Insurance prices vary, depending on where you live, and this includes auto insurance. If you lived in a flood zone, your flood insurance would be much higher. If you live in a rural area, your auto insurance will be cheaper than if you lived in a city.

Insurance laws vary from state to state, and this also affects prices.

Yes and no. Your home insurance rate will be in large part dictated on the particulars of your situation, but you're also part of a "pool" of funds, meaning if the insurance company has to pay out $$$ in claims, the rates across the board will go up to cover the costs, even though the claims have nothing to do with you. It's not fair, but that's the way it is.

Here are some rates for Illinois. Note that you are in a tornado zone (and this zone is changing) if you are in Illinois, and that affects prices.

Insurance varies per zip code. Across town, just 5 miles away, my car insurance & house insurance is lower, for instance. Seems there are fewer accidents and fewer hail claims up against the mountains. It's a slower part of town...scenic. Drivers aren't in a hurry. Houses are old, historic, not wealthy. The BMW's & Teslas live in another section of town with BIG garages, big additions....insurance is higher over there. Living in a wooded forest is higher risk, than in a city. Up the pass, there are mud slides and rock slides since we've been having so much rain lately. Higher risk exists there. Out East, away from the mountains, tornados touch down. All this is factored into insurance rates.

Lars, chisue and I live in an area of Illinois where tornadoes are very rare. But, I think the rest of the state’s tornado alley raises our rates and, as you say, the zone is changing. We also didn’t used to get the hail that other areas did, but that has been changing. (chisue, after that hailstorm last year our insurance went up 40%! Although that’s also because our company told us we can’t do Actual Cash Value for the roof anymore; we had done that for the lower premium.)

All insurance of any kind is local (rather than "regional"). You'd have to talk to someone in an insurance company's risk evaluation/premium setting department to learn how and to what extent.

Loss experience is evaluated and pinpointed by location, as nicole mentioned. Property and car insurance indeed can vary by zip code. For structures as an example, repair and building costs can vary widely from place to place. If a house in Chicago is being insured, loss and theft experiences and rebuilding costs from a small town 75 miles away would hardly be relevant to consider. And vice versa.

Rates also vary from state to state because I think most all states (perhaps all?) regulate insurance companies and the regulatory bodies in two adjacent states, for example, could hardly be expected to come to the same findings for a given premium hike submission.

I'm not sure the infrequency of a particular risk is necessarily what tips the scales completely either because some loss types can be catastrophic and enough to overwhelm any one company. As an example, all structure insurance in my area excludes earthquake damage. The last major earthquake in my area that caused structural damage was in 1989. But I don't think anyone would ever say earthquakes on the West Coast are rare - I think "infrequent" is a better word.

There is a state-founded entity that offers earthquake insurance. I can't say with certainty how common it is to get, few people I've ever spoken with on the topic have said they had it. I never have.

I think flood losses in some (most?) areas is a similar exclusion requiring separate coverage.

It seems to me that insurance companies have to be able to cover policy holders claims wherever they live -- while also remaining profitable. The risk is spread over the entire 'pool'. My individual calculated risk is only a small factor when whole sections of the country are now at real risk from climate change. Big sections of the pool of insured homeowners are filing more and larger claims.

Insurers are raising rates, and they are also cautioning that a lot of home owners are sorely under-insured, given the higher risks. Insurers have even opted out of insuring in some high-risk areas. This is a serious problem for individuals and the nation.

How would you buy or sell a home that can't be mortgaged because it can't be insured?

According to this news report, 33 tornadoes hit Chicago area last month.

I don't think they are rare there anymore. Tornado alley has moved.

If you have a mortgage flood insurance is mandated if you live in a high risk flood area. Earthquake coverage is not mandated. Flood and earthquake insurance aren't covered by a typical home insurance policy. Both home and auto insurance rates are affected by zip code no matter if it is a local or out of state provider. I believe flood insurance is federally run and earthquake is state run. I have neither so, I could be wrong.

Lars, the lake, actually an inland sea, has a moderating effect, very rare for tornadoes to hit near it. Waterspouts form on the lake but do not do damage on land, except if they are right at the lakefront.

" It seems to me that insurance companies have to be able to cover policy holders claims wherever they live -- while also remaining profitable. The risk is spread over the entire 'pool'.

I won't assume what your understanding is but I'll suggest to you that the whole reason for having small pools is so that the risks being "pooled" are done as among policy holders with similar risks. I promise you that your house insurance doesn't include a substantial factor to offset higher rates of theft and damage claims among homes in the "nearby" rough inner city areas.

