Comment by nostrademons
3 years ago
Note also that in some cases you might be the optimal person to hold the risk that your house burns down, if, for example, your liquid net worth is 100x the replacement cost of your home. And that's illustrative of the value of markets: you can choose to transact in them, depending on your personal circumstances. The insurance market exists because for the vast majority of people, rebuilding their home is not feasible with their current net worth. But for a small number of people it might be, and for a small number of firms it's probably worth it to insure many thousands of people, and then you can even slice up the shares of those insurance firms and sell them on the stock market so that the risk of your house burning down gets socialized across all the other shareholders but at the same time you have a stake in the profits.
Rebuilding a shitty house is quite possible for a person. Like people can literally build simple shelters in a time frame of hours. It's only because of so many regulations and rules that you have to go into multi-decade debt.
For instance, apparently the EU is currently considering a regulation that houses must be energy efficient. Getting a current house into compliance would cost on average $50k. That kinda stuff adds up.
It’s not a choice to be part of the insurance market for the vast majority of American homeowners. What you describe is choice in name only.
Your parent literally said
and
He's saying you are required by law to buy insurance for your house because of government regulation. There's no way of saying no.
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Insurance is required by the lender (yes, I understand people purchase with cash outright, but that's a vanishingly small portion of the population).