Insurance costs are soaring and companies are canceling policies and upping rates. Don’t blame climate change. I address the real reasons for this mess.
Dropped
I had been working on this insurance idea for a few days. The Tweet by Adam drives the message, but only for fire insurance. I added hurricane and river flooding.
There are other flood zones along any major river or low areas. Hurricanes also cause flooding. People need wind and flood insurance in some zones. Judging from the map, some places in Florida are at risk for several reasons.
The link in the above Tweet is paywalled.
Buying Home and Auto Insurance Is Becoming Impossible
The Wall Street Journal reports Buying Home and Auto Insurance Is Becoming Impossible
After Allstate suffered billions of dollars in losses and failed to get the rate increases it wanted, it resorted to the nuclear option.
The insurance giant threatened last fall to stop renewing auto insurance for customers in three states that hadn’t given in to its demands, which would have left those policyholders scrambling for coverage. The states blinked.
In December, New Jersey approved auto rate increases for Allstate averaging 17%, and New York, a 15% hike. Regulators in California are allowing Allstate to boost auto rates by 30%, but still haven’t decided on its request for a 40% increase in home-insurance rates after the insurer refused to write new policies.
Farmers Insurance Group increased home-insurance rates by more than 23% last year for tens of thousands of policyholders in both Illinois and Texas, according to S&P Global Market Intelligence. Nationwide Mutual said it won’t renew 10,525 home-insurance policies in hurricane-prone areas of North Carolina.
State Farm racked up $13 billion in property-casualty underwriting losses in 2022, its worst ever. Last year, it stopped writing new home-insurance policies in California. The state’s regulators last month approved a 20% home-insurance rate increase.
In California’s wildfire-prone San Bernardino County, insurers in 2021 refused to renew 1,355 policies in a zip code that abuts Lake Arrowhead, north of San Bernardino, up sharply from 157 refusals in 2015, according to an analysis by research firm First Street Foundation.
In November, Chaucer Group, a London-based reinsurer, named several regions once considered low risk for wildfires that it said are “quickly becoming areas of concern for catastrophic wildfire insurance losses.” They include mountainous areas between Salt Lake City and Denver, and the Appalachian Mountains from Tennessee to New York.
Another concern is Texas, partly because of increased development on the fringes of metropolitan areas stemming from migration from California, the report said.
Despite some concessions from regulators, insurers are bracing for a tough future. Allstate’s Wilson said that everywhere in the country is at some risk from increasingly severe weather. “There is no place that’s safe,” he said, “and no place that’s not going to be impacted.”
Reinsurers to the Rescue?
Also consider the WSJ report The Insurance Market Is Healing
Going into last year, rising interest rates helped lead to a slower influx of capital into reinsurance, which is the backstop that insurers use to protect against so-called tail risks such as hurricanes and earthquakes. That finally gave the upper hand to reinsurers in pricing negotiations, after several years of seeing their pricing struggle to keep up with the rising losses on global catastrophes. That in turn led primary insurers that sell coverage to individuals and businesses to bear more of their own risk.
Global reinsurers posted a return on equity of 21% on average in the first nine months of 2023, up 18 percentage points from the prior year, according to Fitch Ratings. Meanwhile, primary carriers have cited higher reinsurance costs for decisions such as halting sales of new homeowners policies in places like California. Property-casualty insurers overall are projected to have seen a drop in underwriting performance and returns in 2023, according to Fitch.
Is the Market Healing?
In Florida, the insurer of last resort is now the main provider of home coverage.
Perhaps one can make a claim “the market is healing” but customers facing 30 percent rate hikes likely will not see it that way.
Climate Change Nonsense
Politicians will be all over this story, but none of this has anything to do with climate change.
In nature, fire is a natural occurrence. Decades of fire suppression coupled with decades of accumulation of dead brush created these tinder boxes such that once big fires start, they are difficult to extinguish.
Please note blatant incompetence by PG&E, California’s electric utility.
PG&E equipment has repeatedly been linked to major wildfires, including the 2018 Camp Fire that killed 85 people. PG&E has faced several fines in relation to its connection with wildfires, including a $150 million settlement for the 2020 Zogg Fire. That fire burned 56,338 acres, or roughly 88 square miles.
On top of PG&E and California regulatory incompetence, please factor in home prices
Consumer Price Index Items
Since 2020, home prices are up 45 percent. It’s safe to assume the price of labor fixing things after any kind of storm or fire damage is up even more.
Consumer Price Index Change Since January 2020 Key Items
- Home Prices (Through October): +45 Percent
- CPI: +19 Percent
- CPI Excluding Food and Energy: +18 Percent
- Rent of Primary Residence: +21 Percent
- Food: +25 Percent
Assessing the Insurance Fiasco Blame
- Inflation
- PG&E
- Failure to clear brush
- Building in flood and hurricane zone
- Climate change policy Itself (not failure to address climate change)
If insurance has doubled or tripled or cancelled, blame inflation, regulators in California and elsewhere for allowing homes to be built in flood zones and for not clearing brush in fire zones.
None of this has a damn thing to do climate change. It’s a combination of inflation coupled with poor policies, building in flood zones, and not clearing accumulated brush.
North Carolina
A reader just sent this story on North Carolina: Insurers ask NC to hike homeowners rates by 42.2%
Is Inflation Down? That’s What President Biden Says
To highlight the discussion, I ask Is Inflation Down? That’s What President Biden Says
The irony is Biden’s climate change regulations coupled with his free money policies that are stoking inflation everywhere that’s to blame for this insurance mess, not climate change itself.
Nonetheless, have no fear, this insurance mess will all be blamed on “climate change”.
I’m in CA, and my auto policy has doubled in 3 years, and I’ve been dropped by private insurance for my house, and had to use the state run FAIR plan – the insurer of last resort.
Here in CA, insurance companies are not allowed to price the risk of an area into your policy, and their rates are set by Insurance Commissioner’s office, so in all these fire prone areas, they’d take a loss, so they’re moving out. The state FAIR plan, which has no such restrictions, charges about six times as much for insurance as private companies.
Auto insurance isn’t allowed to raise prices for your expensive to fix EV or whatever. They have to set rates based on average cars in the area. As the average cars get more expensive, and inflation drives up repair costs, insurance skyrockets.
The main cause of these insurance problems, at least in my view, is the regulators trying to “help”. I wish they’d stop trying to help.
I thought the FAIR plan usage has to be temporary. How did the state justify it as your source of insurance going forward into perpetuity?
It’s temporary as long as alternatives are available, but there are no alternatives. I have a policy with Farmer’s which covers most common things, and FAIR underwrites the fire, flood, vandalism, and various other kinds of catastrophic events.
We recently pulled out of Cal. We owned a house in a PG&E area of Northern Cal, near Redding, in a mountain community JAMMED with old brush, dying trees, and generally big issues due to a lack of Tree removal permitting. PG&E was sued over 15 years ago over a lack a even easily accessible lines that triggered wildfires.
Lightning was also a huge issue, so we cannot blame PG&E for more than 25% of those big fires.
One night, I woke up to the auto-alarm Call to evacuate. I looked out my front door and falling flaming building materials were floating into my front yard, luckily which had grass. We already had my RV connected to my Tow Car, and our cargo trailer was jammed with fine art, Business Files, guitars, etc. We pulled out.