Damage from water and floods to houses on flood plains and on or near the sand at a beach are far more common and frequent than earthquake damage in earthquake prone areas.

Also, there's no need to mandate earthquake insurance. Major insurers said long ago "we're not interested in selling that, period". Massive losses must be infrequent enough that lenders are happy to bypass the requirement.

As I understand it, there are private insurers who offer earthquake insurance in California though the state agency is the largest carrier.

A few people I know who have houses in more wooded areas (like the Santa Cruz Mountains) have been told by their home insurers that fire coverage will not be renewed when their policy years end. There's apparently a provider, not sure if it's state sponsored, state run, or just state founded, that offers that. At one time, there was a car insurance category called "assigned risks" for people with a lot of claims and or tickets. I'm not sure how that worked (or works, maybe it's still around) but the fire coverage a friend explained sounded a bit like that. The coverage was pricey too.

Not everyone agrees with the lake effect theory regarding tornadoes and Chicago. This is enough for insurance companies to discount the idea that the lake protects certain areas from getting tornado damage in the future.

My understanding is that Illinois does not approve premium increases prior to implementation while some other states do in an attempt to keep price increases reasonable. I may be wrong on this and/or it may only apply to auto insurance.

With regard to the 30+ tornadoes that went through the Chicago area earlier this summer, they tend to go to the west and SW of the Chicago area as they can pick up speed passing over the farmland west and south of city. Although it was scary that one funnel cloud passed just west of the Chicago Loop where tornadoes were previously very unlikely to occur. For those of us north and northwest of the city we are less likely to have a tornado touchdown, but it certainly is not impossible. 🤞🏻 There were a couple of instances this summer when I headed to the basement until the danger was past.

" I don't think they are rare there anymore. "

Weather patterns are all in flux, and the past is not necessarily a predictor of the future. That's one of the insurance industry's prime jobs: predictions.

“if the insurance company has to pay out $$$ in claims, the rates across the board will go up to cover the costs, even though the claims have nothing to do with you. It's not fair, but that's the way it is.”

Why is it not fair? Insurance pools risk, and they need money to pay claims. One option to avoid this and avoid paying for anyone’s risk but your own is to self insure. The buy-in price is steep but the annual premiums are generally nonexistent.

”How would you buy or sell a home that can't be mortgaged because it can't be insured?”

I called an agent local to where I’m looking, to see if it would be possible to get flood insurance for a particular property. Come to think of it I don’t think she ever answered the question but she did say getting ”any” insurance would be hard in the area would be tough because the market is closed. She told me of a type of policy I might be able to find, but it tends to be expensive and not great coverage. I forget the name. One answer to your question is ”cash.”

" One option to avoid this and avoid paying for anyone’s risk but your own is to self insure. The buy-in price is steep but the annual premiums are generally nonexistent. "

LOL - that's not self-insuring, that's not insuring. Self insurance would be paying premiums regularly into your own dedicated bank account intended just for such needs. The premiums are huge, though, because you're carrying the risk entirely on your own, but I bet if you paid premiums of, say, 10x what you pay the insurance company, you could probably manage it if nothing happened for a decade or so.

"Why is it not fair? Insurance pools risk, and they need money to pay claims."

I understand that, and I understand full well insurance is a business, plain and simple. But still - it may not seem fair to people who are in a low-risk area, always paid on time, and have no claims. And then boom! a huge jump in policy premium to cover others' losses.

I live in a relatively high cost state for auto insurance due to no-fault. There was a big whoopdeedo about the legislation that lowered premiums, which it did for all of about one policy cycle then boom! right back where we started at -- no, higher actually -- due to the cost of insurance claims pay-outs. I guess the rates would have been even higher if it they weren't lowered for a short while, but that piece of legislation is its own can of worms and a state-specific issue.

What did I say that made it not self-insuring? The fact that I didn’t specify exactly where the funds would sit? It’s a lot of money and I wouldn’t put it in a ”bank account.” And personally I wouldn’t spend a decade fully funding it. To me, what you describe is ”self underinsuring.”

I run self insured programs for a living. Nothing FOAS has said is incorrect. I genuinely don't understand what is so LOL -y about it. 🤷‍♀️

" I genuinely don't understand what is so LOL -y about it. 🤷‍♀️ "

Because FOAS' comment about a high buy in but no premiums is funny. Kind of like saying "No, the river isn't too cold to swim in.....The water temperature is great, it's just the crocodiles you need to watch out for."

My expectation for assuming a risk includes preparing for that risk.

