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The Hidden Costs of Riots and Reckless Government
Citizens in places like Chicago, Seattle, Portland, and the other cities that have seen rioting in the last few months are hoping for some respite as the summer ends. Whether it arrives or not, their financial interests have already been severely damaged, and most of them don’t even recognize it yet. But they will. Everyone must pay the piper after the dance.
When you insure your house, one of the things the insurance company looks for, in terms of assessing risk and setting premiums, are things like your local fire department. How is it rated? Is it a city service, or is it manned by volunteers? What are response times like? That’s because the most common loss associated with insuring houses is fire. Thus these questions have an impact on assessing the risk and setting the premiums.
It’s also why there are exclusions in the insurance policy. For example, an exclusion for criminal acts. If a criminal act (like making methamphetamine) leads to a loss, it will be uncovered. Landlords have to keep this in mind when renting. Similarly, if an intentional act leads to a loss (usually the insured committing arson) that too is uncovered. Insurance companies want to insure only against fortuitous losses. One insurance company even includes an exclusion for any “act or failure to act” by the insured. That’s a pretty broad exclusion, and it’s rarely enforced, but it’s there to keep honest people honest.
Now that the Miracle Mile in Chicago has been looted, its stores and businesses (and even a Tesla dealership) destroyed, it is pretty clear that insurers are going to take notice. They might pay this kind of loss one time, but they won’t pay it again. As soon as the policy period ends, so will the insurance contract, and it won’t be renewed. If it does get renewed, that $1,000 policy is going to be a $10,000 policy because the risk is so much higher. For the Marxists and Communists following along, this is how capitalism works.
And the cities that are sending their police out like so much cannon fodder and seeing huge utilization of workers’ compensation policies. Do you think those cities will get by with paying the same premiums? Do you think their burned-out police cars are going to be replaced without some kind of adjustment in the policy? An insurer understands a vehicle might be lost to a high-speed chase, but not to a bunch of adolescent gang-banger wannabes.
Consider a city like St. Louis, MO. The inner city, called St. Louis City, is its own county. It’s the hole of the donut. Surrounding it is St. Louis County. The county has its own police force, but so do much smaller towns like Brentwood, Ladue, Florrisant, St. Ann, Manchester, and others. Beyond those smaller cities, there are cities in Jefferson County, south and west of St. Louis City and St. Louis County, that are still a part of the same metropolitan statistical area. Every one of those cities, even if it hasn’t seen increased losses and increased costs for its municipal employees, is going to see their insurance costs skyrocket.
And retailers like Target, Walmart, Best Buy, and many others are going to find their premiums for theft losses going way up, particularly in cities like Seattle, Portland, Los Angeles, Chicago, and DC where the idiotic and gleeful plea to disarm and defund the police is being enacted by the woke, social-justice idiots who were elected. When a police response time increases from five minutes to half an hour, and when your city police send out an email that tells residents not to “walk alone” and be “ hyper-aware of your surroundings at all times,” in addition to advising to “give up your cell phone and purse/wallet,” because “robberies may still occur,” it’s a safe bet that insurers take note of that and adjust their rates accordingly.
And even restaurants, like that infamous Wendy’s in Atlanta, are going to wind up paying more. In Missouri, a landlord, while not an insurer of his guest’s safety, must take notice of dangerous conditions and take actions to protect his business invitees. Premises liability insurance premiums will skyrocket. The price of a Big Mac, which the internet says is an average of $5.67 in the United States, will climb by $1.50 in these areas. Are you still “lovin’ it?”
Because these riots have produced arson on a grand scale, with housing, apartments, malls, and other structures being burned to the ground, fire insurance in these cities will be more expensive, as will liability insurance for landlords and corporate actors. The natural and probable consequence of this is easy to see coming.
So what happens when a landlord who charges $750 a month for an apartment suddenly finds himself paying $150 more per apartment for insurance? Rent goes up. That rent goes up for people who not only didn’t riot but likely didn’t approve of the idea of defunding their police. It’s the poorest people, with the most to lose, who really suffer when police response times inch upwards of an hour.
Not only does rent go up, but the price of a laptop at Best Buy in these cities will need to be adjusted by upwards of 35% or more to account for the increase in insurance premiums being paid both for building integrity as well as loss due to theft. Get your clothing at Target? Even assuming it rebuilds and stays in Minneapolis, the prices are going to nowhere like what they were before the great Floyd Conflagration.
Who does this impact the most?
It impacts the very people who can afford it least. While a bunch of pimpled, white, college-dropout goons dressed in black was busy burning these places, they were staying home, obeying the law, and doing what they have always done: trying to stay out of the line of fire. They are most in need of affordable housing, but they won’t get it from the government now because the Antifa goons burned down their affordable housing in a fit of rage. They won’t be able to get it or afford it from private landlords either, because those landlords have to protect their investments. They’ll do that by setting rents that are likely out of range of many of the people who, if they could, would flee from these Democrat-run hellholes. Housing prices will fall as thousands flee to the more rural areas and visit their friendly neighborhood gun store on the way.
I recently saw a tweet from someone who was likely missing a few of the more functional brain cells. It suggested that the fires set in Portland were “peaceful” because it was only property, and “property doesn’t matter until black lives do.” I find it a felony conviction of the education system in this country that this moron did not recognize that by engaging in this behavior she increased her own cost of living by hundreds, if not thousands of dollars every year. And, of course, many of the people rioting, looting, and burning are not even citizens of these cities. They come from out of state to take advantage of a pathetically weak criminal justice system designed to sing criminals to sleep with lullabies instead of pulling down their pants and beating them until they wail and beg for mercy.
Antifa is passing on a hidden cost to all of these citizens.
