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Home insurers are dropping customers based on aerial images

wsj.com

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Re: Home insurers are dropping customers based on aerial images

#631

Post by lostlogin »

dzhiurgis wrote: post #476
imgabe wrote: post #338

Earlier quoted context omitted.

I think the issue is that in some cases the information is inaccurate and there are sometimes limited avenues for a customer to object if their insurance is cancelled based on inaccurate information. To the extent that the information is accurate, I agree. If you make an agreement with a company and buy insurance based on your statement that you don't have a pool, but then you do have a pool, I don't see any reason w…

There was a case recently in NZ where home owner tried to defraud an insurance company. Well suddenly none of the insurance companies would work with him. Insurance is a requirement for mortgage so this person is effectively going to loose his house. False positive with similar circumstances would be a nightmare.

Has anyone in NZ ever had a bank check if they are insured after purchase? They asked on signing the loan. But after that they never check.

Re: Home insurers are dropping customers based on aerial images

#632

Post by singleshot_ »

tptacek wrote: post #422
ssl-3 wrote: post #417

Earlier quoted context omitted.

How is an unversed lay homeowner who is inexpert in the insurance industry (or perhaps even any industry) supposed to know what risks an insurer thinks are important? Their job, I think, is to accept the quote, pay the premiums, and to keep living life.

On 1-3 occasions over the course of an insured's entire life, they'll be confronted with the paperwork for the insurance contract for the most expensive asset they'll ever buy. They should read it.

This is good advice. One wants to be sure that one is reading the entire policy. Key words here are "certified complete copy" and once someone at the insurance company who is authorized to do so certifies a copy as complete, you can be a little more sure you're dealing with the entire thing than the "copy that happened to be attached to someone's email."

The first page or so will explain who the policyholder is, what is the effective date of the policy, and what forms constitute the insurance being provided. The rest of the policy is (usually) a set of forms approved by the state insurance commissioner that define, in particular, what is and is not being insured. Be aware that something that is very clearly defined on the first page of the first form is very frequently completely contradicted by something on the fifteenth page of the thirtieth form, which makes it very important to have the complete set.

In general insurance law is such that you ought to be able to read the entire policy and make sense of it - no tricks. In practice there are some wrinkles and it's good to consult a professional but if you read the policy you will at least have some awareness of the coverage you can expect.

Re: Home insurers are dropping customers based on aerial images

#633

Post by tptacek »

harimau777 wrote: post #495
potatolicious wrote: post #449

Earlier quoted context omitted.

> "If a group of ten people all have a one in one-thousand per year chance of a million-dollar loss each year" More importantly, each person in this group has a different chance of a million-dollar loss each year, and it's important if you're going to write a policy to get that chance as accurate as possible. Some members of the pool have a 1-in-1000 chance per year, others have a 1-in-10 chance. An efficient insuran…

Wouldn't an efficient insurance market be worthless since the expected net payout for everyone insured would trend to zero?

These kinds of questions are a little mind-binding. Insurance is a financial services business. If the net EV of insurance was positive, how could any insurer remain solvent?

Re: Home insurers are dropping customers based on aerial images

#634

Post by tptacek »

mindslight wrote: post #489
tptacek wrote: post #321

Earlier quoted context omitted.

Why is it not a good thing if insurance is more accurately priced? Insurance isn't a redistribution mechanism. And dilapidated roofs aren't a social good. Municipalities have actual redistribution schemes to make these kinds of repairs. I'll note that there's nothing at all redistributive about sneaking a trampoline onto your property, too. Further, I'll note that working class people also take pride in their houses…

It's incorrect to assume that more data points implies more accurate pricing, as we're talking about very limited very simplistic models. It's more plausible to envision those extra data points serving to confuse the market and make it less competitive, rather than actually helping to accurately price risk. Every new data point partitions the statistical population size into two smaller parts, each with their own lar…

I didn't say anything about more data points. I'm talking about insurers being able to properly gauge whether existing customers are adhering to the terms of their policy, or whether they're free-riding off the premiums of their neighbors by defrauding the insurer.

Re: Home insurers are dropping customers based on aerial images

#635

Post by tptacek »

non-chalad wrote: post #443
sarchertech wrote: post #318

Earlier quoted context omitted.

It’s an issue of scale. Similar to police tracking phones. Police have always been able to assign an officer to follow a suspect, but it’s expensive and therefore rarely done. If insurance companies can cheaply inspect everyone’s house from space, the end result will be to lower prices for people with homes in perfect condition and raise them for everyone else. This is potentially problematic because the people with…

The solution seems to be to remove the insurance mandate, and allow purchasing insurance across state lines. That way two locked-in markets are opened to more competition.

