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Old 08-28-2017, 06:58 AM
 
Location: Saint John, IN
10,638 posts, read 3,311,331 times
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Quote:
Originally Posted by Ultrarunner View Post
Will see how if insurance is there in the aftermath of Harvey...

I've only had one claim and it was when the area was declared a disaster area... insurance was slow but many had much more serious things than I did... but they did settle and no complaints.

California is prone to devastating wild fires... as one was raging the insurance company called offering assistance... said it had movers for valuables, contracted with private fire fighters and had equipment for creating fire breaks... kind of amazing when I thought about it...

Lucky for us the winds shifted driving the fire back on itself...
The only insurance that will pay out on Harvey or any other hurricane is a Flood insurance policy. If you don't have that for your home you're screwed! A regular homeowners policy won't cover flood. An auto policy will cover the cars.

For the billions that insurance companies give out for claims, they collect more in premiums and from others who never put in a claim. It's s business and they are in it to make money, but insurance companies DO make huge profits. As far as natural disasters such as Harvey, again people need a specific type of insurance for that and unfortunately many DO NOT have it due to the insane cost of it! That's why so many people are screwed after a disaster such as Harvey!

Any area prone to natural disasters as huge premiums on homeowner insurance! California (wildfires) Florida, Texas and parts of the Midwest due to (tornadoes), etc; however, flood ins is expensive everywhere.
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Old 08-28-2017, 07:55 AM
 
25,800 posts, read 49,685,561 times
Reputation: 19248
So wind damage would not be covered?
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Old 08-28-2017, 08:27 AM
 
Location: Central IL
13,344 posts, read 7,115,490 times
Reputation: 31026
Quote:
Originally Posted by jimmy12345678 View Post
IMO, all insurance companies are merely legal ponzi schemes that cannot sustain themselves if they actually covered what they say they do. There's no way you can charge someone x amount per month (we'll say $500) and cover them for $50k+ in insurance claims. It would take 8 years of you paying into it to equal $50k, and they still have to pay their employees, advertisements, overhead, etc, so it's not possible for them to do so.

So what they seem to do is try to weasel their way out of paying any claims brought against them. "Oh, well x happened so we can't cover that" or "Oh, you didn't tell us about that, this claim is null and void". They MUST do this in order to stay in business. Then they throw in deductibles and other loopholes in order to further protect themselves and give them MORE reasons to deny your claim, or at least pay you the bare minimum that they can. Basically an insurance company wants free money from you for years on end only to deny your claim whenever the need to use that insurance arises.

Can someone please explain to me how insurance is not a glorified ponzi scheme?
You don't have a clue how insurance works.

By law they have to keep "reserves" on hand to cover many times over the expected outlay in claims. They don't pay claims out of future premiums collected which is what a Ponzi scheme would be. They pay out of reserves built up from PAST premiums already collected. Got it?

BTW, premiums collected aren't nearly enough for an insurance company to be profitable - the profit comes from investing the premium dollars.
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Old 08-28-2017, 09:08 AM
 
Location: Raleigh
6,964 posts, read 5,183,151 times
Reputation: 9390
Quote:
Originally Posted by Ultrarunner View Post
My grandfather explained insurance to me as a tool to make the unbearable bearable... something I have always remembered.

I too hope to never need or use it.
I agree with this. Too many people look at it as something they should get use out of.
Quote:
Originally Posted by shanv3 View Post
Which "other" businesses?? AIG Motors ??
Their investment bank.
Quote:
Originally Posted by Ultrarunner View Post
Will see how if insurance is there in the aftermath of Harvey...
The tough part will be when they all find out that they have to wait in line for Federal Funds to fix the flood damage. It the storm surged and flooded your bottom floor, and the wind ripped the roof off, they would pay for the roof, but not the flood damage if you didn't have a flood insurance policy.

Quote:
Originally Posted by Ultrarunner View Post
California is prone to devastating wild fires... as one was raging the insurance company called offering assistance... said it had movers for valuables, contracted with private fire fighters and had equipment for creating fire breaks... kind of amazing when I thought about it...
Ever seen Gang's of New York? The reason they're often called "Fire Company 12" or whatever is that they used to be private companies, that would put out your fire for a fee. They would race to get there first.

They've done the math...They pay a mover $1000 to move your stuff for awhile, better than a $25K claim. And what they pay you doesn't include the people they pay to process it...

Quote:
Originally Posted by Ultrarunner View Post
So wind damage would not be covered?
Wind damage would be, flood damage wouldn't be. Flood insurance is tough from a private industry perspective because people towards the bottom of the hill will buy it and people at the top won't. Its adverse selection, the same reason you aren't going to be allowed to up your coverage when you smell smoke in the air from the wildfire 10 miles away. Weather and fire don't really work like that, if the wind blows hard everyone in the area suffers.

So, Flood insurance is part of a federal program, sort of strict limits too...$250K max building coverage, no replacement costs, $100K max contents insurance, they only pay so many times before they cut you a final check and try and buy your house. The policies say "Allstate" or State Farm or whatever but they're administered by the NFIP.
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Old 08-28-2017, 09:22 AM
 
8,277 posts, read 3,452,461 times
Reputation: 1584
Quote:
Originally Posted by JONOV View Post
I agree with this. Too many people look at it as something they should get use out of.

Their investment bank.
The tough part will be when they all find out that they have to wait in line for Federal Funds to fix the flood damage. It the storm surged and flooded your bottom floor, and the wind ripped the roof off, they would pay for the roof, but not the flood damage if you didn't have a flood insurance policy.

