One of my pet peeves has always been insurance; whether it be auto, home or health, I have had nothing but problems with insurance #!@$s. And it doesn’t seem to matter which company. They all seem to be as crooked as a dog’s hind leg, more than willing to take your money (and take and take), but stingier than Scrooge when it comes to making a claim.

Many people in California have experienced a total loss or severe damage to their homes due to torrential rains. Most homeowner policies don’t cover land- or mudslides. The damage has to occur from “mostly liquid” for it to be covered under flood insurance. As if the 6+ inches of rain (i.e. WATER) per day had nothing to do with it. They’ve even devised a “test” to determine which it is.

Please. If it is any longer than an hour or two after the event when the adjuster performs the “test”, chances are it’s going to be mud. Water drains away, leaves mud. Seems simple enough to me.

Guess not.

Homeowner insurance doesn't cover much more than fire...maybe folks should set fire to the place before it slides down the hill!

It is my belief that the insurance industry is the second most corrupt group in this country (right after politicians ). New York’s Attorney General has filed suit over a major insurance company operating out of Bermuda.


This website has some very good information (such as the top five “bad-faith” insurance companies: Hartford, State Farm, Allstate, Farmer’s and Liberty Mutual….and yep, there’s mine on the “bad” list, too.)

What is the solution to cleaning up greedy, corrupt insurance companies?

How will Bush’s tort reform affect the situation?

What are your thoughts/feelings about the subject?

The first thing we have to consider when looking at the Insurance industry is that it is a business, and as a business it needs to make a profit to survive.

Your premiums are a calculated risk taken by the insurance companies. Contrary to popular belief, the idea is NOT to make money if you have a loss, but to avoid loosing money.

When you sign up for insurance, you are basically accepting a known, regular loss (your premiums) to avoid an unknown loss in the future (accidents, catastrophes, etc).

I do not live in California. However, in Missouri there is basic homeowners insurance. It covers fires, acts of God like tornados and the life. If you feel the need to have flood insurance, that is extra, if you think you need earthquake insurance that is extra, and if you want protection from sewer backups in your basement that is also extra. Now all items lost have damage limits. Have 5000.00 in computer equipment, you need an additional rider, that costs extra as well. I would assume the situation is similar in California as well. So, the question is, do Californian's have the option to add a "mudslide" rider to their policies?

If the answer is no, then I have to confess, I simply cannot understand why someone would by a home in an area prone to a certain type of loss if they could not purchase the insurance to cover for it. Secondly, if the answer is yes, but it is too costly, then again, I have to ask why someone would purchase a home that was subject to that loss possibility without the financial means to protect themselves from it.

In Missouri, a few years ago we had alot of hail damage in my area and alot of costly claims as a result. The insurance companies answer was to amend the policy in writing, notifying all of their customers to increase the hail damage deductable default to 1200.00. Now, you could get the deductable reduced, but it will cost extra. Insurance companies regularly make these changes to adjust their risk / return ratios.

If an insurance company cannot make a profit, then it cannot exist. If insurance companies do not exist their either we are all on our own, or we are all subject to paying for major losses through out tax dollars to a much higher degree then ever before, or both.

This system is the same in all insurance. I smoke, so I pay more for health and life insurance. I SCUBA dive, so I pay even more for life insurance. Since my choices make me a greater risk, It cost me more for coverage. People choose where they by their homes. In cases like buying a home in an area with a known history of natural disasters, they need to ensure they are properly protected or consider another neighborhood to live in. This is not to say that people should not live in these areas, just that they need to consider possible problems before they do.

What is the solution to cleaning up greedy, corrupt insurance companies?

Public education, people taking responsibility for themselves and their choices, etc. The Insurance companies are not inherently greedy or corrupt, though there are exceptions to every rule, and it that case, Insurance regulation / Law, as I understand it is a state issue.

How will Bush’s tort reform affect the situation?

It's irrelevant. The idea of Tort reform is to restrict damages to actual damages and make loosers pay the winners legal bills. I really don't see how it applies.

What are your thoughts/feelings about the subject?

See above.