The house survived but the surrounding areas were burned up to a ridge below our little town.
We put the house on the market and someone wanted it but it took 1.5 years to lure in a buyer. They still own it but we had HAD ENOUGH.
Mish, You comment on the incompetent Pacific Gas & Electric Utility regarding the wildfires is missplaced.
the blatant incompetence is the Sierra Club, State of California Gov’t and the California Public Utilities Commission (located in San Francisco). The reason is the since the 1970’s and earlier, PG & E would clear cut the path of powerlines in the forest for 150 ft on each side of the power lines to prevent any issues with tree growth. Over time, those requirements were overridden by the CPUC at the behest of the Sierra Club which does not like clear cutting of forests even under the power lines. Since the 1990’s that new growth has finally reached the level of the power lines, and within the last (10) years we have witnessed horrendous fires caused by high wind events causing that new growth to impact the power lines causing fires.
Secondly, during the 1970’s the State of California had (69) labor camps up and down the state performing back-burns, tree cutting and maintenance and maintenance of the access roads to the remote areas in the forests. At that time, the amount of “fuel” on the forest floor was kept to around 1 ton per acre. Over time, the State of California reduced the labor camps due to budget cuts to less that (20). Roads did not get maintained. Overgrowth occurred in areas which would make the access roads not viable. Back-burns to reduce the fuel levels in the forests were not kept up. Within the last 10 years, those “fuel” levels were estimated to have risen to as high as 6 tons per acre.
The combination of the higher fuel loads in the forests coupled with the new growth under the power lines led to the devastation due to forest fires we have seen in the last (10) years. Fire fighters routinely now describe witnessing “fire tornados” which they have never seen before.
In simple terms, when you have that much fuel and it burns that hot, the rising heat load of air rushes to the upper atmosphere creating a huge vacuum drawing in colder air from the perimeter.
The “fire tornado” then is the visual effect of 6 times the normal fuel load in a fire going off at once, and the resulting inrush of air, creating the swirling Coriolis effect on the rising heated air and embers.
So put the blame not on the utility, but on the State Gov’t and the Regulators for their common sense.
You are telling the truth. I agree with you, originally being from Cal. We got OUT.
Finally someone who understands the problem at hand
If we make a list of all the predictions Mish has gotten wrong over the years now, it’s looking pretty long compared to what he got right.
Self driving trucks & cars taking over our roads by 2023: WRONG
Recession predictions # 1-1,000 in the last couple years: WRONG
Brexit would work out well for Brits: WRONG
Hillary Clinton has a degenerative brain disease: WRONG
And now he’s beating a drum about insurance problems being unrelated to climate change, which sounded dumb the instant he said it, like most of those other predictions that were laughably wrong.
You made a good call about housing almost 20 years ago Mish. But you haven’t really done anything since then. Let’s be honest, you realize this and that’s why most of your posts are just hateful political baiting over the last 5 years or so. Maybe it’s time to move on.
“And now he’s beating a drum about insurance problems being unrelated to climate change, which sounded dumb the instant he said it…”
Wild fires are not caused by climate. There was a new record 12 year drought of major hurricanes (CAT 3+) hitting the U.S., after Katrina in 2005.
Climate alarmism is political baiting.
And yet you’re still here reading and commenting – masochistic much? ‘Climate Fear’ is another control / money grift – pull your head out.
As I mentioned elsewhere, this isn’t a ‘climate change’ issue. Among a plethora of causes are:
In the U.S. house exteriors went from being made of solid, durable substances to plastic shells (vinyl siding), leading to enormous increases in claims due to minor hail events.
Replacing a 15-20 y.o. roof with a new one minus the deductible is also nonsensical, but quite a
racketlucrative business for hail-chasing contractors and a money loser for insurance companies.I’m 60 years old. Born and lived my life in Florida. In the first 30 years of my life, Florida was hit by 1 category 5 hurricane. In the next 20 it was hit by 3. In the last 10, its been hit by 5. I don’t see a trend either. We all know global warming is a bunch of BS. This is the Biden administration’s coverup for God’s vengeance for gay marriage or maybe when Obama took everyone’s guns! It’s hard to tell. Gotta watch more in the know geniuses on YouTube!
link to en.wikipedia.org
There have not been that many Cat 5s. More importantly since 1992 only 2 have hit Florida as a Cat 5 (Andrew in 93 and Micheal in 18).
Don’t know what it is like elsewhere but In Florida you can add insurance fraud and litigation costs into the mix. Insurers are pulling out because of it.
I saw a stat where, nationally, Florida accounts for 9% of homeowner claims but 79% of all lawsuits.
Climate is a generic term- CA has grown in size since the 80s and people have migrated to the WUI(wild land urban interface) as the liberal managed cities become hostile and expensive. Just being allowed to live in Paradise, a high fire zone on a ridge with 2 roads out of town, should not be encouraged anymore. The climate in urban areas, political climate, is worse that the environmental. The state is 90% Democrat now and they are incompetent voters. Gavin did many, many backdoor deals with PGE to shelter them from lawsuits and send the cost of their damage to ratepayers. He is scum
California is part of the USA Fascist regime. Gavin, Biden, Trump, Bushes, Clinton, etc. are all slime. This slime has a big impact but we all ALSO bear the blame for NOT PUSHING BACK. The days of Pitchforks have long gone and our complacency is partly on US. I am guilty: too old now.
I was part of the 1970’s anti-war effort but since then, we all went to work and I got too old to want to stand up against Fascism and the deplorable actions of a SCUMBAG In-ON-IT culture – – so corrupt. It is too late, folks, we are DOOMED.
You forgot the other big contributor to inflation – WAR, which the Neocons and globalist Nutjobs are hellbent on making happen for their own nefarious reasons, and will be the excuse for defaults. Yes, gloBull warming will be a scapegoat, along with coronadoom, Putin and Trump.
The “noble” goals of the Mother WEFers includes making us happy by owning nothing. They have many ways of rooting people out of their homes and into 15 min cities. I doubt the homeowning Trump haters even understand that Biden is a puppet of the Neocons and Mother WEFers?
I live in a 145-unit HOA in downtown San Diego. Our risk from wildfire is very close to zero, as the nearest wild area is more than thirty miles away. Nonetheless, our hazard policy went from $70,000 in 2021 to $275,000 in 2023. That is a 292% increase based, they claim, on “wildfire risk.”
I live in town in placerville ca. its unnerving to have the 747 on orbit above your house when the methheads start a fire a quarter mile away. On a 105 degree day in sept wit 7 percent humidity and the last rain was april.
If the winds in the caldoor fire were blowing the other way pville would have been in trouble.
Your area may be different but sometimes all it takes is a lawn mower/ dragging trailer chains or bbq and a city can go.
Be careful out there
SO true, what you are saying. It can be a chain saw hit on a pebble and off it goes.
Can one have Civilizational Death by high insurance rates? Maritime history says yes.
