If this is the case, the state of California should have no problem remaining the insurer of last resort (from a fiscal solvency perspective).
From a comment koolba provided with liability numbers, this appears to not be the case (potential losses exceeding California’s entire budget). This leads me to believe that California residents have taken on risk beyond what they and the state can afford.
Not great if the world’s fifth largest economy is experiencing this financial stress.
All I know, is that if California picks up the tab on any of these uninsurable houses, the owner better be forbidden from rebuilding on that location.
I recall a NPR story where some guy in Texas had his house flooded and rebuilt by the Fed some 13(?) times! Stop throwing good money after bad, that area is not fit for humanity.
If there are places with lower risk, certainly, extend insurance there (when reasonable) using data driven risk models. But places where the risk is high? Prohibit building by refusing to issue a building permit, and perhaps cover existing owners in some fashion. If their house burns down, they must turn over the land to be locked up and never built on again to receive their claim payout. Similar to what FEMA does for flooding.
You want to strongly discourage moral hazard (repeatedly funding rebuilds with taxpayer dollars in high risk areas) while not making housing insecurity drastically worse than it already is. I admit this is a tall order with the perpetual housing shortage.
> If the homeowner still owes a mortgage on the home, the balance due will be deducted and paid to the lienholder. After required payment(s) have been made, the structure is then demolished and the land is deeded to the local government with its use restricted to open space. The land must remain open in perpetuity.
Prohibiting building is a ham-fisted approach and it’s completely unnecessary if we just stop the government from being required to insure things.
I don’t care if people want to build in Florida, it’s a great climate… most of the time. They should just burden the real cost by having to pay an insurance rate that actually covers a new house every 5 years.
It will force it to be the luxury it really and it will spur construction shifts to hurricane proof pillboxes.
I stated the risk is lower in many parts. However the areas of low risk aren’t the ones facing insurance crises. It’s mostly fire prone areas being dropped. For example you’ll find no challenges getting insurance in San Francisco city or San Jose for the most part.
Your point is taken and I am mindful that SF isn’t say, an hour outside of Sacramento or closer to the national forest range. California is handling this as a state crisis though, which is good from a governance and fiscal strength approach, but not so good considering the significant delta in risk between cities and high risk areas (due to the wildly disproportionate costs).
> For example you’ll find no challenges getting insurance in San Francisco city or San Jose for the most part.
While some of that is climate, much of that is because the natural environment was wiped out and urbanized years ago.
I have a higher wildfire risk not because my home is in some wooded canyon, but there are more plants, trees, and open areas around vs paved cityscape.