Ever seen Gang's of New York? The reason they're often called "Fire Company 12" or whatever is that they used to be private companies, that would put out your fire for a fee. They would race to get there first.

They've done the math...They pay a mover $1000 to move your stuff for awhile, better than a $25K claim. And what they pay you doesn't include the people they pay to process it...

Wind damage would be, flood damage wouldn't be. Flood insurance is tough from a private industry perspective because people towards the bottom of the hill will buy it and people at the top won't. Its adverse selection, the same reason you aren't going to be allowed to up your coverage when you smell smoke in the air from the wildfire 10 miles away. Weather and fire don't really work like that, if the wind blows hard everyone in the area suffers.

So, Flood insurance is part of a federal program, sort of strict limits too...$250K max building coverage, no replacement costs, $100K max contents insurance, they only pay so many times before they cut you a final check and try and buy your house. The policies say "Allstate" or State Farm or whatever but they're administered by the NFIP.
As the bulk of flood insurance is through Federal agency, there is no set limit on total and overall coverage cost. The debt ceiling can create a snafu, otherwise it is up to we the people and our elected officials how much federal deficit spending to allow.

Texas secessionists might then understand why if they leave the Union, they no longer would enjoy our Federal fiat.
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Old 08-28-2017, 09:49 AM
 
6,815 posts, read 4,408,035 times
Reputation: 11918
In modern parlance, any situation where a corporation profits at the real-or-perceived expense of the customer/client, is tarred with the accusation “Ponzi Scheme”. In reality, there are many rapacious and unscrupulous ways of shaking down the customer, that have nothing to do with Ponzi. And there are many high-profit, high-fee schemes, that are perfectly aboveboard and legal. One such example is loaded mutual funds, where the client is charged a percentage of assets immediately upon deposit.

The inherent problem with insurance, is that everyone pays, but only a few actually benefit. Even if my insurance company is honest, the rates are low and the customer-service is polite, I can go for decades as a homeowner, dutifully paying my premiums, but never collecting, because I never sustain an incident that merits a claim. The whiff of “Ponzi” comes from the association of some paying but others collecting. Instead of Ponzi, a better analogy is the parable of the prodigal son. The “good” son dutifully stays at home, doing his father’s bidding. The prodigal son collects on his half, then has the temerity to return, and the father throws a feast, welcoming his errant son back to the family. When the good son complains about unequal treatment, the father shuts him up, telling him in effect to count his blessings, instead of begrudging the blessings of others. Insurance, in effect, favors the prodigal son.

The other problem with insurance is that it’s mandatory. At least with Obamacare, one can opt out, paying the fine for lacking coverage, taking the risk. For automotive insurance and homeowner insurance, this generally is not possible, at any price. Short of starting my own insurance company, I can’t self-insure my cars, at any price. I don’t have the privilege of paying an annual fine to the state or county, in exchange for receiving permission to go without insurance.

Lacking insurance, is like a reverse lottery: you save a bit of money every day, in exchange for potentially sustaining a catastrophic loss. Personally, I’d take that bet. I would play a reverse-lottery, where every day the state sells me a $5 ticket, with the understanding that if there is a “winning” number, I might receive a $100M bill for anti-power-ball. I would take this bet, because the expected-value (in the statistical sense) is positive. But there is no such reverse-lottery.
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Old 08-28-2017, 10:00 AM
 
Location: Portland, OR
9,594 posts, read 9,423,079 times
Reputation: 9198
I think the word the o.p. is looking for is "racket".
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Old 08-28-2017, 10:36 AM
 
Location: Saint John, IN
10,638 posts, read 3,311,331 times
Reputation: 12748
Quote:
Originally Posted by Ultrarunner View Post
So wind damage would not be covered?
JONOV said it perfectly above.....If the damage was due just to wind only than that should be covered under a regular homeowners insurance policy, but it would be a fine line if water was also involved. Water damage would need to be covered under a flood policy. So the insurer would assess the damage and only cover the part of the home damaged by wind.


Some say insurance is a gamble. You're paying for something "just in case", but if you don't have insurance and an event happens it could be devastating financially!
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Old 08-28-2017, 12:55 PM
 
Location: Raleigh
6,964 posts, read 5,183,151 times
Reputation: 9390
Quote:
Originally Posted by Hoonose View Post
As the bulk of flood insurance is through Federal agency, there is no set limit on total and overall coverage cost. The debt ceiling can create a snafu, otherwise it is up to we the people and our elected officials how much federal deficit spending to allow.

Texas secessionists might then understand why if they leave the Union, they no longer would enjoy our Federal fiat.
There is a set limit on it though...The policies are ALL administered by NFIP...They cap it at $250K/$100K. The federal government doesn't need to be in the business of underwriting insurance policies for wealthy people that make the choice to live where God can sneeze and blow their house away. I drive around coastal North Carolina and see all of these $1 Million homes that people park their cars under...they have to build way up for hurricanes.

Quote:
Originally Posted by CGab View Post
JONOV said it perfectly above.....If the damage was due just to wind only than that should be covered under a regular homeowners insurance policy, but it would be a fine line if water was also involved. Water damage would need to be covered under a flood policy. So the insurer would assess the damage and only cover the part of the home damaged by wind.
As I understand it, they cover water damage that isn't from a flood no problem. If the wind/hail rips your house apart and the rain ruins it, you're covered. But, the storm surge when the levee breaks? Not so much.
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Old 08-28-2017, 12:58 PM
 
2,923 posts, read 1,707,193 times
Reputation: 1894
the only insurance that doesn't work is health insurance because the govt force them to cover risks that are already known (pre existing condition).


in real insurance, the risks are not known but they know it can happen in the future.
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