I was dropped in CA too. Saying I am in a fire zone when I am in the middle of Downtown Berkeley. This is a pissing match between Insurers and the Insurance Commissioner
You are in a high-risk riot zone so the chances that your house burns down are high. You also risk of being included in an “autonomous zone” set up by Antifa who will keep the cops and fire department out because they are representatives of the fascist state.
In the U.S. house exteriors went from being made of solid, durable substances to plastic shells (vinyl siding), leading to enormous increases in claims due to minor hail events.
Replacing a 15-20 y.o. roof with a new one minus the deductible is also nonsensical, but quite a
racketlucrative business for hail-chasing contractors and a money loser for insurance companies.my insurance agent said I should buy roofing contractor company
if roof is more than 20 years old they won’t write it
no matter how well you take care of it
Now that many people understand that inflation is compound inflation, and not simple inflation: it reminds me of the famous German physicist, perhaps Claus Fuchs, Otto Hahn, or Heisenberg who said something like: “Compound inflation is the eighth wonder of the world. He who understands it, pays it; he who doesn’t understand it, pays it.”
Off topic- Oh my gosh Mish please listen to me -so tonight in this NFL playoff game tonight- the Chiefs vs the Dolphins it’s so cold -all these black guys think they’re testicals are going to all freeze up as they try to play…..at this point I guess I probably should shut up?
Vote your representatives out and invest in insurance companies. Guarantee a year from now they will be reporting record profits
Hey Mike, this looks like ChatGPT bot spam. Not sure how you protect against this stuff.
Just because I am not a MAGA idiot doesn’t mean I am a bot. Bye!
Bot confirmed.
… but doing something about climate change was expensive.
For those unaware more than half the US population lives in areas protected by levees so are by-definition flood-prone.
Consider the implications of homes that go uninsured. Home prices will have to decrease to a level owners can pay ALL damages out of pocket. Many homes have mortgages, so falling home price means mortgages have insufficient collateral. Mark-to-market prices will be much lower when those mortgages are traded. Banks would the have to raise mortgage rates until they match the risks covered by home owner insurance.
All of this leads to financial instability. Investors would take an impairment to their existing mortgage portfolio. The real estate market would collapse. Many large businesses would also have to close in those high risk areas. Mortgages would have an unregulated insurance component.
Home prices can only decrease to the level it costs to build (materials + labor + land cost). They can’t go any lower than that.
Also repairs are often way more expensive that the original construction (similar to how buying car parts costs more than the car at some point).
So its unlikely homeowners can ever afford to pay all damages out of pocket when a new roof costs 20-40K depending on material and what codes you have to follow.
Disagree. Many homes in my area for sale for under 30k 10 years ago.
Where do you live?
More importantly, were those homes livable or did they need work (ie Detroit burned out specials).
Today in most places it costs 200-300K to build a home given cost of materials, labor and building codes.
“Many homes have mortgages,”
Right. And the banks are not going to allow them to go uninsured. They will procure it at the owner’s expense and they aren’t going to shop for the best deal.
4.1 man-made earthquake in Oklahoma City due to energy drilling techniques advanced in the last 20 years. Keep doing it. Oklahoma city will get earthquakes you only thought would be near a fault line.
link to oklahoman.com
The Earths Lubricating Oil is being pumped out faster than the great Crucible can produce it. I see a spun rod bearing in OK. TX and Bakersfield CA. future.
Just got our USAA property bill and it is up 40%. We live in Santa Fe, NM
didn’t you have big fire in las vegas area
insurers are dropping all policies in zip codes with rated fire issues
I had cabin in mountains of AZ – sold few years back
when I was on vacay in dec in mountains I was in process of renewing
agent said if there is tree within 25′ of building they wouldn’t write
defeats purpose of having property in mountains
now I’ll buy more income property down low and take 5th wheel instead
I can camp in national forests for free(dry camping)
gonna be looking at that very much this summer
Another kind of climate change should at least b considered. Although throughout human history we’ve always had wars, earthquakes, famine and epidemics, as expressed in Matthew 24 and Luke 21, the real difference today has to do with the rebirth of Israel as a nation in 1948 as the major sign of the coming of the end of the age. Evil is on the march as never before here in America and around the world. We know what happened years ago when human behavior got out of hand with Noah and the Ark, Sodom and Gomorrah, silly myths, fables most believe. So with all this darkness the world is currently experiencing, we certainly shouldn’t expect the weather to remain normal. If I’m right about my speculation here, the weather is going to continue to get a whole lot worse.
Then there will be strange events in the skies-warnings, evil omens and portents in the sun, moon and stars, down here on earth the nations will be in turmoil perplexed by the roaring seas and strange tides. The courage of many people will falter because of the fearful fate they see coming upon the earth, for the stability of the very heavens will be broken up-Luke 21-25,26
Since 1948, Israel seems more like the Days of Jeremiah. One cannot just double coupon your way out of this pickle.
Jeremiah 7
The Lord gave this message to Jeremiah: 2 ‘Stand at the gate of the Lord’s temple and speak this message. Say, “Listen to the Lord’s message, all you people of Judah. You come through this gate to worship the Lord. 3 This is what the Lord Almighty, Israel’s God, says: Change the way that you live. Do things that are right. If you change, I will let you continue to live here. 4 People may say, ‘We are safe here! This is the temple of the Lord. It is the temple of the Lord!’ But the people who say that are deceiving you. Do not trust them. 5 You must change the way that you have been living. You must do what is right. Be fair to each other. 6 Do not be cruel to foreigners who are living among you. Do not be cruel to widows, or to children who have no family. You must stop murdering people. You must stop worshipping other gods. If you live like that, it will destroy you. 7 If you change how you live, I will let you live in this place. It is the land that I gave to your ancestors, to be their home for ever.
The Promised Land is no longer a piece of Real Estate, it is Salvation. Not just a get out hell free card type of Salvation, but the Salvation that is the peace that comes from knowing the Almighty loves you; and not just you but everyone.
The Sabbath is no longer just a Day, Week, Month, Season, or Year to rest: but is resting in Christ, and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, The mighty God, The everlasting Father, The Prince of Peace.
Everyone who seeks Salvation in Real Estate will sooner or later be confronted with, Taxes, Insurance, Assessors, Neighbors, Fires, Earthquakes, Moth, Rust, Termites, War, Eviction, Expulsion, Captivity and saving the worst for last: Homeowners Associations.
Fourth turning.
You can’t qualify for a mortgage without insurance. Where’s the popcorn?
PS FAIR plans in most states only offer temporary coverage. If all insurers pull out of a state, home ownership via mortgage can’t happen.
Perfect. Homes will be cheap if they have no mortgage. Without the bank industrial complex homes would be very cheap as correspond to supply and demand.
Or… only upper class incomes and corporations will be able to own property, which they then rent to plebeians. Hmmm…..
Banks may start offering insurance with your mortgage?
They would have to be licensed insurance companies and that may be a conflict of interest if tied to the mortgage.
My friend fell into this exact situation. The insurance company wouldn’t insure her home so the bank provided the insurance at a better rate than I am getting. Banks will figure out a way to keep writing loans.
Take a careful look at the policy.
I was doing this for a few months last summer when I could not get any quotes under 18K a year (which is insane). So I went with the bank insurance. But when you read the policy, it’s only covering them and not you so if anything goes wrong, only they get paid and you get zero (ie if a fire burned down house they’d get paid off mortgage and you’d be left with an empty lot and there would not be a rebuild).
