Homeowner’s Insurance
Homeowner’s insurance could be a lot easier to understand. If your house is destroyed by a catastrophic event, you should get a pre-established sum of money which you can use to rebuild. It shouldn’t matter if your house is destroyed by a hurricane, a tornado, a flood, a fire or a landslide. People purchase insurance for peace of mind. They want to know that if their home is demolished through no fault of their own, their insurance will give them a predetermined cash payout. The amount of the payout should be based on the premium. If you need $100,000 to rebuild, you pay a higher premium than someone needing only $50,000.
As homeowners know, insurance doesn’t work this way. Instead, insurance companies purposely use extraordinarily complicated language to protect themselves from having to pay claims. Only certain types of disasters are covered. And instead of covering types of disasters, like hurricanes and tornadoes, insurance policies cover naturally occurring phenomena which may contribute to disasters, like the wind. This allows insurance companies to bring in experts to decide how much damage was actually caused by the wind and how much was caused by something else, a nonsensical distinction when your former home is a pile of rubble. When homeowners disagree with insurance company assessments, they must then hire their own experts and take the matter to court. Of course very few private citizens have the financial resources or stamina to battle insurance companies in this arena.
insurance, hurricanes, floods, homeowners insurance, wind damage, replacement value
The amount of the payout for a complete loss is not established either. Instead insurance companies get to decide what the replacement cost of your home is after the disaster. And if you haven’t taken a video of all your belongings and stored it in a safe deposit box, then good luck getting a fair replacement value for your personal property. Of course if you own anything worth more than a grand, you have to purchase a separate policy for it. Insurance companies have stacked the deck in their favor. If governments sold homeowner’s insurance, they could change all of this through good old fashioned competition. But before that can ever happen, we need to rid our legislatures of insurance company cronies.
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