Why are all the insurance companies pulling out of disaster areas!?

[Josh Edelson]

GENERAL DISCUSSION:

California has fires. Florida and South Carolina have hurricanes. All these insurance companies are jacking up the rates 2x-6x or cancelling policies altogether in these and many other areas. If you have a house in any of these places and have a mortgage, you're required to have insurance. What happens if you can't get it? What happens when hundreds or thousands of homes burn or are flooded or destroyed and have no insurance? Are we seeing the beginning of the next big real estate crash - insurance pullouts leading to uninhabitable areas? If someone loses a $400k house to a fire with no insurance, they're just screwed now?

What will the long-term trends be because of this?

Is it still safe to invest?

Do we just need to factor in insurance costs of 2x-6x higher rates now?

Super frustrated, especially considering the already exorbitant rates, high costs of everything else and unaffordability all across the board. Are higher powers trying to keep people from being able to own homes?

- Josh

[Bill B.]

If you listened to BP podcasts you heard the cause of the Florida problems. Some weird law that allows contractors to sue insurance companies for repairs instead of homeowners. They claimed Florida’s insurance lawsuits were 400% of their market share. 

If you listened to real wealth or BP podcasts you heard California put a criminally low rate increase cap in place 10+ years ago and it’s finally coming home to roost with high inflation and fires caused by horrible environmental policies. 

Insurance is waaaay down on my list of real estate issues. You can switch companies and/or coverage and/or limits. Property taxes are another matter. So are laws and regulations regarding rentals. These government actions can crush the value of your investment and your only option is submit and pay or take your lumps and flee the market.