i forget if there are limits as a % of Coverage A, but there is typically also debris removal as part of the coverage, isn’t there?
Checking my State Farm policy … 75% of coverage A with replacement cost … good. Personal Property used to be coverage C and I think we referred to it that way still when I said goodbye to the farmowners line last year. had no idea it was B but looking at my policy evidently structures don’t get their own letter now.
I totally don’t buy the commissioner’s argument. It’s true that anyone having their house burn down would be very stressful, and it sounds like there are procedures in place to follow. Just because your whole neighborhood burns down, that doesn’t seem like any sort of reason to try to bypass typical procedure and unfairly enrich the policyholder.
Typical California trying to take take take. And if you don’t comply with their request? Are you going to end up on some secret DOI blacklist? Insurers should be increasingly maneuvering to lower their presence in the state with every word the commissioner speaks.
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The Commissioner would be well-served to be taking the opportunity to remind constituents that it’s a good idea to maintain an inventory of valuables, and periodically walk through their house making a photographic or video record of their belongings.
It’d be one thing to remind insurers that they don’t necessarily need to “torture” claimants – there should be enough data and analytic tools to estimate a typical contents value; it should be possible to turn that into a standard offer where an insurer ought to be neutral about making it vs requiring some sort of an inventory. Heck, I think it would be an appropriate use of a commissioner’s power to prod the industry to develop tools to facilitate less cumbersome settlements. But a “just pay limits” call is little more than a politician thinking ahead to their reelection campaign.
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I don’t see how “all your neighbors are in the same situation” makes filling out those forms any more stressful than it usually is. But i gotta say, the one time i filed a homeowners claim, i found it so stressful that i walked away from the claim and have been dissing Allstate ever since.
I had a backpack stolen from a parked car. I wrote up an inventory of what was in that suitcase. (The backpack itself, 7 tee shirts, 9 pair underpants, 11 pair socks, 2 jeans, 2 shorts, 1 wool sweater, 1 pair hiking boots …) The claims adjuster asked me the age and original price of every item. I said I’d purchased replacement cost coverage, and couldn’t i just submit the receipts of replacing the stuff? He said no, i needed this information. I asked if he could help me estimate those costs. He said no.
I had no idea what I’d paid for any of it. The most valuable item had been a gift. How old was my underwear? Damned if i knew. And i was still feeling attacked by the theft. The whole process felt really humiliating, like my failure to keep receipts for purchasing underwear was a personal failing on my part. This is why I’d purchased the $_&+$# replacement policy.
Anyway, after a few rounds, i walked away from about $1000 of loss, feeling hurt and humiliated. I’m sure the claims adjuster patted himself on the back for preventing fraud. And i still think Allstate is a shitty company that i won’t do business with.
There are a lot of people in roughly my situation, and the insurance commissioner is reacting to that. It’s wrong. Either the process should be changed overall or it shouldn’t be, but this is just a lot of the same thing as every house that burns down. But i get where he’s coming from.
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I’d complain to my DOI in that case.
ITA. I think there is a lot that could be done to make the claims end of things a better experience for customer.
I’ve had State Farm for quite some time, and my claims experience with them hasn’t been onerous, IMO. Note that most of my claims are related to auto-related claims and I’ve not had a significantly large homeowner loss apart from a tree falling on my house. Total cost for that (removal of the tree and repair a “smallish” section of the roof) was around 6k . . . with ~1k deductible.
I think there’s likely to be a significant difference in the claim experience between a stock company and a mutual.
Debris removal on the typical policy is going to be some fixed dollar amount (which is part of my one paragraph where we can ignore those costs in terms of the discussion related to the recent CA DOI request of insurers).
There is another aspect of coverage that called “Building Ordinance & Law” which is expressed as a % of Coverage A (usually 10%). This covers the added expenses of repair/replacement that is related to “improvements” required to satisfy current building code. The typical policy has this as a “sub-limit” (meaning that its cost + the costs of “covered” repair/replacement is still subject to the Coverage A limits) with the option to buy an endorsement to have this coverage become an additional limit.
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Looks like this is a month old …
The emu is running from the wildfires.
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Something tells me that they’re going to have an uphill battle getting federal funding to cover that short fall.
[snark]
And Lara is going to expect insurers to raise rates in other states to pay for this shortfall.
[/snark]
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I’m of the opinion that good pricing practice will have an assessment provision in it, though that’s been a regulatory battle on my end as well for many years, not CA.
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I don’t understand what this means. ELISOA.
Future assessments by FAIR plans have an expected value attached to them. A provision for that anticipated expense should be included as an element of risk transfer…IMO.
Regulators don’t like it, because it means higher rate indications, but I mean…allow for the correct rates to be charged by the FAIR plans and it goes away.
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To add to what ALS said . . .
When the residual market mechanism doesn’t have enough money to pay their claims, other companies are “assessed” a share of the short fall.
This added burden should be allowed to be charged back to the market in their rates (until their assessment has be recouped). Florida has this in place.
I don’t think there are any provisions in CA law/regulation for this to be recognized.
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Yeah I probably should have better defined ‘assessment’ originally. And they can be modeled! But regulators don’t like that either…so…more fun things.
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I hadn’t thought of that before and would be interested to know how big they’ve been historically. It’s like an assumed reinsurance loss that can be directly tied to your premium (assuming the assessments are done by market share of premium).
The NC Rate Bureau includes compensation for assessment risk in it’s property filings if you want to poke around at a broad public (and complicated) example:
Look for: ‘2024 Homeowners Rate Filing Part 1 of 2’
The (total) amount of the shortfall?
The typical amount a company might “charge back” the market in their rates (i.e., the average amount collected from a policyholder in their charged premiums)?
If the expected assessment (after running a model) for the next year for your company is n% of your total losses, then the rate (before taking into account expenses, profit etc.) would go up n%, no? I’m wondering how big n tends to be.
I can’t speak to how “future-looking” assessments are generally handled. Work I’ve done deals with the recoupment of an assessment that the state “forced” upon our company.
And the value of n will also generally depend upon what time horizon the recoupment is projected over (IIRC, we’ve done about a 5 year window); with the expectation that if an additional assessment is made, that there will be a “separate” provision calculated for that.
I also think that the state sets a limit on how much “extra” can be charged to a given policyholder (which also impacts the time horizon for the recoupment).
For our filing, we would place this in the paperwork covering our profit provision determination.
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