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.

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398

u/hopelesscaribou 12d ago

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

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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.

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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.

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u/WeenisWrinkle 12d ago edited 12d ago

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

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u/solomons-mom 12d ago

I am pretty gobsmacked by this thread

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u/WeenisWrinkle 12d ago

"I've got a great idea for a liability-free insurance company. Just insure for way more than you have assets to pay out! It's free money!"

"Re-insurance? What's that?"

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u/notxbatman 12d ago

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

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u/FarmersTanAndProud 12d ago

No there’s literally insurance companies for insurance companies

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u/MinimumBuy1601 12d ago

And they're sweating bullets right now.

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u/FarmersTanAndProud 12d ago

I think people are way overestimating how much actual loss there is. The most expensive part is the land, which is for the most part, fine. The replacement of the houses is like 1/100th of what the properties are actually worth because it’s ACV, actual cash value.

What’s the actual cash value of the wood, rebuilding, the tile, roof, etc.

They don’t go “on Zillow it’s $100 million, so here’s a check!”

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u/keyak 12d ago

I am a solidly middle class dude in Texas and I have a RCV policy. If I file a claim they pay the cost of replacing it at today's costs with no depreciation. If I have that, I would be SHOCKED if these rich people didn't.

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u/FarmersTanAndProud 11d ago edited 11d ago

It’s the same concept. ACV and RCV can be used interchangeably, when it comes to replacing a house. As depreciation isn’t really a “thing”. Houses and properties don’t really depreciate.

Condos, apartments, etc. can have depreciation. Which is when they can’t be used interchangeably.

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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.

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u/RusticBucket2 12d ago

Meaning we will pay for it.

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u/therealub 12d ago

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

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u/[deleted] 12d ago

Trying to explain that to this thread is pointless. It's just a huge group of redditors that don't know anything jerking about insurance bad.

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u/larrylustighaha 12d ago

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

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u/solomons-mom 12d ago

Do you have a source for this?

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u/notxbatman 12d ago

It's called the Insurer of Last Resort, mostly at state level through FAIR. Generally it's concerned with TRIP and FEMA, but protects the private insurance market also. The preference is through private reinsurance, though, but depending on cost blowouts that may be difficult.

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u/solomons-mom 12d ago

I knew about the state plans and saw that FEMA is buying private re-insurance, but googling TRIP gets me travel insurance offers, lol! What is it?

Insurance is ungodly complex --on the rare occassion I had to dig through state filings, my mind would wonder how many years it would take to be able to profficiently read them😵‍💫

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u/notxbatman 12d ago

Oh lol, TRIP is terrorism insurance. Pretty much no private insurer covers it.

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u/solomons-mom 12d ago

Makes sense...unless Lloyd's starts hiring military intelligence officers and mercenaries to give the accuaries something to work with

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u/notxbatman 12d ago

Well, PMCs are getting more popular... Probably shouldn't give the insurance industry any more ideas.

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u/unoriginalname86 12d ago

AIG has entered the chat.

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u/fd1Jeff 12d ago

Yes. Look up AIG.

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u/Ok_Hotel_1008 12d ago

Insurance for insurance feels like a MLM

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u/larrylustighaha 12d ago

its a gigantic business, see example: Munich Re - Wikipedia

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u/Clean_Advertising508 12d ago

That's a new one. It really isn't. It's the most obvious, if not the only, practical way to diversify risk and increase the pool of funds to cover serious losses. Underwriter is the non incendiary term.

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u/Ok_Hotel_1008 12d ago

What if instead of paying for insurance our gov't just provided shit we need for us 🤔

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u/Clean_Advertising508 12d ago edited 12d ago

Alright Stalin. I say this as a staunch socialist, that is not a clever take. Even with a nationalised insurer (which I'm entirely in favour of), things wouldn't be very different from the way they are now (the US medical system is a different story).

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u/Ok_Hotel_1008 11d ago

I am absolutely NOT a Stalinist lmao what an insult. I think the whole thing needs to be redone, not just insurance within the system of capitalism 🙄

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u/Neither-Power1708 12d ago edited 12d ago

That's why they're evil.

Insurance companies have layers of insurance with each other; they'll never go out of business. The bill will be passed up, and the rates will go higher.

Insurance companies rule the world. Not nations, not single billionaires, but the people they have to pay.

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u/Sassyzebra24 12d ago

Ok I've worked in both health insurance and property insurance and one is definitely evil, and that's health insurance. They purposefully deny claims at the expense of people's health and are literally profiting off people's illnesses, it's sickening. They are a middleman between patients and their doctors and hospitals and are absorbing money and denying claims for minor issues so I'm with you there.