I only mentioned California because, well, I live here. It is not the only state that has had insurance issues. And 35+ inches of rain in a year is hardly normal. Many of these areas are not "prone" to flooding because it rarely rains this much (not since 1890, anyway). Flood insurance is available, land or mudslide insurance is not. How do you prepare (i.e. pay premiums) for a situation you had no clue would ever exist?

And yes, I acknowledge that insurance companies are a business in the business of making money. That doesn't change the fact that they often engage in not-so-aboveboard practices.

What is the solution to cleaning up greedy, corrupt insurance companies?

Well a good place to start might be something like this proposed Policy Holders Bill of Rights.

Insurance companies of all flavors engage in unsavory practices on a daily basis and we as consumers don't really have any say in the matter right now because we can't exactly use someone else that doesn't engage in these practices.

Some of these things include:
- The practice of redlining which charges higher prices to lower income communities by zipcode.
- Use of credit scoring to determine rates

How will Bush’s tort reform affect the situation?

It won't, lawsuits are not the problem. In fact his tort reform is harmful because it is a handout to big corporations and removes one of the methods that consumers have to redress their complaints and problems.

Insurance companies should be able to operate a profitable business, but some of the practices they are engaging in right now under everyone's noses make Enron look like a model company.

Let me start by saying I hate insurance companies. I cancelled my home policy about 2 years ago when the premium jumped to $100/month. I've had 1 claim in the 12 years I've lived in my home and that was a small claim of less than $200.

I paid for my home outright and said buh-bye to my home premiums when they jumped from around $800 per year to nearly $1200 per. I'm not sure what caused the giant rate increase, it may have been 9-11 and the fact that several insurance companies lost a ton of money in the stock market, but regardless, I dropped the policy and am saving $1200 per year.

I have no clue why those rates would be so high, especially when you see insurance companies making SO MUCH PROFIT. I guess that explains the profit part.

Here in Michigan we are required to have a minimum of auto insurance. Again, the rates are outrageous. I pretty much have no coverage whatsoever and I'm paying $800/per year.

Whoever says that insurance companies base premiums on risk are not all together being honest. Insurance companies are going to charge the maximum they can charge and ANY excuse they can use to make more money, they will use.


The current administration is in bed with insurance lobbies. Take for instance the "terrorism insurance" bill that backed insurance companies if a terrorist attack occurred. The net affect was insurance companies could charge premiums for terrorist insurance, but OUR GOV'T would pay out the policies if an act of terrorism occurred.

The tort reform bill is another insurance company lobby bill. They can't wait to limit people to how much they can sue, BECAUSE THEY PAY THE SETTLEMENTS! If you really think there's no connection, you have no idiea what you're talking about.

What they should do for tort reform is make insurance companies PROMISE to reduce rates and force ceilings on premiums. If they can put ceilings on DAMAGES, why can't they put ceilings on PROFITS as well??

Heck, they should do that with anyone who benefits from Tort reform.

The right constantly complains about gov't handouts, but insurance companies = gov't waste.

Are you saying these areas did not have mudslides before this one? I mean, my entire town has never been hit by a tornado. However, Tornados do occur in the area and since weather is rather unpredictable I made sure my homeowners policy covered for such damage and a prepared and stocked a safe place in my basement for my family.



I assume that if you then loose your home to fire you will be handling this loss out of you own pocket. And, if that fire happens to damage your neighbors home, you will pay those damages as well?



The minimum coverage that you carry is not to cover your loss, if the accident is your fault. If you want to protect yourself from your loss, in an accident that is your fault you by comprehensive insurance. The minimum is required to ensure that any insured parties, damaged by an accident you cause are covered.



Insurance companies only make "huge profits" when they have years with few losses. When they have years with large losses they tend to loose money. In the end it balances it out. As for charging what they can, the limit on that is competition. If the biggest companies raise their rates by 50% the smallest ones will not unless they have to so they can secure more business. This happened in Missouri recently. The Insurance regulations changed, requiring some sort of new accounting in that the insurance companies had to have more funds available based on premiums I believe. Most companies were working this at the limit of the law, so when it changed, they had to increase their rates to comply. A few companies, in the area who had been more conservative (I don't mean politically) with their finances were in a position not to have to change their rates at all. As a result, they got more business, as was the reason I switched to my current insurance company.



