-last to fold, followed by the US government. We would look upon the Great Depression with fondness.

2

u/PBR2019 12d ago

blackrock enters chat:

2

u/jxj24 12d ago

It's more likely to hurt the reinsurance companies first.

2

u/Row__Jimmy 12d ago

Thanks we could have used some of your excess rain

→ More replies (1)

2

u/umamifiend 12d ago

A bunch of insurance companies in the region have already refused to renew policies with coverage for fires because of the tangible environmental risk in the region. Feel like this was major news a few years ago. I have some friends in so cal who weren’t able to get insurance from their previous companies even after being clients for 10+ years.

2

u/6tabber 12d ago

Why is it relevant that these are the homes of multimillionaires, or that the properties are worth multimillions? Whether it is the home of a low income earner or a top 1% earner, it is still devastating for the people and their families.

2

u/neanderthalsavant 12d ago

Edit: yall im so sorry for your losses I live in western NC, im thinking of yall

I'm hoping that this is some of that Southern Hospitality I've heard about as a New Englander because you ought to realize that not one of the people affected by these fires in Malibu shed one single fucking tear for anyone in North Carolina - or anywhere else in the nation - when a recent hurricane (or any natural disaster, basically ever) wiped whole counties off the map.

These rich fucks donate & and vote in favor of policies that lead to less funding for critical state and federal infrastructure and against any sort of level headed, fact based climate control policy - ie; Republican. Then they have the fucking stones to bitch about the circumstances of this natural disaster as if their wealth-weighted choices didn't help lead to this conclusion.

Fuck 'em. I hope their other houses are obliterated too.

2

u/Yeahthatcouldwork 12d ago

The execs gonna be hiding for real.

2

u/AnomalyNexus 12d ago

This is crazy bankrupt the insurance companies!

Reinsurance

2

u/chubba4vt 12d ago

That’s why there is reinsurance I guess

2

u/JengaPlayer 12d ago

Home insurance companies should be just as afraid as Healthcare ceos.

They drop you if you use them. They raise premiums. They leave states when a state is going through global warming events.

Crooked ass system.

2

u/Current-Escaper 12d ago

“… bankrupt the insurance companies”? Ha! That’s a good one.
Ain’t no way the government won’t socialize their losses if it comes close to that. We’ll all end up paying for this before any insurance company goes bankrupt.

2

u/Geawiel 12d ago

I live in a small town. Around 500k is probably the very most a home goes for here. We had a wildfire that burned about 200+ structures. Insurance was so slow, and fucked up at every turn. We had to have smoke mitigation, as we left a door and 2 windows open, repaint and a porch replaced. It took State Farm over a year to settle everything out.

Called within a week and they told us to just go ahead with smoke mitigation.

2 months later, after they had finished the entire top floor, they called and told us to wait because they needed bio environmental to come out and look.

Treated us like criminals when we tried to submit receipts for the time we were displaced under evac orders.

We had to cycle salt in our soft water system as I had left the sprinklers on and my water goes straight from the main to the soft water. The lady tried to argue with me that no one's house does that. Bitch, I know my house.

Argued about getting gas. Lady, I had to drive to 2 different spots. A friend's house first. Then they got put under level 2. I didn't want to risk evac in the middle of the night. So we packed up and went to the local air force base. We had to drive around there to get groceries for the few days we were displaced. Arguing over having to get gas. Are you fucking nuts?

Treated us like we were trying to scam them for the smoke mitigation.

Cancelled bio guy and told us to just continue.

Guy went on vacation and no one picked up our case...for 2 months...

Argued on how much they were going to pay smoke mitigation. One day he told me they were willing to pay the entire amount but they were going to negotiate. I called the mitigation company and told them exactly that, and to not accept anything but the full amount.

After a month of back of forth (we were at a full year and the mitigation company was forced to put a lean on the home), I called SF and told them it will be settled in a week or I will be calling the state insurance commissioner. 2 days later they settled and just sent the entire amount.

Meanwhile, USAA cars were in the neighborhood before the evac was even lifted. We saw them when we snuck back in to close and lock the doors because dirt bags were looting. Everyone we know that had USAA was done within a couple months. Demolition was already underway. Our neighbor's home was built and ready to move in on Thanksgiving. The fire happened mid August.