Hey Chris thanks for your comments little buddy. Most of the time I seem to get hammered with my stuff by all these woke assholes, pedophiles and everybody else.
You remind me of the ancient Greek philosopher, Diogenes of Sinope.
Not mentioned: low-trust society, however YMMV based on location.
non-disclosure
concealment
intentional acts
fraud
moral hazard
morale hazard
The forced march to low trust is changing the foundations of society. Nobody talks about this. It’s nice to hear it mentioned.
MAGA is the main driver of low trust in this society.
Stop consuming establishment media, it’s breaking your mind.
There are 1500 houses in the town where l live. Each year, an average of 3 burn down. Let’s say it’s a bad year and 5 burn down. If we put 1495 black marbles in a barell representing the houses that don’t. and then put 5 white ones, one with your name on it in, representing the ones that do, After spinning the barrel, would you pay the equivalent of a yearly insurance premium to draw your marble out.
Even if you drew a white one, you still have a 1 in 5 chance it’s not yours!
Think about it🙂
Someone gives you a gun with 20 barrels only 1 has a bullet. If you don’t kill yourself, you get $15,000. Do you pull the trigger.
Some would.
You are 30 years old in good health. You have a wife and 3 kids, do you not buy do you not buy life insurance? Home insurance? Health insurance?
Maybe you don’t on purpose. Maybe do don’t because you have no money. But I think it is smart to protect against catastrophic loss in most instances.
And if you have a mortgage, most likely you have no choice. The lender will force you to have insurance.
Reply to Mike Shedlock
Nice reply Mike. I’ve thought about it.
Perhaps surviving many years of hang gliding has made me look at things a little differently. The desire to know what it’s like to fly like a bird can have catastrophic consequences, and l had some close calls before l gave it away, but the experience every time l flew was just unbelievably mind blowing and worth the risk.
I am no way a poor man but l believe in being responsible for my own actions in everything l do.
I have never insured a car or a house (since l paid it off) in my life. I am an old guy now.
I live alone, l kinda like it that way, and it means that l only have myself to worry about. That has a great influence on my thinking. Every night before turning in l turn off every appliance at the wall except fridge and freezer.
I sleep lightly, and the slightest aroma of electrical wire burning has me flashing out of bed walking around the house, inside and out looking. (It’s fun). It’s usually the bloke up the road burning plastic off wiring. The price you pay for not paying!😄
Chicago north side. $1800 in 2022-2023, $2500 in 2023-2024. 39% increase, In Chicago. We havent seen a wildfire in … ever.
Well, since 1871.
My Florida vacation home is 2 miles from the beach in Largo. My premiums went up 8, 12, 5, & 13% during Trump and I’ve had one increase of 4% in last 3 years. Is there any financial news you won’t blame on Biden? Seems that’s all I read on here. My insurance is with Citizens in Florida. My Georgia home insurance is with Travel and it’s gone up under Trump by 4% average over 4 successive years and has not gone up over last 3 years. I didn’t blame increases on Trump and don’t give lack of increases last 3 years as credit to Biden.
Have you priced actual insurance in Florida recently?
Citizens is the state insurance of last resort (I’ve been told it’s a nightmare to work with if you have to make a claim). I had that for the first year I owned my house but as soon as the value crossed 500K, Citizens dropped me because they can’t only insure up to 500K (in Broward and Miami/Date it’s 1 million).
I suspect you’d find that private insurance has skyrocketed.
Have a property out in CO and wild fire insurance up over 100% and new insurance will not cover the entire value. I think we only had one insurer that even offered anything. Maybe people will need to assume more of the risk.
People would love to. But as long as you have a mortgage you are not allowed to as the bank will force you to have replacement insurance.
Is replacement insurance a new thing? When I worked in the mortgage industry we only required homeowners insurance equal to the amount of the mortgage – no replacement cost. The banks only care about getting their own money back. They don’t care if you walk away with nothing.
You can always dispute your insured value, at least where I am in Georgia. Tell them you want less coverage and they will sell you what you want.
I tried doing what you said because I have a small mortgage on what is a very inflated house price.
I was flatly told no (Florida) by multiple companies. The reason is if you get say 200K insurance on an 800K home and you get wind or water damage for say 40K of damage, how does the insurance pay out? At a 1/4 (so 10K) or the full 40K. They don’t want to deal with that hassle so you have to get full replacement.
The alternative if you want mortgage only is you get insurance via your bank who then insures for the mortgage value. But at that point you have ZERO insurance if anything happens (ie if home burned down, bank would be paid off and you’d get 0 and be left with an empty lot).
Number of issues here. In California I live close to the ocean and I pay a fortune for utilities to subsidize those that live in the harsher climate areas of Cali. Same thing occurs to a lesser extent with insurance and I don’t enjoy subsidizing wealthy people’s choices to live in a Malibu firetrap or Malibu beachfront prone to flood damage.
As long as jurisdictions are run for the wealthy homeowners by the wealthy homeowners we are going to see zero innovations in housing with increasing home shortages
I remember looking at buying a concrete block and rebar house in Westchester SoCal for a cash deal and realizing it would be hard to sell because no one would write a mortgage on it and it would be hard to insure it because it was non confirming construction. The f’ing place was built like Fort Knox, fireproof and earthquake proof.
On the housing shortage for the poor I don’t see any alternative but having to get the Feds back in the business of building low income housing since they can cut thru local red tape as needed.
“On the housing shortage for the poor I don’t see any alternative but having to get the Feds back in the business of building low income housing since they can cut thru local red tape as needed.”
Dump federal income tax, in favor of property tax. IOW: Stop transferring wealth from those who produce, to idle deadweights who don’t.
Absent the Feds forcing the “reporting” and ratting out of incomes, it becomes much harder for states to attempt doing so on their own. Hence most states will, no doubt kicking and screaming since they’ve largely become bastions of nothing but robbery of productive people for the benefit of “landed” leeches by way of “real estate” “appreciation”, have little choice but to follow suit.
That will very effectively reduce the political clout of the deadweight leeches making up the “real estate” rackets, while simultaneously ensuring that the only way property will be valued enough to fill state’s coffers, is if the state serves as a magnet for productive industry, and hence “good” jobs.
“Dump federal income tax, in favor of property tax. IOW: Stop transferring wealth from those who produce, to idle deadweights who don’t.”
How would this help? The government still needs to raise the same amount of revenue as it does now. So property taxes would skyrocket if there was no federal income tax.
You’d know this if you lived in a State that has no state taxes (eg Florida/Texas). Property taxes there are much higher percentage wise than they are in States that have state income tax. That’s because the cost of civilization is a ‘set amount’ and whether you get that via property tax or state tax doesn’t matter.
“How would this help?”
Because it makes it really expensive to sit on a Ghawar sized oil field while doing nothing other than play polo on it.
Ditto idle patent trolling.
It effectively forces those too incompetent to make efficient use of a scarce resource, to hand the respource over to more competent people, who can make efficient use of it.
More competent usage of scarce resources results in more real wealth. As well as more fair allocation of wealth. As if the two really differed.
