[danielmarkbruce]

No one, including companies, should not be forced into contracts they don't want to enter into.

In practice, you are going to find they are never arbitrarily doing it. They are doing it because the price no longer covers the cost of providing the insurance. Just like when I decide the price of X isn't worth it anymore, I stop doing the transaction. The reasonable response would be to increase the price, but in some situations it's not possible due to regulation.

[j45]

Except when those companies have lobbied to create laws to make the use of their industry mandatory.

[toast0]

Car insurance isn't mandatory; proof of financial responsibility is. In California, you can get a compliant insurance policy, deposit $35k with the DMV, setup a compliant $35k bond, or a self-insurance certificate which requires a larger deposit and is really for commercial motor vehicle carriers. I don't think it's unreasonable to require means to pay for damages when operating a motor vehicle; it doesn't take much to cause damages well in excess of California's deposit amount; washington state requires $60k.

For home insurance, usually it's a mortgage requirement, which is not by law. In condominiums, the community may require it of individual owners, and then it's not really law either.

[tptacek]

Side note here on how ludicrous it is that you can substitute a $35,000 bond for a real insurance policy, given the likelihood that any driver is going to cause losses far in excess of $35,000.

[toast0]

Minimum insurance in California only covers the same $35,000. $15,000 for injuries to one person, $30,000 for injuries to multiple people, and $5,000 for property damage.

It's completely insufficient, but it's not nothing. A reasonable person would carry much more insurance.

[creato]

The 35k bond doesn’t preclude getting sued for an unbounded amount. Presumably the idea is that a 35k bond demonstrates you have more available in case of a judgment.

That said, that seems like a risky idea in a world full of LLCs, trusts, etc.

[dragonwriter]

No. it demonstrates exactly the same minimum ability to pay as the alternative minimum deposit or insurance coverage, which are also $35k.

[tptacek]

Not having any insurance coverage at all doesn't preclude you from getting sued for an unbounded amount.

[dragonwriter]

$35,000 is also the minimum liability coverage ($30,000 for death or injury to multiple people plus $5,000 for property damage.)

In either the bond, deposit, or liability insurance scenario, the responsible party remains on the hook for whatever is not covered in advance.

[j45]

Fair, but there are lots of places, like Canada which require some types of insurance by law.

[toast0]

I'm unfamiliar with Canadian law, can you provide an example jurisdiction and required coverage?

[cldellow]

In Ontario, the Compulsory Automobile Insurance Act [1] requires that all owners/lessees of vehicles take out insurance policies. The Insurance Act [2] sets out that the minimum amount should be $200,000.

$200,000 is a much better floor than, for example, Ohio's $25,000. An Ohioan friend was injured by a motorist who had the minimum coverage. Her care cost more than that. The motorist who caused the injuries didn't have a lot of assets and she was unable to recover the excess from the motorist.

Still, there are some perhaps unintended downsides. Canadian rental car companies, as the owners of the vehicles, are obliged to provide $200,000 insurance as part of every contract. As a result, it seems there's not much market for them to sell excess liability insurance, and none do that I'm aware of. I, as someone who has plenty of assets to lose if I injured someone, would happily buy a higher liability insurance. Doubly so when I rent a car to travel to the US, since the terms of the contract are often "the rental car company will provide the minimum insurance required in the jurisdiction where the claim is incurred".

[1]: https://www.ontario.ca/laws/statute/90c25 [2]: https://www.ontario.ca/laws/statute/90i08

[toast0]

Thanks! That is mandatory insurance.

I agree that 200k is a much better minimum. Although I would think a deposit of $200k should be just as good as a policy of $200k... But the Ontario law doesn't allow for a deposit.

I wonder if there's a speciality business available in Ontario for single customer insurance, so individuals or businesses can self-insure without risk pooling.

[halostatue]

https://duckduckgo.com/?q=ontario+minimum+automobile+insuran...

https://www.ontario.ca/document/official-mto-drivers-handboo...

https://www.ibc.ca/insurance-basics/auto/types-of-auto-cover...

For the US:

https://www.forbes.com/advisor/car-insurance/minimum-require...

[j45]

The links below beat me to it.

Auto insurance is mandatory, and it can be government run, or private.

Other areas of insurance can be indirectly required, say one side of renting, etc. Effectively lenders can set the conditions they desire.

[Analemma_]

I could be wrong, but I don't think there are any states where you are required by law to have home insurance. The issue is that banks won't underwrite a mortgage for an uninsured house, because without insurance it's a completely unsecured asset whose value would go to zero at any time. (And if a bank won't write a new mortgage for it, the value drops dramatically even if it's already paid off, because now the potential market is limited to cash-only buyers for a risky asset)

You're free to go without insurance on a house that you own, but so long as the bank owns it, they're going to make insurance mandatory, and that has nothing to do with lobbying.

[marcosdumay]

> whose value would go to zero at any time

No, it wouldn't. It would go down to the value of the land (where a construction is permitted).

Nowadays, that's often more than 90% of the price.

[robocat]

> value of the land

Only very approximately - it depends on contextual situation.

We had a ton of uninsurable "as-is" houses after the Christchurch Earthquake. Prices for those houses dropped massively because without a mortgage you only get cash bidders so demand was relatively low compared with supply. The price someone is willing to pay for an as-is property depends on many factors, and it can easily be below land valuation.

Firstly desperate or naive sellers would accept well below the land value. You assume that that there are enough buyers to compete. There were not enough buyers shortly after the quake because not enough had cash so there were very cheap properties. Plus you were buying risk too - you simply couldn't price correctly because there were too many unknowns - when whole suburbs are uninhabitable a new construction is irrelevant. The city population dropped significantly.

You could offer below land value on some properties because you are also purchasing a liability e.g. the council required some houses to be demolished & removed (demolition costs were tens of thousands - and demo companies were busy as fuck).

You might pay a lot more than land value:

• Some places could still be rented (uninsurable is not uninhabitable) so potential income mattered.

• Many places just needed work done - sometimes not much - but often a new foundation e.g. lift house and put in new foundation. New foundations had to be compliant with earthquake strengthening rules so usually very very expensive. The as-is homes were often sold by the insurance companies because they were uneconomic to fix.

I advise everyone to be very careful buying property in suburbs or cities where all houses have common/correlated risks of an event - floods - fire - etcetera. Insurance premiums will rise until it is unaffordable - then all houses will not maintain value. Disclosure: I do live in a flood prone suburb but I can afford to self-insure and most people cannot do that.

Even worse: insurance did not cover the financial losses for many people in the Christchurch Earthquake. Especially small businesses. Then again - many other people ended up with huge payouts and were financially much better off. However even then money is usually a poor substitute for emotional costs.

[positr0n]

Woah, where can you buy a house that 90% of the money you spend is land? Is that even true in expensive downtown US cities like SF and NYC?

Construction is pretty expensive too.

[marcosdumay]

My home has pretty much 80% of its value as land. And it's not in a anormally expensive location in my city.

[epolanski]

You are not wrong at all.

Home insurance isn't mandatory, but refinancing your mortgage is impossibile without one.