J. Robert Hunter is now planning to come out of retirement.
65% on condos is a much smaller dollar amount than single famly dwellings. Worth keeping in mind.
I assume that the average condo owner has a much tighter budget than a single family dwelling owner, so that 65% will be meaningful to them.
Mmm. Maybe? I largely associate condos as second/vacation homes. Geographic disposition to the coast could definitely lead me to be biased there though.
Yeah, youâre probably right. I couldnât find any figures, but I imagine quite a few are second homes and many would be rented out. Still, 65% is 65%.
I was thinking the opposite, but Iâve spent most of my time in areas where condos are âlike apartments, but you buy into them, rather than rentâ.
My next home will probably be something like a condo, since Iâm getting to a point where I donât want have to fuss with exterior maintenance.
No doubt true. Didnât read the article, but also when the last increase took place is also an important point. If itâs been several years it might make more sense.
I agree with the definition. Just what Iâve been directly exposed to locally is either vacation/rental homes, or older folks with similar thoughts on physical labor and yard maintenance.
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âŠwhereas I spend time with people from NYC, Toronto, and MontrĂ©al, where multifamily housing units (apartments, condos, duplexes, etc.) are very common.
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Remember condo insurance isnât covering the building(except for a very nominal amount)âŠthe premium dollars are very low compared to a policy on a comparable valued house.
Apparently HO pricing articles are generating clicks for the WSJ, because theyâre running another article that has no surprises for P&C actuaries. (free link)
https://www.wsj.com/real-estate/rising-insurance-costs-start-to-hit-home-sales-d8787f0f?st=0nt14l9bpq2mxby&reflink=desktopwebshare_permalink
This article also brings in flood insurance pricing:
More from the wsj:
https://www.wsj.com/personal-finance/americans-are-bailing-on-their-home-insurance-e3395515?mod=hp_lead_pos2
chatgpt summary
Homeowners in the US are increasingly opting to forgo home insurance due to rising premiums. Some believe the likelihood of a disaster is low enough to justify not having a policy. The national average for home insurance based on $250,000 in coverage has risen by 20% from the previous year. Some wealthier homeowners feel they can afford to rebuild or relocate without insurance. However, not having insurance poses significant risks, as it could lead to financial devastation in the event of a disaster. The trend of skipping insurance is more common among those who own their homes outright, especially those without mortgages or who have inherited properties. Around 12% of homeowners in the US donât have homeownersâ insurance, with half of them having annual incomes below $40,000. For those with mortgages who lack insurance, lenders often purchase more expensive lender-placed insurance. This rising cost of insurance is affecting existing homeowners and potential buyers. Some are unable to afford homes or qualify for mortgages due to higher insurance costs being factored in. Wealthier individuals are finding creative solutions, such as setting aside funds to cover potential repairs or investments.
Iâll walk back my previous condo comments I guess:
I expect quite a few retired folks in those Villages to have to leave Florida as it will become unaffordable for them.
How high would your insurance have to be to make it worth it?
Even if your insurance is $6k on a $600k home then that would still take 100 years of no claims to make back your money. If the odds were that you would go 100 years without a claim then there would be more insurers in your state.
JoeJam,
You are not a P&C guy, it seems. Amiright?
You can easily have a 1.2M claim on a 600k home, when you also account for contents, appurtenant structures, and additional living expenses.
I am actually a P&C guy, I was responding to the WSJ article discussing how people were foregoing insurance to save money and I was wondering aloud why anyone would think it is worth it since it would take you 100 years claims free to make back your money.
Do they no longer use utility theory to teach whippersnappers why insurance makes sense?
Generally, rational decision makers will prefer the certainty of a small expense to the risk of a huge expense.
Rational decision makers will generally prefer a certain small expense that is greater than (odds of loss)*(loss size).
The question is whether homeowners premiums are reaching the point where people might prefer taking their chances. I donât think weâre there yetâŠbut we are likely in the gray area where people disagree because they underestimate the risk.
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Or are P&C insurers and actuaries losing sight of the insurance principle by modeling risk to such a degree that high risk people that used to be subsidized by society because we had broad risk categories are now actually reaching the point that they can choose to maybe lose their house to a storm or definitely lose their house because they canât afford insurance + mortgage + other expenses?
The principle of insurance is not to subsidize high risk with low risk. That may be the principle of social programs. Insurance is to price for high risks as precisely as possible, and low risks as precisely as possible. People with bad luck are subsidized by people with good luck, but bad risks are not supposed to be subsidized by good risks. Itâs like saying drunk drivers should be subsidized by careful ones.
If people buy houses by the water, they need to pay more for flood risk and hurricane risk. If flood risk suddenly becomes unexpectedly much larger AND the people involved are low income/assets, a government program may be indicated to buy people out of their high risk homes. If people knowingly bought high risk homes or the people involved are high income/assets, they should pay for their own choices.
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I donât think of the homeowners insurance affordability question today as one of high risk individuals, but high risk locations.
I remember when State Farm exited Florida in 2009, that was fairly big news but I donât recall any sort of mass exodus.
In July, State Farmâs Florida unit filed for an overall statewide homeowners insurance rate increase of 47.1%. The request was rejected on Jan. 12 by the state Office of Insurance Regulation, the insurer said.
But now in California and Florida and there are lots of big names that are probably being denied the rates they think they need, and it seems they are prepared to walk now. Well, in Florida a lot of them have already walked, and now the State of Florida wants to walk away and has to court new carriers. I think itâs just an excessively long underwriting cycle that is finally turningâŠ