A society with a government focused solely on ensuring the dumbest of the dumb,and most incompetent of the incompetent, “owns” hence controls everything; as is the case with all possibly financialised “ownership societies”; will never be anything but a completely useless waste of a basketcase.
Pretty much any valuable mineral land gets quickly sold and not sat on to play Polo. In many states like Texas you don’t even own the mineral rights to your own land so Oil companies can drill there and just pay a small royalty for drilling.
Honestly, I think property taxes are one of the worst forms of tax. It is essentially a terrible wealth tax. “Oh look! You improved your home! More tax for you. Oh look! Your neighbour built fancy house or there is a new fancy development in your neighbourhood! More tax for you!” This is especially egregious considering the home price inflation of the last couple of years.
At least with an income tax if you don’t have an income you don’t pay taxes. You don’t pay more income tax unless you earn more. Property taxes can increase astronomically through no action of the owner.
“Oh! You lost your income and can’t pay your astronomical property taxes? We’re going to confiscate your home for the back taxes.”
I concede that there may be some argument to be made for non-primary residence land tax. This would be with the aim of encouraging productive use of land.
” This is especially egregious considering the home price inflation of the last couple of years.”
Do you really believe Pelosi’s teardown would ever have “appreciated” to $30mill, with 20% property tax and the dollar at $20/oz? The “appreciation” you mention, is exactly a pathology stemming from the fact that someoene other than Pelosi has to pay to protect her ownership of her shack.
The fundamental reason property taxes work; while the rest, from activity(sales/income) to debasement taxes, are nothing other than arbitrary theft and shakedowns; is that the service government renders, is specifically protection of property. Not of sales. Not of income. But of property.
Not just real property. But also ownership of other property, like machinery, cars and organizational structures/corporations, as well as “intellectual property.” But all property nonetheless.
It is NEVER efficient, hence never works, to charge for a service other than what is actually being delivered. If you buy a car, nothing other than you paying for that car, is efficient. It makes no sense in the world,that instead of you paying for the car, your next door neighbor instead has to pay the cost of your across the street neighbor’s hot tub. The sole and only function of such inane hairballs, is to make it easier to cover up theft.
Taxes are no different. Protecting property is not free. It costs government, even a legitimate limited one, A LOT: Courts,record keeping and police being the most obvious. But also infrastructure enabling police,as well as you, to get to your property. Military protection to prevent foreign invaders from simply overrunning national cops and laws. As well as the cost of maintaining a society where others have other opportunities available than stealing your stuff. All that, and more, are costs incurred in order to protect your property.
It makes absolutely no sense in any possible universe, that someone who has property he wants protected, does not pay for it. Such that, instead,someone who do not have any,has to be forced into slave labor to do so.
For an “average” person, most of the time, in a functional society, the practical difference between paying nominal income tax vs property tax, may not matter much. If roughly the same amount is collected, it’s sort of a wash.
But things get completely lopsided, when the Spanish Crown grants ownership to all land making up current-day Argentina to some arbitrary Jose. Who as a result, has no need to earn any income. While the other millions of people own nothing, yet are still forced to pay income taxes on their sharecropping income. And ditto, when the US Fed similarly hands ownership of all land and corporations to an arbitrary gaggle of middlebrow “investors”. Who again earns no so-called income even remotely close to what the property they were thus granted is “worth.” In both cases, you end up with indentured slaves paying taxes on “income.” Taxes which are then spent on property protection for idles leeches.
And then there is efficiency: By making payment(tax) completely unrelated to the service rendered(property protection), everyone has an incentive to lie. Understating income(lower taxes), and overstating property(cheaper access to credit). So you end up “needing” a full on STASI-levels-of-intrusiveness spy organization, spying on every American individual and organization. As well as encouraging some Americans to be ratting out others. Disgusting, to say the least. And also grotesquely inefficient: For every penny collected, another 30 whatnot cents are wasted simply on collection, tax-avoidance,planning and minimization etc.
Whereas with property taxes you pay for what you receive: If you don’t tell government you own patent X, then government simply won’t enforce it for you. But instead do so for whomever _is_ telling them he owns it, and hence paying for the protection. No spying, ratting out, STASI like IRS “audits” nor any of the sort required. Just you paying for the service you receive. You would think the benefits of that would be obvious to anyone.
Honestly all of that can be done through the private sector. This already happens in some places where the police are inept. Sure, the military would be different. BLM has kinda shown that protection of property doesn’t seem to be their focus.
Guess you don’t do a lot of real estate valuations. Lots of motive to lie as well and even then they can be off by 50%. Now you want the government to determine valuations? Have you seen the bubble in property that Bernanke et al have blown? Even in Texas and other high property tax rate locations? Far outpaces salary gains.
Sorry. Bit hard to follow. But if the next door neighbour’s hot tub increases the neighborhood’s valuations, then everyone in the area is paying more. Let’s replace hot tub with swimming pool.
So no. Your arguments are not convincing. Neither have you addressed the inherent stupidity of property taxes I have outlined in that people, through no action on their own, suddenly have to pay significant increases in taxes due to a neighbours improvements or some new development. Perhaps their neighbour got a really good price to sell their home. God forbid they renovate their own home! That is a permanent increase in taxes.
Guess you like disincentivizing people improving their homes or neighbourhoods.
You’re also punishing people that would rather build themselves a nice home instead of partying, travelling and buying junk. “You will own nothing and be happy” comes to mind.
“Honestly all of that can be done through the private sector.”
And then, the one paying will have to be the one receiving the service: The property owner. Not some random other guy which just so happens to be selling lemonade three zip codes over.
Or do you reckon a private record keeping company should be running around forcing random people around the country to pay them “income taxes”? Just so they can avoid charging a fee to the ones they are rendering service to? And if so, what if those random third parties tell the private company to go stuff it, as they rightfully should?
“Now you want the government to determine valuations?”
Nope. No magical-mystical-special-snowflake-person “determines” “valuations” in free markets.
Instead: You let the government know what something is worth to you. Then pay 15%, or whatever, of that value. If that something is worth more to someone else, he’ll buy it off you. You’ll both be happy. You get more than your property was worth to you, and he gets a property worth more to him than what he paid. Just basic, econ101 free trade. Then: He’ll be paying 15% tax on what the property is worth to him. No arbitrary, made up, “valuations” required. Just bog standard, straight forward free market trade.
The whole made-up-“valuations” racket, only exists specifically because there is no free market, and because of the artificially enforced disconnect between the service rendered; protection; and who/what is paying/paid for it. No such nonsense exists in markets which are even remotely free.
“But if the next door neighbour’s hot tub increases the neighborhood’s valuations, then everyone in the area is paying more.”
Only if “everyone” now feels their property is worth more to them than before. In a free society, noone is ever in any position to tell someone what a piece of property is worth to him. What value he puts on a piece of property is up to him and him only.
“Guess you like disincentivizing people improving their homes or neighbourhoods.”
Not at all. But if you do stud your house with diamonds and decorate your yard with gold coins, in the process attracting every band of thieves on creation; why should anyone other than yourself be paying for the additional security required to protect the now gilded shack?