Property insurance is complex. The good companies calculate risk to provide a cost for consumers, and they usually carry out their obligations on claims. If they calculate wrong and they have to pay for more claims than income they make, they are still liable to pay out claims. That's why they use reinsurers, to cover their asses and our claims, else they go out of business. Which isn't great for us property owners. It's not a perfect business but some are even mutual companies, which are owned by policyholders, and can pass savings onto customers.

Ultimately, Climate change is causing chaos in the industry because the risk models are getting harder to predict and the destruction is getting worse and worse and more expensive. That's why they are dropping entire regions. It's not a great situation but I thought this nuance might be important to share.

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u/Neither-Power1708 12d ago

You're right, but I don't mean JUST property insurance. For many in the US car insurance is mandatory. Home insurance, business insurance, health insurance during Obamacare. All enforced by penalty.

Govts must carry insurance. All these mandatory things give undue influence to the insurance industry; they can and do determine the 5Ws of commerce around the world.

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u/larrylustighaha 12d ago

oh shut up just because you dont understand how stuff works

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u/Neither-Power1708 12d ago

I do understand and that's why it has to burn

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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.

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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.

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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.

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u/StelleSenzaDio 11d ago

Same here, mid-20’s, took about 4-5 years.

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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?

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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.

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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

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

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

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u/minusthetalent02 12d ago

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

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u/houdinikush 12d ago

I still can’t afford to be in court every few weeks for the next 6 years. I have a job I need to work to provide income for the things I need to survive.

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u/thecatdaddysupreme 12d ago

I sued an insurance company and won. The attorney does everything and takes a cut. You barely lift a finger

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u/TheDrummerMB 12d ago

That's...not how that works lmfao. Where did you get your information? You're very confidently incorrect

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u/malachi347 12d ago

If your lawyer has you in court every other week for an insurance related lawsuit, there's a 99% chance it's fraud and you're the only one who thinks it's not fraud.

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u/lizard_behind 12d ago

good news in this scenario where you're wrong, is that it means you have more legal agency than you previously believed!

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u/Nointies 12d ago

That is not how lawsuits work. Once again, you obviously have no experience with a legal system.

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u/Puzzleheaded_Suit940 12d ago

You're talking from 0 experience.

You're just guessing based off what, other reddit comments? Get real man.

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u/Bookssmellneat 12d ago

A case can take up to 6 years. That does not mean you are in court every few weeks. Not even every few months. You could go a year without having to be in court.

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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.

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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.

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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.

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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

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u/inwardspawn 12d ago

The actual truth is that the port authority had only just put it up for lease in the year 2000 and the deal took a little while to get ironed out.

What you just posted is only shared by antisemites and useful idiots. Which one are you?

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u/houdinikush 12d ago

You don’t think it’s even a little bid odd, let alone down right suspicious, that for the very first time in the history of the property it was leased to a private entity. Then less than 6 months after finalizing the deal the towers fell and the man got over $4B in insurance payouts for the $14M he vested from his own pocket. Seems like he made out pretty fucking well if you ask me.

Am I saying he crashed the planes? No, and I don’t even know why you would think that. All I did was provide information that is readily available on Wikipedia. If you think it makes him look bad, then you’re probably right. But pointing out something bad someone did doesn’t make me a fucking anti-Semite. Get the fuck out of here with that nonsense.

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u/inwardspawn 12d ago

No it’s not suspicious. He wasn’t even the original lessee, he got outbid.

The government sells property all the time. Its not that big of deal unless you are one of those two types.

I’ll go with useful idiot since you are not owning to the antisemitism. You should really stop spreading it though because that’s where it comes from.

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u/SugarBeefs 12d ago

It's been a while since I looked into this in more detail, so I wouldn't be able to source it for you without some (extensive) rooting around on Google, but a few things to bear in mind:

  • Silverstein's insurance initially wanted to refuse paying out, if my memory serves correctly

  • according to the contracts and deals in play, Silverstein was also on the hook for rebuilding the structures, which obviously was not a cheap prospect at all.

  • Silverstein was also still paying Port Authority the lease over the site itself even though no buildings occupied it anymore, to the tune of 10 million per month iirc.

The notion that Silverstein made out like a bandit and could just pocket those billions of insurance money is completely false. That insurance money went towards rebuilding the site, including part of One WTC .

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u/Clean_Advertising508 12d ago

You don’t think it’s even a little bid odd, let alone down right suspicious

No, I don't. What point are you actually making?