My suggestion funds the ”policy” up front. Yours funds it over ten years. I’m really interested what makes you think your way is better. Aside perhaps from getting a feeling of assurance you’re paying a “premium” I fail to see why your method is beneficial.

" My expectation for assuming a risk includes preparing for that risk. "

Does that change anything about your incorrect or misinformed assumption about what self-insurance is, how it's handled? You can admit you spoke up with no knowledge of how it usually works.

I've dealt with many situations where companies self-insured various risks and none of them were ever funded. Not one. And even if hypothetically funds were "set aside" with such intent, there would be nothing to prevent use for another purpose. With one exception - large companies self-insuring large risks sometimes set up captive insurance companies. Another way of saying - their own insurance company. So that amounts set aside to fund certain future needs can be deducted when set aside, without waiting until they're spent.

I wonder what ally de's experience is? She would seem to have first-hand knowledge and experience.

I can't understand the focus on "premiums." Aside from captives, I have also seen some small employers get sucked into group self-insured trusts. I wondered if the experience being related was something along those lines, assuming that was the only way to do it. Or something.

TV, if you're giving a speech to clients trying to push pet insurance, perhaps what you said helps motivate some of them. It just doesn't compute in a larger sense. Sorry if I am being dense.....

" I have also seen some small employers get sucked into group self-insured trusts. "

Sounds like you're describing situations where some rubes got had by overly enthusiastic sales efforts, shoehorned into an approach they really didn't need.

My firm is self-insured for employee medical and prescription drug benefits. What does that mean? They bear the benefit reimbursements directly. An "insurance company is engaged to administer the benefit plans, meaning - everyone has an insurance card, claims and bills go to the insurance company, it pays what the plans provide, and a billing for complete reimbursement is sent every week to my firm to payback the insurance company for the claims it advanced money to pay. The firm has partial reinsurance for coverage of catastrophic claims - you know, someone whose condition runs up extremely high costs. Rare diseases and the like.

Why done this way? Cheaper. If buying insurance in the alternative, the firm is large enough to be its own risk pool and so the premiums would be the sum of the claims paid, the cost of administration, plus reserves, plus profit for the insurance company. By self-insuring, only the first category of costs are incurred. This is common for large employers in whole or in part. Employees are usually never the wiser about it, I happen to know as a part-owner. .

My wife’s is the same. But as the one who introdiced "self insured" into tye conversation, clearly I meant homeowners insurance on sn individual basis. Not largr employer health plans.

Self insurance is self insurance, the concept isn't different depending on the risk involved. I mentioned it as an example of one kind only.

The company pays out the benefit so from their perspective the plan is self-funded. From the insureds’ perspective they are paying regular premiums into a socialized plan jist as if they were pauing any insurance carrier. Most won’t even know the plan is self-funded, as you yourself said. It’s apples to oranges from what I was suggesting in the context of this conversation, even if there are some similarities in terms and concepts..

We self insure for long term care. In the nineties we each took a LTC policy that DH's employer recommended. It was affordable at the time, but eight years in the premiums were increasing rapidly. I looked into the predicted care needs for people most like us -- our socio-economic cohort -- and we decided to bail. We were able to salvage something by paying up an aditional two years of the then-current premiums. That would provide 30% of the then-current benefits. (Some dollars are better than none!)

I think LTC policies (and reverse mortages) are often better for the insurer than the insured.

Aren't ALL policies better for the insurer than the insured? No one goes into the insurance biz to lose money.

" From the insureds’ perspective they are paying regular premiums into a socialized plan jist as if they were pauing any insurance carrier. "

"Socialized" is an odd word to use here.

A medical care benefit is exactly the same whether an insurance policy underlies it or a "self-insured" plan does. "Premiums" paid by participants are not actually insurance premiums in either flavor because the amounts paid never find their way to an insurance company to pay for a policy. It's a copay to reimburse the plan sponsor who bears the cost however structured.

" Aren't ALL policies better for the insurer than the insured? No one goes into the insurance biz to lose money. "

A curious comment. What businesses do people go into to lose money?

Businesses that lose money and can't support themselves with profits go away. They provide no goods, no services, and no jobs. Is that the kind of business you think is better?

Aren't ALL policies better for the insurer than the insured? No one goes into the insurance biz to lose money. "

A curious comment. What businesses do people go into to lose money?

Businesses that lose money and can't support themselves with profits go away. They provide no goods, no services, and no jobs. Is that the kind of business you think is better?