It IS more expensive to protect Fort Knox than a city dump. More valuable things do cost more to protect than less valuable ones. In free societies, that additional cost can only ever be borne by the guy who wants his more valuable thing protected. Not just random third parties robbed at gunpoint by some omnipotent,totalitarian government.
“You will own nothing and be happy” comes to mind.”
Anyone can be happy with whatever they please. What’s important is that noone, ever, should be forced to pay for the protection of anything which is not theirs. If you own nothing, hence require no protection service: In a free society you don’t buy any. Hence don’t pay for any. That’s what’s important. Not making up ever weirder and more contrived rituals which never, ever, amount to anything other than forcing some people to pay protection for stuff they do not own.
Valuations are essentially “expert” opinions that are paid for. That you are of the opinion that such “No such nonsense exists in markets which are even remotely free” is a sign that you don’t know what the free-market is and leads me to believe that you have forgotten what it is to be, or never have been, a first time property owner. Even if you just asked some “friends or family”. I’m sure insurance companies would also appreciate independent expert valuations.
It is a bit concerning that you don’t see how the first statement does indeed cause people to be reluctant to improve their homes. What if they did home improvements but also added security features such that their risk exposure stays the same? The risk to the protector is still the same but the valuation has, in all likelihood, increased therefore the taxes as well.
Anyway. I find your arguments contradictory and unconvincing. I doubt we’ll make any further progress so I’m stopping here.
Enjoy the rest of the day and have a good week.
“Valuations are essentially “expert” opinions that are paid for. That you are of the opinion that such “No such nonsense exists in markets which are even remotely free” is a sign that you don’t know what the free-market is …”
Since “expert” opinions is what sets the price of oil, porkbellies, tennis socks and all…..
An insurer may well have a different opinion wrt the value of an insured object than what market bidding settles on. Nothing wrong with said insurer choosing whether to insure or not based on his own opinion. But as far as government charging person A, arbitrary “expert” opinions simply opens up for pure, arbitrary shakedowns.
“What if they did home improvements but also added security features such that their risk exposure stays the same?”
And, pray tell, how would that be determined? By another arbitrary “expert” opinion? Coffee grouts? Or whatever other purely situational arbitrary nonsense, that some logically challenged indoctrinate can be suckered into falling for?
Rational people always improve the security, of ALL their stuff, up until the point where further security enhancement is no longer worth the cost. To Them. While, as well, how much effort they are willing to put in, in order to obtain/steal other people’s stuff, is determined by how valuable said stuff is.
In government-monopoly-on-force societies, theft is not primarily about physically grabbing something. Instead, it is done by way of courts, by way of lobbying for taxes, by way of lobbying for regulations, bans, mandates, “improvements” paid for by others etc…. All of which become more attractive to engage in, if the property in question is more expensive, rather than less.
Hence, as long as property protection remains a monopoly rendered service, there is no “better” algorithm some arbitrary “expert” to can apply, which will yield a more accurate estimate to “how expensive is property B to protect”, than simply going by the market price of B.
Sure, if property protection was as free market, as in pure anarchy, you could get a more accurate assessment. But with government, and courts, a monopoly: Market price is the only independent assessment you have, regarding how valuable something is, in sum, for the total body of all possible budding thieves. Hence how much total effort, across all possible mechanisms, thieves are willing to put into acquiring it. Hence how much estimated effort will be required to protect it.
And a proposed solution: move to Midwest but away from the tornadoes’ paths and higher, away from rivers.
Live in Wisconsin, no claim in 35 years, storms actually seem less prevalent, nowhere near tornado alley, huricanes, earthquakes, mudslides, forest for forest fire and am on high ground…insurance up 27 percent.
Disregarding the religious argument of man made climate change, which is not accounting for 27 percent more claims, it just seems to me that the issue is massive inflation in housing costs, materials and labor which can be smoothed away by the Fed and BLS to appear lower but when the rubber hits the road and real claims generate a real need for economic activity the true inflation must be paid. That is this is mostly an inflation/housing inflation phenomenon coming home to roost. Build bigger, more expensive houses, full of bigger better appliances and furniture, bought on credit…. well the insurance company is taking on that much more risk, regardless of climate sideshow, fueled by the debt holding homeowners sitting on 50-150 percent inflated values of late.
It’s a man made problem, just mostly a fed fueled financial one yet again. The timing of this coincides with the case schiller chart and proper inflation numbers moreso than any superimposed hurricane chart.
How many people here have made a home insurance claim recently (last 10 or so years)?
I had never made an insurance claim (home or car) in my life until a few months ago. At that time we had some water damage in the house. My Laundry room is on the 2nd floor and we had a leak when installing new washer/dryer. The leak caused the ceiling in the room below to be become water logged and it also ran down the walls and into the flooring (laminate) so that it became water logged (squishy when you walk on it).
We called water mitigation to come dry out the ceiling/floors/walls immediately and then the insurance company. Their adjuster came out and looked things over and I was absolutely stunned at what he said had to be done. Here’s what they said has to be done:
1) Replace the entire floor on my 1st floor of the house
2) Replace all the trim on my 1st floor
3) Paint all the walls the 1st floor of my house
4) Remove all the popcorn ceiling on the 1st floor of my house
5) Remove half the floor on the 2nd floor of my house
Why you ask? Because insurance is replacement insurance. That means they have to make the house look EXACTLY as it was. So while you or me would just fix the room with the damage (re-drywall the wet walls, replace floor in 1 room, fix ceiling in 1 room), insurance has to replace everything because even if you match the exact flooring (or paint) it won’t look the same (fading, usage etc). So they have to replace 100% of everything to make it all match again. So the total for them is going to be over 100K vs 3-4K if someone was doing it themselves!!!!
That’s why insurance costs are to the moon and insurance rates are skyrocketing on homes and autos (they do the same there I was told).
At lot of this is driven by how modern homes put the exact floor in all rooms (if my 1 room with damage had a different floor than the rest of my 1st floor they’d only replace that floor. That’s why only half my 2nd story has to be done because the other half is carpet and a ‘different floor’ so they don’t replace).
At some point insurance companies are going to have to stop with the ‘replacement’ insurance feature and go with ‘reasonably close’.
I’ve owned a home for almost 20 years and I have never filed a home owners insurance claim. I live in an area that’s relatively free from severe weather. Earthquakes are extremely rare and wild fires aren’t an issue.
In my area it is the government regulations that stipulate what has to be replaced. It might depend on the coverage, but wall or ceiling paint isn’t something that has to be replaced.
“At some point insurance companies are going to have to stop with the ‘replacement’ insurance feature and go with ‘reasonably close’.”
Not until housing is cheap enough that the owner has a huge cushion before lesser-than-replacement repair may threaten some bank’s collateral security…..
In a free market, most houses wouldn’t have near any debt attached. Hence the owner could self insure, or sub-replacement-insure. IOW, the owner could act rationally. But not in the current cardhousonomy, where anything less than as-new, could threaten some oh-so-precious bankster’s collateral.
Mike, there is one more factor in play, at least for Florida: increased rates of litigation and disputes, all thanks to Public Adjusters and lawyers finding out that when in litigation, insurer will rather go for a compromise than spend way more money in court. There has been an explosion in the number of Public Adjusters and attorneys ”accompanying” claim adjusters.
