Posted by: shoji | September 5, 2007

Gambling– and the inevitable bail out

A small but growing number of homeowners are dropping insurance for wind damage. The people quoted in the WSJ article seem to “understand” the risk they are taking, and have made decisions based on benefit/cost analysis.Although I lean towards personal choice in many endeavors, I know that “We” (the collective taxpayers) will end up paying for this under insurance in the near future. Insurance companies, too, will take fire for misleading and confusing policy documents.

Personal choice requires personal responsibility, but I don’t think the U.S. Government will be able to politically respond to catastrophic wind damage (i.e., hurricane) by telling homeowners that they should have purchased wind coverage.

clipped from www.marketwatch.com
Homeowners Dropping Wind Coverage

A small but growing number of homeowners are taking an extreme approach to insurance against hurricane winds: They’re going “bare” — doing without the coverage entirely.

Customers can choose to drop wind coverage on their own. “We work with them to make sure they are appropriately covered,” says
Mike Siemienas,
an Allstate spokesman. But, he adds, “At the end of the day, it’s the customer’s decision.”

Kathy Sansbury dropped coverage on her Fort Lauderdale, Fla., townhouse after the premium roughly doubled in December, to nearly $9,000. At that price, she and her husband concluded that after paying the higher premium for just 13 years, they would have spent enough to rebuild.

“It doesn’t make sense, as expensive as it is,” she says.


George Mastics
says

“Maybe I’m a gambler. I don’t know,” he adds. But he hasn’t paid for wind coverage for a few years. “So far, I’m ahead of the game.”

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