I’ve got some bad news: property insurance is fake. 

Thinking about all these folks in LA and what the other side of these fires will look like for them and everyone around them. It’s terrible. 

What I learned from my experience (linked below) with storm disasters 2 years ago and a few other experiences over the past few years both personally and in business is that P&C insurance is now mostly a heist. 

The policies are long, complex, and there’s pretty much always an ‘out’ for the insurer. There’s enough grey area in the policy docs and doubt and discretion in the claims process that they can always either deny or pay just enough to diffuse the conflict with the claimant, even if it’s not what the policy entitles them to. 

Given that, you cannot operate your business or personal financial life assuming insurance has your back if disaster strikes. It does not. They may pay something, but your coverage is not as good as you think. Your insurer will weasel their way out of covering you every step of the way. They will wear you down and dodge financial responsibility to cut their losses. That’s not going to change anytime soon, so we all need to adjust to that reality when we think about managing risk.

Some tactics to consider: build more reserves and go for higher deductibles to get your premiums down. Don’t fall for BS coverages. Diversify your exposure to a total loss on insured physical assets. Arrange access to liquidity just in case. Plan for the worst both practically and financially. Game out your moves. Reduce your exposure to potential real world losses.

Sorry to have to be the bearer of bad news in this difficult time for so many people.