Yes, I meant to mention litigation costs.
Thanks
The leeches which are draining America, are all in a symbiotic relationship: Ambulance chasers, “insurance” racketeers, “finance” halfwits, “regulators”, “investors”, “realtors”…….
An entire army of nothing but useless deadweights. It’s hard to imagine anyone would be surprised to learn that; having to pay all these negative value add nothings to live in unearned splendor; American people can hardly afford roofs over their heads, while American companies can’t afford to simultaneously pay salaries AND price their output competitively.
You can’t simultaneously transfer trillions a year to useless leeches, without the costs of doing so affecting both your living standard and your competitiveness. And that’s without even getting into higher order effects, like handing useless deadweights all wealth, also result in said useless deadweights being handed all power to allocate scarce resources…..
Excellent truth here, Mike. The fraud of trying to tie this all to “cliiiiiimate chaaaaaange” is strong. In SW Oregon we lost 2300+homes and businesses to the Almeda Fire in September 2021. This was triggered by an ARSON FIRE set in a 60 mph wind event. (still unsolved, BTW) This truth of the fire is rarely reported or acknowledged. Hey, you gotta’ keep sucking excrement from the Green Agenda cloaca. Grant stream funding, don’t cha’ know.
The government will just bail them out anyway. “Too big to fail”.
One item everyone overlooked is interest rates.
The insurance companies take your premiums and invest them now to pay later. They have been heavy investors in the bond market in the past. With rates close to zero or even negative, taking inflation into account, that help is diminished. so ratepayers shoulder more of the burden
Insurance if a rip off. A fine if you are a debtor. Get a cheap place for cash and fix it up instead.
I’ve been saying the same thing that Mish laid out above for the last two years when friends and family gripe that thier insurance premiums have gone up. They often blame the company. I gently remind them that the cost of labor and materials to fix damage are way up as is the cost of cars in general should your car be totaled. Couple that with increased risks of natural disasters in certain areas and you’ve got yourself skyrocketing insurance rates.
My advice on lowering your insurance rates is to shop around and/or tinker with your deductible (i.e. increase it) if you can afford it.
Shop all your insurance, every year. Increased competition drives rates down.
When you change insurance companies too frequently eventually you’ll get insurance companies that won’t insure you.
Here in FL insurers (those that haven’t already left) are demanding that homes with a roof that is more than 12 years old be replaced or the policy will be cancelled. Most homes in my upper-echelon subdivision have roofs that were rated to last 25-30 years or more and can cost anywhere from $60,000 – $100,000 to replace.
We do not have a mortgage and self-insure so this is not an issue for us now – but it will be when it comes time to sell.
So actually in FL your house very likely is not really “worth” what you think it is. It is actually worth what you think it is MINUS the cost of a new roof.
Seen the same here in south Florida (West Palm area).
More and more people opting for metal roofs so they never need replacing.
Roofs in our subdivision are concrete tile and run $60,000-$100,000.
Metal roofs cost even more.
What kind of HOA do you have that requires roofs that are that expensive. Or do you have massive 1 story homes with a giant roof footprint?
If I google around for average metal roof cost in Florida it comes in at around 20-30K.
The net of all inflation factors appears to be near 40% when insurance companies do the sums. Thank Jerry Powell for that. Put a plug in the money supply and let the interest rates fall where they may. Yes, there is no chance of that. The debts cannot be paid. What can’t be paid won’t be paid. Inflation is default on debt. As dollar value approaches zero the nominal price of sound common stocks approaches infinity. The stock market will boom. The nattering nabobs will squeal inequality.
Paying investors and cutting corners on risk and quality is what’s wrong with the world. Look at every company that deems investors more important than the quality and / or risk of their markets or products and you will eventually get catastrophic failures. Boeing is exhibit A. But this also applies to the insurance industry, banks and a whole host of other companies in all industries
Every time a commenter says “blah blah is what is wrong with the world” I know I’m reading random NPC thoughts.
If you think it’s bad now wait a few years. The biggest contributor to climate change is the demand for meat and the animal farming. Humans are destroying the planet to be sure in many ways. The payback will be severe and happen a lot more quickly than most think. Covid was a virus that percolated and became more resistant due to a warming planet. The era of planet stability peaked at the millennium.
Every Time A Civilization Reaches The Pinnacle Of Its Decadence, We Return To Restore The Balance
You lost me at “Covid was a virus that percolated and became more resistant due to a warming planet”. No gain of function, right?
Gain of function cannot explain how a cold virus became a pandemic.
Discontinue the lithium. If globaloney warming exists, and it is as unlikely as unicorns existing, it is because Bill Gates owns four private jets.
I had steak tonight. It was scrumptious.
More likely Covid leaked from the Wuhan Institute of Virology.
I live in an Orlando suburb. We’ve been hit with hurricanes or their passing effects. Usually roofs are the issue, but their was flooding in 2022 with 20″ of rain dumped by Hurricane Ian.
I had a leak in my 16 year old shingle room 3 years ago. That particular roof was put on after Hurricane Charley. We lost about 1/4 of our shingles. We experienced a leak on that roof near our chimney 2 years ago. Adjuster said roof was failing due to windstorm damage. I think it was more of the natural aging process, but my insurance company paid for the full replacement ($18K) less $500 deductible. So I get a brand new roof for $500.
I am happy that the insurance company picked up that bill. I paid for that coverage, but I don’t think it was really fair to the insurance company. I think there should have been a depreciation schedule for the value of the roof…similar to car insurance.
My insurance was dropped 2 years later because the insurance company pulled out of hurricane prone states. To obtain reasonably affordable coverage for a new policy, I increased my normal deductible and also specific hurricane deductible. In our area, to obtain new coverage, your roof cannot be older than 10 years old. Also, many newer policies are having a depreciation schedule kick in for roofing costs. On my current policy, my new roof is covered for full replacement value for the first 5 years after installation. Depreciated values apply after that 5-year time frame.
The global climate has changed over the last decade, even. The world is much hotter than it was, and this is just an irrefutable fact. Trying to deny this is just partisan obstinacy. Now, the causes of sea level rise and astronomical SSTs, etc. can be debated but what’s the point? The conversation need to shift – soon – to what can be done to adapt. It’s too late for emissions goals, or for subsidizing renewables and EVs. People need to move away from at-risk places, or accept the full risk themselves. No more FEMA support or rebuilding sand dunes with federal money. No more federal flood insurance rebuilding the same house 4 times. Anyway it looks to me like the “free state of Florida” has the right idea – no poor people can afford homeowners insurance anymore, so one good storm will take care of that problem. Look what happened in Ft Myers Beach last year. Poors gone – in an afternoon! Ain’t capitalism grand?
“The science” is fake and you are hallucinating.
The CA politicians are in bed with PG&E. Jerry Brown, the governor prior to Gavin Newson, sister sat on the PG&E board. PG&E is one of the largest contributors to Gavin Newson’s wife (first partner) Jennifer Newson feminist film company Girls Club Entertainment, contributing so much that PG&E was listed as associate producer on 2 of her never seen film productions. Gavin Newson and the democrats passed laws in 2019 to provide PGE indemnity for their responsibility in the wildfires they created
I think that you have climate change stuck in your head. I have lived in California for most of my 68 years. The climate is changing. It is a contributing cause along with increased building in rural and wildland areas.