I think there is no connection with the current topic as it would not change the situation faced by those in question of tort reform was or was not enacted. But thanks for being so nice about it.



You lost me on this one, could you explain it? Also, I hope you are not including me with the right.

What is the solution to cleaning up greedy, corrupt insurance companies?
Are there any mutual insurance companies left in the USA? Being mutual means that there is no profit motive, since they are run to cover their costs and nothing more.

Almost all the UK insurance industry began along mutual lines in the 19th and early 20th century. However, many of them have been swallowed up by profit-led companies for two reasons:
1. Some bad investment decisions coupled to increased claims (in part linked to the claims culture of no-win-no-fee tort claims) meant that mutual insurance companies didn't have the resources to cover their liabilities.
2. Polcy holders in a mutual insurance company are in effect the shareholders. As such they can get a windfall profit by voting for a flotation, whether or not that is a good idea for the insurance cover they provide. This was so fashionable in the 1990s here that some people took out policies with insurers or opened accounts with building societies (the UK equivalent of a savings & loan) specifically so they could vote to award themselves a windfall. So much so that there are now comparatively few mutual insurers left.

How will Bush’s tort reform affect the situation?
It might have some small impact if it can affect the current paradigm that says that not only is everything that happens someone else's fault (never ever "my own", but that this someone should be punished.
Though I cannot see that unless the courts move away from no-win-no-fee claims, that culture will not change - it's still too easy to make a frivolous claim in the hope that some mud will stick on your little part of the wall.
This does have an affect on the cost base of the insurance industry since it is almost always the defendant's insurer that ends up paying for such compensation. As they are for-profit organisations, the imperative, if they have a bad year for claims, is to protect their future profits, so they increase premiums afterwards. Hence the relentless rise in premiums.

What are your thoughts/feelings about the subject?
I think the reversal of no-win-no-fee might help. Also, in the UK, a judge can "award costs" to the party he or she thinks "deserves" to pay them. Basically that means that not only do you have to pay your own legal costs, you have to pay the costs for the other side as well.
If you're a venal businessman whose negligence has resulted in genuine hardship or injury, then the effect is that your punishment is a little more severe. It also potentially means that the plaintiff gets all of the damages, since their legal costs are considered separately (though the current trend in UK law is not that way).
But if you're a money hungry sloth who broke a toenail on a paving stone and is trying to get rich by taking taxpayers' money from the local council, then the effect is to act as a deterrant to both you and the ambulance chaser representing you from blaming someone else for your inability to lookwhere you're going.
In other words, I don't think anyone should have to pay up front to go to sue someone they think has done them some kind of harm, but I think that, if they fail because there was no case or because it was mischevious or malicious, there should be a punitive cost to them.

Yes, that's what I'm saying. With the notable exceptions of places like La Conchita and Malibu, areas like Hacienda Heights (where I lived for the first 20 years of my life and NEVER heard of a landslide) and Costa Mesa are experiencing landslides. Last night there was a report of the land collapsing under homes in the Philips Ranch in Pomona. And it is raining again today. This is a once-in-a-hundred-year event. How can you say the area is "prone" to it based on that fact?

Oh, and Frank Lloyd Wright's Ennis-Brown house, built 80 some years ago and on the national registry of historic homes, is now in danger now from slides. I guess Wright should have expected this to happen 80 years ago when he built there.

Sadly no Julian. There are plenty of insurance companies that still have "mutual" in their name because they once were "mutual", but many of them have since moved on to be profit oriented.

Yes sir! My house was built in the 20s, never burnt down. Had some fire damage once due to neighbors house on fire (during the 70s I think). If I had the extra money I'd pay it, but I'll roll the dice. Like I said, I've been here 15 years without a problem other than a tree falling on my fence.

