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Old October 19th 17, 12:28 AM posted to
John B.[_3_]
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Default California's Fires

On Wed, 18 Oct 2017 08:41:24 -0700 (PDT), jbeattie

On Wednesday, October 18, 2017 at 7:30:03 AM UTC-7, wrote:
On Tuesday, October 17, 2017 at 10:25:28 AM UTC-7, jbeattie wrote:
On Tuesday, October 17, 2017 at 7:52:39 AM UTC-7, wrote:
Unfortunately in the Santa Rosa fire Levi Leipheimer's house was burned to the ground. I can only hope that he is solvent enough to repair since I suspect that the insurance companies are going to play the "mass destruction" card and not pay on their policies.

Why would you say that? Assuming any insurer went insolvent, there is the California Insurance Guaranty Association. But I doubt that any admitted California insurer is going to go insolvent because of the fires. Most insurers retain only part of the risk anyway, placing the rest with reinsurers. Adjusting claims will be slowed by the number, but anyone insured by a legitimate, admitted insurer probably has nothing to fear.

My sister lives in Santa Rosa and my brother owns property there. I was getting real-time reporting over the weekend. It seems to be improving, although living in the smoke is hard on the lungs.

-- Jay Beattie.

Jay, a long time ago I remember reading my insurance policy and there was a clause in it that said if a high percentage (don't remember what) where destroyed in an area that the insurance policies were null and void.

Fire insurance is the most basic coverage there is, and in most states, the policy form is dictated by statute. I've never seen any policy purporting to cancel retroactively if there were too many losses in a geographic area. There are some assessable policies issued by mutual insurers that allow the insurer to demand additional premiums if reserves are wiped out by large losses. Otherwise, large losses wipe out reserve, trigger reinsurance and/or catastrophe bonds and a lot of other risk-spreading devices.

IMO, the worry is not really the fire loss in wine country but that loss combined with all the storm damage for large P&C carriers like Ace or AIG, although most of those guys left the Florida market or issued policies with the usual exclusions for flood, wind-driven rain, etc. Anyway, its the national loss picture that really matters this year on top of the fire losses. Global warming is going to drive up premium big time.

-- Jay Beattie.

Out of curiosity, do U.S. insurance policies contain "Act of God" or
"Force Majeure" clauses?


John B.


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