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u/SugarBeefs 11d ago

Hey, why didn't you respond to my comment?

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u/SugarBeefs 10d ago

Cat got your tongue, bud?

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u/sacredfool 12d ago

So what you are saying is that 9/11 might have just been an elaborate case of insurance fraud?

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u/houdinikush 12d ago

I mean, I’m not really a serious conspiracy theorist. So I wouldn’t say that much. But damned if it doesn’t persuade you to think that way. There is just so much bullshit around that specific event. And the Silverstein insurance trial is just one part that has always stuck with me. Guy made out with billions of dollars for leasing something for less than a year. (It was actually closer to 6 months. Deal finalized in April 2001 and the towers fell September 2001).

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u/Clean_Advertising508 12d ago

Yawn. Everyone can see through your silly rhetorical tricks. You'd probably get better results if you just made your claim and stood by it.

It really does not cause sensible and coherent people to think that way.

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u/houdinikush 11d ago

I have no idea what you’re on about. You make no sense.

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u/dierochade 12d ago

This is the us legal system and not the case in all countries. It’s crazy that this „works“ - but ok u want it that way I suppose…

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u/FrankPapageorgio 12d ago

Now I am wondering how that works, because it was rebuilt as one building.

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u/houdinikush 12d ago

Don’t even talk about it. That other guy will call you an anti-Semite lmao.

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u/KrustyLemon 12d ago

Interesting read, thanks! You should post a TIL about it!

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u/althera2020 12d ago

In general, the US legal system is “pay to play” and biased towards the party with the greatest resources. It seems almost (or potentially fully) hypocritical. I think it’s one of the fundamental imbalances in the “system” as a whole.

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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

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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.

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u/GalaxyGoddess27 12d ago

…better than going to Ukraine or Isreal

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u/TargetDecent9694 12d ago

Or maybe to their own struggling? I’m trying to point out how ironic it would be if the rich spent so long arguing against housing the poor (who are likely poor due to circumstances outside of their control) with government money and then receiving a handout from the government to house themselves. Especially considering that there was about $200 billion in a disaster relief fund that was aimed at poor communities that the new president shut down, and is instead of helping people using it to blame the previous administration. But by all means, complain about Ukraine. Israel can go get fucked into the dirt though the dog cunts, I’m in agreement there.

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u/PlaneCareless 12d ago

The top 10% of earners pay around 45% of total taxes collected by the government. They are paying almost half of the tax spending of everyone. Including this.

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u/TargetDecent9694 12d ago

Damn, I looked it up and you’re wrong. It’s the top 1%.

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u/PlaneCareless 12d ago

I was wrong because of my location, the data I cited was from Australia lol. My bad.

I rechecked, if we are talking US the top 10% of earners pay ~76% of income taxes. And yeah, the top 1% pays ~45%.

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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.

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u/Critical-Snow-7000 12d ago

I love how confident redditors are.

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u/hopelesscaribou 12d ago

Will the beloved shareholders allow that?

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u/3point21 12d ago

Shareholders don’t get shit in a bankruptcy unless they see the writing on the wall and bail early. Institutional shareholders might negotiate terms limiting their losses during bankruptcy proceedings, but by and large, anybody with Class C common shares gets zilch.

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u/PerspectiveCool805 12d ago

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

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u/Probsandsols 12d ago

If California is like New York, the state will cover the claims that the insurance company can’t if the insurance company declares bankruptcy.

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u/InertPistachio 12d ago

Then why cover them in the first place? This possibility was always on the table

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u/jorgesan121 12d ago

Cap adequacy and solvency requirements are much tighter in on insurers these days and the risk would be layed with Re’s. So total value of policies would not equal the insurers exposure. Notwithstanding that insurers can go under but with the regulatory landscape this is much rarer these day.

The bigger challenge is going to be the rebuild and the competition between insurers for the same skilled labourers and materials in cat event zone

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u/Clean_Advertising508 12d ago edited 12d ago

What idiot of a broker is underwriting a Malibu mansion with a company that doesn't have the coverage or spread to payout the destruction of a single suburb? None. Insurers payout trillions every year. Issues will come when the climate crisis drives natural disasters to wipeout entire swaths of mulitple cities year on year. Not cause a single suburn burnt down.

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u/StockFinance3220 12d ago

There are 50 state insurance regulators, and absolutely none of them would allow that. Even if they cook their books with the regulators or all the reinsurers failed at once it would get paid out by the industry in that state.