I have done a lot of work for PG&E and private overhead power lines. I think that California is making a mistake holding PG&E liable if they have installed and maintained their power lines according to G.O. 95 (California Public Utilities Commission General Order 95) which governs overhead power lines in California. PG&E was and is required to follow this design “standard” and if they do so and there still is a problem then perhaps the damages should be put on all rate payers. California also needs to look at changing G.O. 95 to make it safer. Overhead power lines will cause a spark if something either comes between the two conductors (such as a large bird or a branch) or the two conductors touch (as can happen with extreme windstorms). A solution to much of the problem is to have increased clearances between overhead conductors and adjacent trees and to have wider separation between conductors (and/or shorter distances between poles or towers). Other options include undergrounding of power lines but that is typically over 20X as expensive. In any case everyone needs to realize the ratepayers will pay for it.
I have also lived in CA most of my 70 years and I disagree. PG&E provided minimal maintenance for 25 years instead paying bonuses while increasing rates and investing in ridiculous wasteful green energy projects
You’re not thinking this through, Steve. Investing in ridiculous wasteful green energy projects is REQUIRED by the Public Utility Commissions via state administrative rules. Same thing here in Oregon. No utility wipes its behind without approval by the PUC’s.
If PG&E didn’t maintain their system to G.O. 95 (and other California requirements) they should still be held responsible for any failures caused by lack of maintenance. What I am saying is that PG&E should be given a clear direction on what they can do to avoid certain liability. You can’t have hundreds of thousands of miles of distribution and transmission lines through rugged property with tinder dry vegetation and not have some issue pop up even if it was designed/maintained to standard.
And the PUC is technically incompetent. They are a lot more concerned with energy subsidies to low income households and their preferred energy sources than they are about a stable, economic supply of energy. G.O. 95 is sort of a joke, it is as if someone translated the NESC (National Electrical Safety Code which is the overhead line standard for most other states) while on LSD.
PGELower natural gas prices so far this winter will result in lower gas commodity costs on your bill.
As part of our commitment to a safer and stronger energy system, we are focusing on the critical electric and gas initiatives that will make our infrastructure more climate-resilient against the growing effects of extreme weather, like more powerful storms and hotter temperatures.
Our major actions that are helping build the more reliable and more resilient energy system you deserve include:
• Undergrounding powerlines
Undergrounding powerlines nearly eliminates wildfire risk, keeping your community safe for years to come. Undergrounding also permanently eliminates some of the annual costs for vegetation management and maintenance.
• Investments in multiple layers of wildfire safety
Delivering multiple layers of protection to reduce wildfire risk from PG&E equipment by 94%*. This work includes strategically moving lines underground, and other essential actions such as installing stronger poles, covered powerlines, and safety-power shutoffs.
• Grid capacity and resilience
Continuing to invest in more innovative solutions to prepare the grid for new technologies that will make energy service more reliable for everyone, while supporting a future with more electric vehicles and battery storage.
• Gas safety
Investments that will maintain our gas safety performance, one of the best in the industry.
These actions will make our communities safer for generations to come. Across all our efforts, we are also focused on delivering this important work safely at a lower cost. For example, we’re applying for federal loans and grant programs, and entering into public-private partnerships, all to reduce costs by hundreds of millions of dollars.
Commitment to Transparency
As part of our commitment to transparency, we also want you to know that the state regulatory process for determining January 2024 rates is complete and we want you to have more details on how this change in rates will impact you.
How will my bill be impacted?
The chart below provides a range for how your bill may change starting in January 2024. These estimates include the lower natural gas commodity prices this winter compared to last winter.
On average customers in your area use 426 kWh of electricity and 47 therms of natural gas during the month of January.
To help you understand what the rate increase means to you and your household, use the chart below.
Low usage
250 kWh for electric +$13
33 therms for gas +$3
Medium usage
500 kWh for electric +$32
50 therms for gas +$6
High usage
750 kWh for electric +$51
70 therms for gas +$9
•Shows change compared to previous rates as of October 2023 for electric and December 2023 for gas
•Actual impact will vary depending on your usage and any programs you may be enrolled in
•Includes the California Climate Credit
On average, residential rates for services provided by PG&E to Direct Access and Community Choice Aggregation customers would increase by 24% compared to current rates. Check with your provider to learn how this would impact your overall bill.
It really doesn’t matter that you think climate change isn’t driving up risk, the insurers do and they are the ones putting money on the line.
In CA the another cause was installing an insurance commissioner in 1985 that held rates significantly down from where they should have been. Yes the insurance was cheaper so do you want “Affordability or Accessibility”?
Interesting to say climate change isn’t driving up costs. Without disagreeing with any of the other cost drivers you mention I think it’s much more likely that the climate is changing and that that has consequences than that there is no change. Insurers agree, and aren’t the only ones (farmers are changing what they plant, water management is seriously impacted, ski resorts are dealing with less snow as just a few examples). Arguing that we shouldn’t spend to try to avoid climate change is one thing. Ignoring its effects is another entirely.
Very minor role. Insignificant to everything else.
Climate has always changed but the environmentalists are against thinning forests, any logging, clearing brush or any reasonable proactive measures that would have mitigated the extent of the issue
You are 100% correct.
My dad had a logging business for 30 + years. He was hired to go in and selectively harvest older hardwoods leaving the young to moderate aged trees alone to replenish the forest. Around the time he got started he harvested a neighbor’s property. Ironically his last job before retiring was that very same property over 30 years later. The forest had completely replenished itself and was ready for harvest again.
If man doesn’t clear the old and dead stuff out then mother nature will, often with disastrous consequences.
In Cali it was some controlled burns that triggered massive wildfires with attendant legal exposure that really f’d up sensible wild vegetation management. When I was a kid on the central coast of Cali I was told to go out with a flamethrower like contraption and burn any potential fire fuel before it got too dry in the late spring
North Carolina insurance industry proposes average 42% homeowner premium increase | AP News
Here in NC, just last week they approved a 42% increase in insurance rates.
42%!
I am just going to pass those costs on to the tenant. I won’t be paying them on anything except my primary resident, which I have a very high deductible on and an extra 300 bucks a year won’t kill me.
I fix pretty much everything myself.
It’s the lower income people who will get hurt by this the most, as always.
FYI you seem to have a load problem on the blog. It keeps refreshing the page without displaying over and over again. It stops if you switch off to another tab likely meaning there is probably a script event that stops causing a problem when the onblur event triggers.
Yes, I have a known issue
Thanks
The store of value for 5,000 years vs the government debt-based paper with ink on it is coming to a crunch looks like. “Anything that can’t go on forever won’t.”
“For a fiat currency over-owned by foreign interests, the inflationary implications are potentially catastrophic for the dollar.
The dollar’s suitability as the international medium of exchange is already facing a challenge from gold, to which the Asian
hegemons and their growing band of supporters in BRICS and the SCO are turning.” (Now with Russia leading the BRICS!)
link to goldmoney.com?