California fires, $250 billion and counting.

 WHERE WILL ALL THE MONEY COME FROM?

WE WILL ALL BE PAYING FOR THIS CATASTROPHE

Sadly, what happens in California will affect us all. While much of the housing may be covered by Insurance, this added hit on the insurance industry will be paid for by all of us with increased insurance premiums on our homeowners policies. These policies have already risen substantially in recent years and the reality is that insurance has an arrangement that they are connected in case of disasters. No insurance companies could cover all these loses without such an arrangement. Premiums in some areas like Florida, and I suspect California, are now so high, often over $1000 a month, that some can no longer afford these premiums. If some decide to eliminate insurance, that makes a smaller pool and again increased premiums.

Some insurance companies are actually exiting certain markets as they become too risky to provide insurance, this is already the case in some areas of California, due to prevalence of fires. Flood insurance is now mostly provided through some sort of Government program.

While we see the cost of housing replacement, then there is the infrastructure that has been damaged, much of this is uninsured and will be replaced by FEMA or extra money in the form of disaster relief. The reality is that, while we are often touted as the richest country in the world, it seems that if we subtract the debt from the assets, much of the country is broke. This will require more spending, more debt, another loss of the purchasing power of the dollar through inflation.

I suspect that we will soon see the insurance industry begin to reevaluate who they insure much more closely. We can expect they will begin to actually look at properties and possibly refuse to insure some if they look too risky. This will be much more likely in hurricane, tornado, flood and fire prevalent locations.

In one way or another we will all be paying for what happens in other parts of the country.