You're right. It can't just be about paying for insurance but also has to include undergoing and passing regular stress tests. Just because one buys fire insurance shouldn't give them a free pass to fill their house up with large amounts of flammable material and sparking wires.
In addition to the insurance comparison, which is apt, there is the danger aspect to consider as well. If insuring your house isn't worth less than $7 a month to you, why the hell should the firefighter consider it worth their life (potentially)?
On the other hand, as a landlord it's not your health and safety you're gambling with. As long as your insurance company doesn't complain, spending a lot of money to decrease the risk of fire doesn't make financial sense.
> Don't spend money on insurance, spend it on stopping your house burning down.
Or do both (it's funny how IT types love those dichtomies).
And if you tell your insurance about your extra measures for fire safety, they likely lower your rates. They might even consult you about which fire safety measures are actually useful (and they have the data: data driven fire safety, how does that sound?).
Since fire insurance tends to pay for damage repair when things didn't burn to the ground, they're also useful in situations that are not as life threatening as your example. We had a warehouse burn down in town, and the neighboring house was affected in that the windows on two sides of the house melted enough to be useless. The cost of replacing all those windows can easily exceed an individual's short-term liquidity (a single event might even exceed the rates paid for the insurance over its life-time) - for the insurance that was pocket change.
The problem is that even if you fireproof your house, your house can still burn down. It makes more sense to fireproof your house AND have homeowner's insurance. You can't lower your risk of negative events to zero, but even so, that's not the point of insurance. The point is to have a safety net should some improbable event happen. I don't care how fireproof you make your house, it could still burn down, and you don't want to be without insurance when it does.
> if you are a millionaire and have a $200k house, then you don't really need to buy insurance for the house since you have ample funds to purchase or build a new one if the need arises.
Unless that fire spreads to someone else's property or kills/seriously injures someone, in which case you'll wish you had insurance.
> "Yes, buying insurance is bad if it disincentivizes you to work your hardest to prevent the outcome that you're insured against."
Most people here have home fire insurance coverage but don't have extinguishers (or haven't checked them in years), sprinklers, or a fire safe. So is fire insurance coverage bad?
Both are actually, in some sense, the same thing. Both are costs which you will pay instead of your insurance company. Because they don't pay those costs, their assesments of the costs of a fire will be off. Thus they will let some houses burn which optimally, would not burn.
However, my underlying point was really that it does make rational sense to allow some houses to burn. We could put a fireman on every street, and we'd probably save a lot of houses, lives, and heirlooms. But that would prohibitively expensive. Instead, we have to engage in trade-offs, having cheaper fire protection at the cost of risking some houses, lives, and heirlooms.
But nobody is suggesting they should have just put the fire out for free. They should have put the fire out and billed him a sum many times higher than what the insurance premium would have been. The idea of insurance is to cap your liability, not to be a precondition for receiving any assistance.
If there has been a rise in arson cases in my city that finally convinces me to get fire insurance, is that in bad faith? I have a reason to believe my house is now more at risk of burning down, so I'm buying insurance. It seems a much more realistic scenario than the one of having a arsonist slowly approaching a house (and even then, arsonist in general do not burn down most the buildings they approach throughout their lifetime, and even more so when you could individual approaches that result in arson).
What about someone who notices that they are getting older and are starting to develop aches and pains and decides to start buying health insurance that they had avoided when they were younger because they seemed to have been made out of rubber back then?
The Fire Department is paid for by taxes and puts out the fire. If you don't want to lose everything you own you can either carry fire insurance or manage to not have your house catch fire.
Are you suggesting that we should have government fire insurance?
I've never had any of my 3 houses burn down. I don't know why everyone says buy insurance, and having a fire extinguisher is a good idea.
It seems to me like a common misconception that you "have to have a fire extinguisher" (or other supression system), otherwise you'll have your house burn down.
I dont agree with your point. You fail to understand several things. I believe that when you have a building you need to be insured on your property, right ? Then, the lack of proper fire safety devices in your building should raise the risk on your property, and therefore raise significantly the cost of your building insurance. Should your building burn in flames and spread around, damaging a few other buildings around, your insurance would cover the costs (just like your car insurance covers the costs when you injure a 3rd party in an accident). On top of that, the surrounding property owners could sue you for financial reparations for lost opportunities (business, rent, etc...) for which you would have to pay.
In the end, anyway, the insurance contract would cover most of the damage costs. That's why insurance systems exist and are usually mandatory. And the free market should reflect the cost of having no fire protection in your property. Net, you would not need to have regulations to enforce that, the costs themselves would probably entice you to get at least minimum fire protection, based on the insurances recommendations.
Seriously, most people seem to be believe that regulations have existed forever and that civilization was born with it. On the contrary, the amount of regulations we deal with nowadays is a very recent thing in History, and most people lived before with other systems in place to ensure their safety without the need of Big-Ass Governments.
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