Many do not individually deserve it.
But they all deserve it collectively. They voted for the clowns that refuse to back the blue and stand up to the thugs. They got what they voted for, not what they deserve.
They can change that.
The question is, will they?
Published in Law
“But the insurance companies are like, part of the system maaaan.”
The invisible hand of economics has a way of correcting all wrongs, eventually. Great post!
@jamessalerno I agree. I am not a fan of the adjustment side of insurance, but it provides a service and, when properly administered by a corporation that is not corrupt, it has great social utility. I never planned on becoming an insurance lawyer, but I wound up becoming one based on the cases that crossed my desk.
If property destruction isn’t violence then police would be justified burning down the homes of suspected criminals.
They don’t care. In fact, if they understood it, they would be positively gleeful. “The worse, the better,” is the age-old revolutionary’s motto.
When can we start killing the revolutionaries? Asking for a friend with a helicopter.
@anthonydewitt I have only a slight understanding of how insurance companies set rates, but I understand than they are regulated by the state.
Do you foresee any possibility that a populous and politically influential county, say Cook county in Illinois, could pressure state regulators to force statewide rate setting, so that tranquil cities and counties in Illinois would in effect subsidize the insurance rates in politically reckless jurisdictions like Chicago?
Can you you foresee any way that insurers could legally redline entire cities or counties by declining to write coverage in such areas… Minneapolis, for instance.
Can state government become an insurer of last resort? Sort of like Obamacare for areas at high risk of rioting/looting if commercial insurers will not accept the risks?
Thanks.
I had two contractors phone out/delay some work we’ve got going on in the Willis Tower, we lost a couple days during last round of riots too.
Trust me, the work at home/Covid-19 event has real estate owners and planners looking very seriously at scaling back on the commercial property footprints.
These Leftist morons in city governments better get their act together quickly, they are running out of time and patience from the money-people (even the Liberal ones). The cost savings is some serious low hanging fruit that owners/shareholders will demand get picked.
@limestonecowboy All these things you posit could happen, the question is merely whether they would be constitutional. It seems like an uncompensated taking for citizens in Quincy, IL to pay for high risk property insurance in Chicago. But Chicago has controlled Springfield so long it hardly matters what’s possible. It’s really just a question of how inflamed the electorate would get in that situation.
@wicon it isn’t low hanging, it’s practically boxed fruit. We were on a conference call for one of the foundation boards I’m on, and several of the people have said they were told by their employer to come pick up their computer and take it home. Several places have been shuttered, and this was before the riots. So, you’re right. Add increased insurance costs into that equation, and why on earth anyone would maintain an office downtown is beyond me. My firm used to have an office in downtown KC. Really nice officer on the 23rd floor of a big building there. About 20 years ago they moved out to the suburbs in Leawood, KS. No one has to fight traffic. Now, with this pandemic, I think they may think about an even smaller footprint.
Their concept of how property insurance works is roughly on the same level as their concept of how health insurance worked was a decade ago, when they couldn’t see why the insurance firms would charge people with pre-existing conditions higher rates, or why they wouldn’t let people buy insurance when they get sick.
They have no idea where the money comes from, and if they do try to think about it, envision the insurance company operators as Scrooge McDuck, diving into a vast vault full of unlimited piles of money they could easily give to their policy holders. In the current situation, they know the insurance companies have the money to pay out claims on riot after riot, and if for some reason they stop offering policies or only offer them with massive premiums, it’s nothing but pure greed.
Well, Anthony does have a mustache. @anthonydewitt, do you twirl your mustache and laugh evilly as you cancel insurance policies right and left?
Heavens! @richardfulmer .. I don’t work for insurance companies. I have sued a bunch though. I understand their utility. My beef with them is that they offer coverage and then, when there’s a claim, they decide not to pay based on some specious policy defense. I have a Missouri Supreme Court case (Burns v. Smith) where the insurance company literally tried to tell the Supreme Court that “and” really meant “or” and that interpreting it to mean “and” was absurd. I quoted Inigo Montoya: “you keep using that word. I don’t think it means what you think it means…” That was a fun case.
The Guarantee Clause of the Constitution, Article IV, Section 4:
“The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened), against domestic Violence.”
It would seem that “We the People” have a Constitutional right to be protected from Domestic Violence and Insurrection, meaning I think the Local governments in these various cities, including my own of Los Angeles, have failed to uphold the Constitutional Rights of many of it’s citizens, particularly those who own small business, and have egregiously allowed, due to deeply partisan political considerations, egregious domestic violence due a purposely insufficient effort to control it. It might be different if a strenuous serious effort had been made to control this violence but we all know that is not the case, particularly when these cities ,like my own, have in the face of the violence reduced the funding for police and have allowed certain individuals like the rioters and the homeless far greater protections that ordinary citizens and have waived enforcement of the law against these ‘protected classes” – a direct violation of the Equal Protection Clause.
I would think that these small business would have a cause of action in that case that says they were wrongly injured due to the willful and knowing lack of police protection afforded by these cities.
This is where I am.
Also, does your friend give rides?
Bryan, I infer that @omegapaladin’s friend does indeed give rides… Short rides with a rapid descents.
It’s better to ask forgiveness than permission.
Insurance for a civil disturbance, an oxymoron if there ever was one, is difficult, and quite expensive if one can get it to begin with.
Factor in slow first response times in the situation that exists in Portland perhaps a claim will be paid one time. After that the aforementioned insurance will probably not be offered a second time.
Yeah. The KC commute isn’t bad compared to other cities, and it isn’t even that bad from where I’m at on the south side, but I still save an hour a day. Not small potatoes in terms of time, let alone cost.
Mencken comes to mind.