Many political issues seem to be a mute point, as when it comes time for implementation, the general public cannot stomach the consequences. You could pick any number of them social security, public health, insurance, retirement, and so on. However, the more specific example that comes to mind, namely because I live on the Gulf Coast, is that of insurance.

While it is obvious we have a free market based economic system, we do have some social interactions, namely from various historical, call it; learn as you go bumps in the road. Insurance is one of those systems. It is not mandated by the government, except is certain circumstances, such as automobile liability. So with those exclusions, we as both a free market and political system, leave the choice of insurance within the hands of the individual. Both in choice of company, as well as choice of coverage.

Now the scenario: Joe Dirt owns a house, and it has a current market value of 200K. He can choose to insure it against various outcomes, or he can choose to, well, roll the dice. We, again, as both society and politics, agree with this choice. Joe has the option, he makes the choice.

Now the reality: Katrina hits, and Joe’s house is gone. For the Joe that bought insurance, it’s a nightmare of paper work, calls, complaints, lodgments, request, and the typical bureaucracy the is incurred in such a historical event. Yet, in the end, his 200K investment, remits back to a 200K investment, and less the wear, he is back at square one. Insurance did as it was prescribed.

Now another reality: Katrina hits, and Joe’s house is gone, only this Joe didn’t buy insurance. So not really a nightmare, just well, f’d. The system is pretty simple in this regards. The investment is gone, the dice came up craps.

The aftermath: No one is cold hearted enough to look at the later Joe and say, hey, sorry, you knew the risk, you gambled, you lost. The media, politicians, neighbors, friends, family, the works, run up the flag: bail them out. Fair enough, economies can’t handle a large collection of individual losses of such a nature, let alone the lending institutions taking such a financial hit. A bail out, is the only option.

Yet, this leads to the core question, if we don’t have the balls to follow through with a choice made by the system, shouldn’t we let the choice be first dictated to that minimum level, and start the debates after that? I mean, why should we let anyone own a house, or let any financial institution broker a transaction with out mandatory insurance? Forget the debate about options, haven’t we already seen the option?

Yet, this leads to the core question, if we don’t have the balls to follow through with a choice made by the system, shouldn’t we let the choice be first dictated to that minimum level, and start the debates after that? I mean, why should we let anyone own a house, or let any financial institution broker a transaction with out mandatory insurance? Forget the debate about options, haven’t we already seen the option?

Mandotory insurance would be an open door to price gouging. IF people have to buy insurance, the cost of insurance will go up and may price people out of the market. Insurance as choice, forces those companies to compete, rather than having those insurance companies know that people have to come to them to get insurance to purchase certain things like a home.

Also, you've got to factor in the risk factor in buying property in certain locations. For instance, people living in a condo in California can get great hurricane insurance, but let a large condo complex try to get earthquake insurance and you're looking at prices that are through the roof. In Florida, the opposite is true, great earthquake insurance, but hurricane insurance is almost impossible to find and very, very expensive.

I don't like the idea of mandatory insurance, it's a choice and a gamble, dammit.

Also, though you didn't mention it, I don't like the idea of having the government cover the cost of homes being destroyed in natural disasters. What happens is that people build dream homes right along the coast, a hurricane comes along and wipes out those homes and all us taxpayers get to foot the bill for those homes. Which can add up to billions. Of course, all those people who would be overjoyed to have taxpayers rebuild their dream beach home will tell you to kiss their hind parts and get off my land if you went anywhere near "their" beach.

Dammit.

Her's another funny little scenario. The government mandates insurance against hurricanes, and people buy it. Then a hurricane comes along, and pushes a wall of water up against the shore, destroying many houses, as hurricanes do. Then the insurance company informs the policyholders that their insurance did not cover flooding, but only wind damage. Unless they can prove that the damage was caused by the wind instead of the storm surge, they will recieve nothing.
The citizens are still out the $200k, but now they blame the government for forcing them to buy the insurance, and many politicians are threatened with the loss of their jobs if the taxpayers don't compensate all those citizens. The insurance companies sit back and count their loot.

Yes, but again, indifferent to whether they should or should not, the government is bailing out those without insurance. To what extent, still remains to be seen, but again, no one had the balls to look at those that gambled, and lost, and not help. So it seems like something different has to be done, so such funds can be properly budgeted.

Also, I think the verdict will be out for sometime, but insurance companies across the board have seen decades worth of profits wiped off the books. The change in terms had more to do with lack of funds, than protection of profits, with the government bailing them out as well. Again, an unbudgeted expense.

Mandotory insurance would be an open door to price gouging.

I would hesitate to make that assertion. Auto insurance is mandatory in many states, and that hasn't priced anyone out of the market. Much as I hate how pricey it is, I can get behind the logic of it.

Plus condo insurance...you HAVE to have it.

Actually, that does bring up a very valid topic. What about secondary housing? In the case of the storm, it’s the only place the balls are showing. Own two uninsured properties? Well, no, if’s, and’s, or but’s, your f’d on the second.

I have mixed emotions about this subject of 'personal responsibility.' Some sort of property insurance is mandatory IF there's a lien involved. No lender in their right mind is going to make a loan without it. If you own it, then insurance is your choice.

I agree with whoever mentioned before about resenting the fact that MY tax dollars are committed to replacing YOUR property if you don't have insurance. (i.e., Katrina aftermath) I also resent that people who choose to live on coastlines are putting themselves more at risk than those of us who live in the middle of a prairie (notwithstanding tornados:) Seems to me there should be some kinda 'just in case tax' that comes with ownership of a non-insured coastal dwelling, along with that beautiful view of the ocean.

But on the other hand...

How 'bout 3 grown men who make the decision to climb a dangerous mountain in December, get hit by a blizzard, and end up lost and hurt? How 'bout the hundreds of thousands of dollars being spent to save them?

Unfortunately, one man's body from my hometown was identified today... and last I heard, the other 2 are still missing.

I wouldn't have it any other way than for 'us' to do everything possible to find them, but...

Well, I'm sure you catch my drift.

Excellent post, ShadowWalker and an equally good post, Imagineer.

It is not my responsibility to have my money taken so that someone else can be made harmless for a loss suffered. Either purchase insurance or take your chances. It is also the government's responsibility to see that the insurance companies are not allowed to pull the scam they presently pull.


I own a condo directly on the beach in an area that has in the past been devistated by hurricanes. I cannot get hurrican insurance. I know that and chose to purchase there anyway. I am not worried about the building being destroyed since it is ten inch thick concrete but I could lose the entire interior of my condo. That's a chance I am willing to take. I do not expect anyone else to take money out of their pocket to pay for the restoration of my condo.