What insurance mandate?

Re: Home insurers are dropping customers based on aerial images

#636

Post by tptacek »

lobsterthief wrote: post #603
tptacek wrote: post #499

Earlier quoted context omitted.

It's good to want things! But if you're a bad driver, you don't get to pool with people with zero accidents and tickets.

This is a really bad analogy that doesn’t hold water. There are good drivers and bad drivers. There are also good homeowners and bad homeowners. I live in Florida, but chose not to live in a flood-prone area. We also have hurricane clips on our roof, and we just changed all our windows to impact-resistant windows (with the help of a state-sponsored program, actually). Our insurance isn’t that high at all. Could it be…

This is a lot of words about a lot of scenarios, but here we're talking about people who (1) secretly install trampolines, (2) secretly install swimming pools, and (3) falsely claim to have replaced their roofs.

Re: Home insurers are dropping customers based on aerial images

#637

Post by tptacek »

hattmall wrote: post #533
PaulDavisThe1st wrote: post #426

Earlier quoted context omitted.

You seem to be forgetting that this avoidance can work at two times: 1. pre-emptively dropping or refusing coverage 2. claim inspectors concluding the company has no liability for a particular incident. It doesn't all need to be #2 (and probably should not be), but it also doesn't all need to be #1 either.

#2 is less successful and incurs more costs. Trampolines are a good one because let's say you lie about a trampoline. Ok, great, we don't have to cover any trampoline related injuries. What are the chances that you would then lie and say that a broken arm occured on the steps instead and simply fail to mention the trampoline like you already did.

You, the rogue trampoline owner, aren't really the party that the insurer is worried about. Your kid's best friend's parents are. (And it's not a broken arm they're really freaked out about --- don't make a homeowners claim over a broken arm, probably; it'll cost you more in the medium term --- it's death or paralysis, both of which will put millions of dollars on the line).

Re: Home insurers are dropping customers based on aerial images

#638

Post by tptacek »

Eisenstein wrote: post #457
skissane wrote: post #378

Earlier quoted context omitted.

Well, I'm not in America, and I'm wondering if this is an American thing? I just checked my insurance policy. The word "trampoline" never once occurs in it. I don't think my insurer cares about trampolines. If I think about it: given the absurdly large payouts for some injury lawsuits in the US, I understand why American insurers might be particularly sensitive to things that might induce injury, like trampolines. Gi…

To explain the lawsuit issue, here is a perfectly plausible scenario and how it could play out somewhere in the USA.: 1. A person is at a friend's house for dinner 2. Upon leaving to go home, they trip and fall trying to navigate an unlit path to their car 3. Their injury lands them in the hospital and requires a week or so of recovery time in which they could not work, and as they contract out they lose that money 4…

I mean, sure, but really the simpler issue --- and this is an issue in Australia too, but I don't know how it's handled --- is that some kid is going to double bounce on the trampoline at a party, land funny, break their neck, and be paralyzed for life. Average payouts for paralysis cases are in the high millions.

Re: Home insurers are dropping customers based on aerial images

#639

Post by tptacek »

harimau777 wrote: post #494
tptacek wrote: post #294

I don't really understand the privacy concern here. To wit: insurers can demand actual inspection of your home when making underwriting decisions. The condition of your house is very much their business. Why is an aerial photograph of your roof, which everybody in the world already has on Google Maps, such a big deal?

I think that one difference might be that physical inspections don't scale. It seems to me that the current systems working (for regular people) requires that insurers not be too good at assessing risks. The better the insurer is at assessing risk the closer insurance gets to providing no value to the insured.

Insurance is famously negative EV (in dollars, if not utility).

Re: Home insurers are dropping customers based on aerial images

#640

Post by callalex »

radlad wrote: post #592
ncallaway wrote: post #541

Earlier quoted context omitted.

I wasn’t actually confronted with the paperwork. When I purchased my house, the insurerer that was selected by my bank informed me (several times) that they were unable to provide the complete coverage details and contract until after the insurance contract was in place. Even then, it took me several calls and interactions to get them to send me the actual detailed insurance contract. They tried to fob me off several…

You are entitled to find your own home insurance, you do not have to use the bank's choice.

Is that really an option when there are another dozen people bidding on the house though? (I haven’t been through the home buying process yet)
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