Regulatory loopholes in the California landlord insurance market

[Lilia Matlov]

How can this be legal? Has anyone else encountered a similar situation? What happened to property insurance in California?

I bought a new landlord insurance policy, and the insurance company asked me to sign a disclosure statement saying they can collect my premiums, file for bankruptcy, and then be exempt from providing insurance coverage. This kind of thing only happens in America where lobbyists control Congress.

[Lilia Matlov]

Quote from @Greg Scott:

I have not seen that other states.  Rather than congress, I'd blame the California government's insane insurance scheme. 

Anytime the government tries to control prices, like they do with insurance in California, the market will react.  From what I have read, insurance prices in CA should be much higher than they are now, and insurers are not allowed to raise prices without approval from the State.

In one story, a guy wanted to buy insurance and was willing to pay for it but nobody would insure his Pacific Palisades home.  He went to the state program but his house was above the maximum California would cover, so he was "naked" (no insurance) when his house burned down.

If you are an insurance company hoping to stay in business in CA, but losing money, and are not allowed to raise your premiums, what would you do?  I would probably slip a clause in that says if I go bust, I'm not covering you.

The darkest part is that the insurance industry, especially in California, is one of the most heavily regulated industries. This means that this issue has been brought before hundreds of local and federal lawmakers, yet it is still allowed to be written into law. The entire system needs to be dismantled and started over.