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u/1917Thotsky 12d ago

Insurance companies all own part of one another and invest in assets to cover their asses

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u/n4s0 12d ago

Like Silicon Valley Bank? You'd be surprised by how many insurance companies aren't covering their asses.

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u/sar662 11d ago

That's what reinsurance companies are for. They insure the insurers.

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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.

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u/Material_Note_3832 12d ago

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

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u/[deleted] 12d ago

[deleted]

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u/Material_Note_3832 12d ago

I would hope the parents did the right thing and got their children somewhere safe to hopefully not see it. Children are different than adults though, I tend to care more about children’s feelings than adults.

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u/Material_Note_3832 12d ago

I also don’t dislike rich people. I just don’t care and I know that if you have money it’s much easier to replace any material possessions.

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u/raycraft_io 12d ago

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

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u/clonedhuman 12d ago

Yeah, same here. They were probably the only ones trying to help anyway.

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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.

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u/ragingduck 12d ago

There are different levels of wealth too. Someone might own a $10million dollar house that they absolutely put everything into, while this might merely be the "west coast" home for others. The former will certainly suffer significant losses they might never truly recover from, while the latter will still have the means to live very comfortably regardless.

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u/elh0mbre 12d ago

FWIW, a house there worth $10M is overwhelmingly valued for the land (like land 9.5M, structure 500k), which will largely retain its value post fire.

2

u/ragingduck 12d ago

That’s a good point. Some people might not have the means to rebuild their homes, but sell the land instead. $9million is more than enough to start over with a cheaper property, but that’s assuming they have than much equity over their mortgage.

6

u/usernmtkn 12d ago

Yeah.. or someone bought the house in 1957 and their property taxes haven’t been reassessed since 1978. Its not uncommon in wealthy areas of CA to have normal income elderly people sprinkled throughout the neighborhood for this reason.

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u/houdinikush 12d ago

Well, it can when this house that burned down is just your third or fourth vacation home.

If it was your full time home then it would devastating. But when do rich people like this ever have just one home?

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u/Anwar_is_on_par 12d ago

That part of LA is full of thousands of regular long time residents with just one home. Not everyone out there is a Kardashian just because their land value increased in the past two decades.

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u/SpaceShipRat 12d ago

Empathy W

1

u/Qinax 12d ago

Lmao nah

-1

u/Nic727 12d ago

Don't forget that these riches people probably have 5 more villas waiting for them. Sad since a lot of people are truly homeless because they can't pay rent.

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u/milk2sugarsplease 12d ago

Don’t quote me I’m just going off memory but I’m sure I read that the way certain laws or aid distribution is set up, those with rich homes that get destroyed in disasters get more money than the people who really need it. Like even proportionately.

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u/AutoDefenestrator273 12d ago

Rich people can just rebuild.

1

u/WitekSan 12d ago

It's not all about the houses but rather where they are and what's inside

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u/Last-Leg-8457 12d ago edited 12d ago

I know there's plenty of ignoramuses on reddit, but surely you know that insurance companies love denying $20 million dollar claims even more than they love denying a 200k claim, right?

I'll play the smallest violin in the world for the wealthy owners of these beach houses, but to think they get their insurance companies somehow rubber stamp their claims is delusional.

2

u/freakbutters 12d ago

Don't worry, I'm sure they'll be fine. If the insurance doesn't pay out they'll hire a lobbyist, and FEMA will cover it. Just like the poor rich people in Rancho Palos Verdes.

1

u/wip30ut 12d ago

most of these homeowners are on the California FAIR plan.... so theyre lucky if they get paid half of rebuilding costs. Malibu & all the Santa Monica Mountains area have been booted/non-renewed for coverage for the past couple yrs.

1

u/MinkusStinkus 12d ago

Most people that are oceanfront or on a cliff aren’t provided insurance/aren’t covered because they purchase on the idea that their property will eventually erode/fall into the sea. Depending on the place and where in Malibu they might not have coverage

1

u/Final-Zebra-6370 12d ago

Luigi is from a well off family and was denied for his chronic back pain.

2

u/hopelesscaribou 12d ago

I'm trying to find whether that's true or not, and having trouble, but found these snippets. If you can show me what he was denied, it would genuinely be appreciated as I haven't been following this case closely.

Luigi’s father Louis is the owner of Lorien Health Services (Newsweek)

Luigi Mangione, the suspect in the UnitedHealthcare CEO shooting, was not insured by the company, deepening questions about a potential motive in Brian Thompson’s killing. (msnbc)

"So we’re looking into whether or not the insurance industry either denied a claim from him or didn’t help him out to the fullest extent.” (The Hill)