I'll pocket the $1200/year, I figure if it takes 10 years for another accident to occur, that's AT LEAST $12K I would have saved that most likely will compensate any damages that occur. After all, how many homes in your neighborhood burn down to the ground on a regular basis? I know of only one since I've moved here and that was a strict case of arson.

I think it's a safe bet. Screw insurance companies.



You're right about comprehensive, but if you don't insure yourself you must go to court and the most you can sue for is $500. Your minimum insurance in Michigan covers damage to PROPERTY. At $400/year, having only had vehicle-to-vehicle accidents in my history, IMHO it's really a joke to pay that much to cover property damage....for someone else.



Insurance companies make huge profits....if at all possible. I'd look for links but I don't have much time.



Sorry, didn't mean to offend. But you're right, the tort reform bill will NOT reduce rates or change the way INSURANCE companies do business.



Insurance is a nasty business. It's filled with corrupt companies that try to skirt their responsibilities while bilking people who MUST have insurance (ala taxes for taxpayers). In addition, you have a lot of fraud against insurance companies (ala Halliburton) with people burning down their homes or stealing their own cars, etc. just to collect on their policies while honest people suffer for it.

Also, medical insurance is like a gov't program. Honest people kick in the funds, but not everyone gets out what they pay in (ala welfare).

As a side note, this is similar to a way to save alot of money on insurance without loosing the protection. I don't know the property values in your area, but I doubt you could replace your home for say 24,000.00 which is what you save by not paying insurance for 20 years. However, most insurance companies (at least everyone I ever dealt with) have a different rate structure depending on your deductable. The higher the deductable, the lower the rate. If you take 1000.00 and put it in the bank, then take a 1000.00 deductable on your home policy you can save a fortune on insurance rates without loosing the catastrophic loss protection.



I have no idea what your insurance laws are in your state. In my former home state of New Jersey, you could save alot on insurance premiums by electing to wave your right to sue for pain and suffering if there was an accident. In my state, I insure a 2004 Voyager, and a 2000 work van, with full coverage, limited deductables and high limits on damages for around 1000.00 / year (I included the cost of a 5000.00 rider I added to my homeowners policy to cover for theft of the tools carried in and on my truck). It sounds to me like you should be working on your states insurance laws.





If Tort reform was enacted it would be a toss up as to whether or not insurance rates would go down. It would come down to how hungry the smaller companies were for more business. However, it is definitely a safe bet to say that they could not go up nearly as much or as often as they have in the past because the losses would not be limited to reality.



So do you blame the Insurance companies for the Fraud? This is not a trick question, because to some degree I do. I worked as a insurance fraud investigator in New Jersey years ago. I never got a case for investigation that was not at least 2 years old unless there was a major tip or something. The reason is accounting. It costs too much to investigate every case. However, what really annoyed me was that when we were able to prove fraud, the worst that happened was the subject got a letter from the insurer explaining why they are no longer going to pay compensation, disability, etc. In many cases these people just went back to work. The Insurance companies do little to discourage fraud if they are unwilling to prosecute it.

However, I have be a customer of various insurance companies now for 20 years. I have only once had a problem with a claim. And that problem that delayed my claim was caused by the dealer that sold me the car because they had two different vin numbers listed for it between the various documents. As it turned out, both vin numbers were fraudulent and the car had likely been stolen, then sold to me by a car dealership, to later be stolen again. I can't blame the insurance company for that. Every other claim I have ever had has been handled promptly and without incident. So, I am sorry, but I cannot support such blanket statements about insurance companies.



You're not supposed to get what you paid in. You are taking a known loss (your premiums) and agreeing to pay it, to avoid an unknown loss (a medical issue) in the future. If you are extremely lucky, you will never come close to getting back what you paid in medical insurance.

Insurance is NOT an investment, insurance is protection.

Opps, almost forgot this part:



I was not aware that this had happened in an area that had no history of mud slides. I certainly feel for these peoples loss. However, I still have a hard time understanding why the insurance company should pay, when the policy did not cover this sort of damage.

However, the issue brought up about the definitions of damage is an interesting one. One that California should consider looking into to try to clarify, possibly through regulation, to avoid such murky issues (no pun intended) in the future.