Reply #21: C'mon! Who didn't know there was alot of this going on?

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And, I'm fairly certain that State Farm isn't the only insurer that has violated their customers' trust.

I'm no expert on insurance and I have never gotten it. I mean, let's just say that a hurricane doesn't produce a coastal storm surge and all the damage is caused by wind, the determination and qualification of which is the issue in most of the lawsuits now being levied agains insurers, to wit, insurers cover wind damage but not flood damage. Insurers claim the damage by Katrina to homes was a result of flooding and not wind, though the storm was producing sustained winds up to 130mph, which is enough in itself to destroy homes and buildings.

The part I don't get is that the amount of "equity" accrued on a month-to-month basis of home insurance could never amount to the value of the home. For instance, the Insurance Journal says the average homeowner paid $677 in home insurance for 2005. If the home's value is $100,000 (not counting contents), the total accrued value of the insurance policy over the lifetime of a 30-year mortgage is only 20% of the value of the home, or about $20,000.

I've learned over the years that insurance companies are able to cover the value of loss because the revenue generated by hundreds of insured more than covers the calamity experienced by a few insured who file a claim each year. Which makes sense. But what if thousands of insured policy holders simultaneously experience calamity for which they file a claim of loss?

According to FEMA official Michael Buckley about 1.3 million homes and businesses are located in the area swamped by Katrina. The toll of those claims is going to be "astonishing," he said. When you consider that amount of premiums versus the cost of covering that many homes and businesses, it's not all that difficult to understand why a company like Nationwide or State Farm might try to mitigate their responsibilty to their policy holders, illegal and unfair though some of their tactics might be. But, of course, that doesn't make it right.

I have never owned a home so my knowledge in this area is sketchy. Please feel free to comment on any flaws in my reasoning