Bogus Claims = Higher Premiums = People Cancelling Homeowner's Insurance

Here's the leading edge of the problems and cost of persecuting insurance companies by requiring they insure things they did not agree to insure: Homeowners drop insurance after Katrina

Facing soaring premiums or feeling shortchanged by their insurers, a growing number of homeowners and businesses in Louisiana and Mississippi are "going bare," or dropping their coverage altogether, insurance agents and consumer advocates say. Many more are drastically reducing their coverage.

You didn't realize making insurers pay claims for things they didn't insure would raise rates? Insurance doesn't appear out of some hyperspatial vortex. Policy premiums have got to cover claims, in the aggregate. Nor are the insurance companies charities or even utilities. They are entitled to charge enough to make a profit. If not, tell me, who would willingly insure others? Who would invest in an insurance company? They don't get their money by printing it, you know.

Elderly homeowners -- particularly those on fixed incomes and those who have paid off their mortgages -- may be the most likely to go uninsured. Most homeowners don't have that choice, because mortgage companies require borrowers to have insurance. Those whose homes are paid off can drop their policies, unless they are getting government grants or loans that require one.

Really? How utterly predictable.

Many small business owners are feeling the sharpest pinch. The insurer of last resort for many Mississippi homeowners and businesses is the state's "wind pool," and its commercial rates have jumped 268 percent since Katrina.



Tom Simmons, who owns three office buildings in Gulfport, Miss., said he paid $3,070 in premiums for the rental properties before Katrina. Maintaining that level of coverage this year would cost more than $25,000, he said.

Seems the state of Mississippi doesn't get its money by printing it either. It has to charge premiums or tax citizens. Guess what? It's doing both!



All of this is bad, but it's only the first problem. Wait until there is a disaster and people lose everything without insurance because the insurance companies were forced to raise rates, or stopped issuing insurance entirely. It will happen; it's only a matter of when. And when it does happen, the ones responsible will be the people, politicians and judges who drove the insurance companies out by forcing them to pay billions for claims that weren't covered by policies, legal fees for defending their right to not pay claims for items not covered and for which they never charged a penny in premiums.



Now aren't you glad the state of Mississippi socked it to those insurance carriers and forced them to pay flood claims even though their policies didn't cover flood damage?



Too bad the people, politicians, and judges involved will never see the inside of a jail cell. We send business executives to prison for things that don't do a minute fraction of the harm done here.