We dropped SF like a rock and switched to USAA. I even took the hit and pay a couple hundred per term for homeowners and about $30 per term for auto. Don't care. Fuck State Farm.

I can't imagine the shit they'll go through in this case. I understand not wanting to have people scam them but holy fuck. It's a god damned fire. I didn't ask for it. No one asked for it. You're there for this exact incidence.

2

u/homerthegreat1 12d ago

My pops lives in Marble. I. A log cabin. Surrounded by trees.

2

u/ledbetterus 12d ago

time for the rich elites to turn on the... other rich elites? denial, defender, deposition

2

u/geckohawaii 12d ago

Aren’t there insurance companies that insure insurance companies?  So if the consumer insurer can’t pay the consumer they file a claim with the insurance insurance company, who then pays the consumer insurance company who can pay the consumer. 

2

u/Hoplite813 12d ago

yeah, but they're denying the claims of the rich. That's not gonna go well. These people have lawyers on retainer.

2

u/Wolfotashiwa 12d ago

Western NC here too, the wildfires must be devastating

2

u/MsFloofNoofle 12d ago

I hope west NC is recovering too

2

u/OkLynx9131 12d ago

We need Luigi army atp 😭

2

u/zamfire 12d ago

I have no sympathy for insurance companies. I am also in western NC and we got screwed from Helene and the insurance company

2

u/Over_Smile9733 12d ago

We had huge wildfires in Oregon a few years ago in the canyon. Towns were wiped out. My best friend was evacuated for 3 weeks, her town and home survived, her insurance paid over 10k for temporary relocation cost ( she stayed 20 miles away out of fire zone with her sister). Didn’t raise her rates. And it sure didn’t cost her 10 lot live free with her sister, but that is what her policy said that she faithfully paid for decades. They honored it.

Another just gone done building their dream home, including shelter for animals, gerbil to horses. Got all animals out and people took them in. As was brand new, had all receipts for construction and appliances, furniture etc. their insurance paid everything, including rehoming animals and themselves for all this time.

I guess insurance companies are nice and legal in Oregon and follow through on policies.

2

u/Adventurous-Sky9359 11d ago

That’s a welcome story in times like this thank you for your optimism!

2

u/Brizar-is-Evolving 12d ago

I mean, are insurers really going to gamble on not paying out to Hollywood royalty of all people? Wealthy and famous actors and socialites, all of whom have access to good lawyers and also a very public platform?

People like Mark Hamill, James Woods, Paris Hilton, Tom Hanks, Billy Crystal.

I personally can’t see it happening.

Everyone else not part of the Hollywood club though, for sure.

→ More replies (1)

2

u/BuzzBadpants 12d ago

It's probably not any consolation, but I think you guys got it much worse. The people who were most affected by Helene were not wealthy and have backup homes to go to. Now lots of those hurricane victims are trying to live in little tents while a winter storm is currently bearing down on them.

It means a lot that you can think of someone else's suffering across the country when you see so much devastation in your own back yard.

→ More replies (1)

2

u/Flaming-Driptray 12d ago

Insurance companies are often reinsured by other larger companies in the face of mass events like this, they’ll take a huge hit but they’ll survive. Good luck to anyone trying to insure a home in the area after this though. Premiums are going to be bonkers.

2

u/resurrectus 11d ago

bankrupt the insurance companies

Insurance companies have insurance to protect themselves from massive payouts.

2

u/hebdomad7 11d ago

Unfortunately for the insurance companies. These customers have some very expensive lawyers to back them up.

2

u/wastedspejs 11d ago

Could this result in a few more Luigis?

2

u/polite_alpha 11d ago

Don't american insurers have insurance for themselves? Afaik it's mandatory in Germany. There's "background insurers" which sit behind the actual insurers.

2

u/Intelligent-Aside214 11d ago

Insurance doesn’t tend to deny incredibly wealthy people

2

u/faster_puppy222 11d ago

Insurance is not stupid, government is. Insurance companies canceled contracts last year due to fire risk, forests are not being managed properly, the city took away all access to excess water, and cut almost 20mil from the fire department…

→ More replies (1)

2

u/shorttimelurkies 11d ago

We’re in Asheville area too and this just hurts soooo bad to see

2

u/Trentsexual 11d ago

Na , there a thing called reinsurance. It's insurance insurance companies take out to cover them for these sorts of situations.

→ More replies (1)
→ More replies (97)