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Home insurers are dropping customers based on aerial images

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Re: Home insurers are dropping customers based on aerial images

#711

Earlier quoted context omitted.

> You live in a market with $800k houses down the road but your apartment is $1300/mo? Yes that is correct. Ladd's Addition in, Portland, OR. The floor for fixer-upper houses within a half mile might be $500k but I see $800k+ very regularly. I'm sure you can find something to quibble with here though. Somehow in my 40-year life I've always managed to find small, cheap, shitty apartments in good neighborhoods. I guess…

> I put a few thousand into index funds each month. I could easily buy a house with cash in a place where I'm not excited to live. But why would I? I don't want a house. I like my cheap small shitty apartment because it's in a great neighborhood. My money's growing just fine. I have enough. Because you’re not lighting rent money on fire every month. I’m sorry you can’t understand this, and all I wanted to do was help…

> Because you’re not lighting rent money on fire every month.

I'm not lighting it on fire! I'm getting a place to live.

The homeowner is also lighting money on fire every month! They don't get a check back from the roofing company when they sell their house. They don't get a rebate from GE for the stove they bought 20 years ago. They get the benefit of having a stove in their house and a roof on their home.

In 20 or 30 years or whatever I have a Vanguard account with a couple hundred thousand dollars in it. In 20 or 30 years the homeowner sells and gets a big check as a result. Why do I care if their check is bigger than my Vanguard account?

Re: Home insurers are dropping customers based on aerial images

#712

Earlier quoted context omitted.

On the contrary, I think using expected value to explain the value of insurance from the perspective of an insurance holder is a misunderstanding of insurance. People don't buy insurance to optimize the average case; they buy it to optimize the worst case. But an insurance policy that doesn't redistribute wealth has both negative expected value and negative value in the event of a payout. At which point it is just a…

Insurance almost mathematically must be negative EV in dollar terms. It's positive EV in utility terms because of the declining marginal utility of a dollar. If it was dollarwise positive EV, every insurer would be insolvent. This is pretty basic? Like, it's an economics frequently asked question why buying an insurance policy isn't as irrational as playing the lottery, since both have negative dollar EV.

You're moving away from the original question, which is does insurance redistribute wealth. If you get an insurance payout and that payout doesn't involve redistribution of wealth, then it means that the payout must come only from your premium payments, minus admin fees and profit margin. But that's not how insurance works. There are innumerable examples of people who received more in insurance payouts then they've ever paid in in premiums.
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