Elmer, your comment is bizarre. Nowhere did I imply that there is anything wrong with making money, Chisue mentioned two kinds of insurance are better for insurers and I simply stated that all insurance policies are designed to make money..

I wss about to respond but given yoir response to Lucillle I think the majority of readers will cleaely see the csuse of all misinderstsnding on this thead.

You two are welcome to enjoy each other's misunderstandings. The concept that a product or service is "better" for the provider than for its customers is a difficult starting point.

You can avoid "socialism" altogether. Employees can always decline specific benefits and maybe your wife should decline medical care coverage. (Another odd comment).

Insurance policies are regulated and approved by each state where sold. profits and losses are regulated. anticipated claims must be protected. i was a claims person and the last nine years i was a paralegal in the law department handling claim litigation of a multinational insurance corp.

Currenly a below average typist.

You can avoid "socialism" altogether. Employees can always decline specific benefits and maybe your wife should decline medical care coverage. (Another odd comment).

Hoo boy. Who said anything about socialism? Who said I objected to insurance plans and why on earth would my wife decline medical coverage?

I said socialized plan meaning costs of the plan are socialized among the insured. “Shared” if you prefer.

My comment was intended to question the value of LTC policies -- and reverse mortgages. I believe that Homeowners insurance provides more than 'feel good' benefits, and it is required for people with mortgages. Of course, we're required to have Auto insurance.

The insurance industry and others are also saying that many homes are currently extremely under-insured due to risks from climate change. This is especially important because a house is so often an individual's largest financial investment.

" I said socialized plan meaning costs of the plan are socialized among the insured. "

As someone who worked with clients, providers, and subject matter advisors on employee benefit matters, including health plans, I'm quite comfortable in saying that your imaginative effort to back out of a mistake is a fail. I've never heard that word used as you suggest.

The definition or use you've tried to imply is yours and yours alone.

Elmer, the irony is that where I first heard the term used in the context of shared expenses was during my tenure at a Fortune 100 insurance firm.

Now since of course neither I nor anyone else can hold a candle to your vast worldly experiences, elite intellect and storied career, it would be foolish to expect you to take me at my word. But a quick google found the term used similarly, clients sharing a financial expense:

When investors sell mutual fund shares, portfolio managers will often have to sell securities to come up with the cash to facilitate their redemption requests. This cash-in/cash-out proposition can be costly, resulting in trading costs and tax bills. These costs are socialized across all mutual fund shareholders--even those who haven't bought or sold.

The Benefits and Drawbacks of Active ETFs | Morningstar

Now, before you waste time conjuring up some pedantic response in order to allow you to pull that tail out from between your legs, let me assure you I DON’T CARE and here’s why: Because the first time I heard the term I used context clues to understand what was meant. I didn’t need to ask, I didn’t need to question it. “Context clues” is a concept my kids were taught in elementary school. If you learn it and practice it, maybe you’ll feel less need to derail conversations. Because even if you believed I used the term awkwardly - and even if I did - you’d still know what I meant. And you’d leave it alone. Unless you needed your daily superiority fix.

Your internet search turned up a match in an unrelated area. Are you suggesting that mutual funds and employee health plans are similar?

I recall you've said your work experience was in an administrative support area. You don't gain industry experience walking by the company name on your way in and out the front door.

I'll stick to what I said, your pretense isn't convincing. No problem for me, I know what I do and don't know.

I didn’t say mutual funds and health plans are similar, what I was suggesting was a similarity in using the term to describe sharing expenses across a client base. It’s exactly what I meant the first time second time, and any time after that. So your allegations of me trying some ”imaginative effort to back out of a mistake” is the true fail here.

And I suspect you misrecall my experience, but I bet it felt oh so good to once again cast your superiority.

So now you’re stuck on employer sponsored plans? If you take a look back at when I introduced ”self-insured” into the conversation, the context was an individual assuming their own risk as opposed to paying into insurance. It was as simple as that before you tried to impress us. If I tripped up along the way so be it (not an admission, just seriously not worth revisiting.) Everyone with or without "experience in this area" knew what I meant. Maybe even you did. Do you EVER tire of stroking your own ego and belittling others?

Apologies to everyone else for letting myself get sucked in once again. I’m trying not to, I promise. And with that, good night I’m out.

sucked in once again.

Years ago someone on KT saved me from a lot of grief by saying that 'just because someone throws the ball, you don't have to catch it'.

When an insuer provides health insurance for an employer, that employer is the group policyholder, not the client. lucille i let myself get sucked in. client may have been apprpriate before the effective date of the group policy, but not when the coverage is being provided.