Insurance doesn't generally cover flood damage for structures in flood zones, or does so at a much higher price.
The point of briandear's example was that wind had damaged the roof and walls, and wind storms were covered by the insurance; whereas flooding had damaged the floors, and flooding was not covered by the insurance.
When you get insurance, it doesn't necessarily cover everything. You might have insurance that will pay for your home if it catches fire and is destroyed accidentally, but will not pay if a person deliberately commits arson. Insurance might pay of your home is destroyed by a storm, but not by a landslide, and so on.
The main problem I heard with briandear's example is that people apparently didn't understand the coverage they had purchased. If I operated an insurance company, I would consider summarizing the policy that people were about to purchase with a simple form showing the most common hazards. Maybe even show them with simple glyphs depicting fire, floods, storms, etc., and indicating whether their plan covers that scenario or not. Ask them to sign or initial that form. It's not a legal form, but you'd present it to them and ask them to confirm they understand it along with the contract text version.
Then, when an event happens and they're asking for an insurance payment, you show them the form that they had initialized, and explain how things were covered or not covered.
I would also want to explain to people that multiple disasters can happen at once, and explain how the insurance company will reason about what's covered, based on the cause of each thing that was damaged or destroyed.
> The main problem I heard with briandear's example is that people apparently didn't understand the coverage they had purchased.
While that's true, a part of the reason is the complexity of policies, and exclusions for situations which people consider "common sense" to be covered. Situations which are medium risk, but part of people's everyday lives.
For example, my travel insurance does not cover accidents which are "a result of drug or alcohol influence". My laptop loss insurance does not cover theft if it is "left unattended in a room with public access".
It might make sense to exclude getting high on unknown drugs in Thailand and stabbing yourself, or leaving your laptop on a truck stop cafe table while going to the toilet.
But at the same time, having a few beers while on holiday, and leaving your laptop on your desk at a startup office are both things which reasonable, responsible people still often do. And would not expect to invalidate their insurance cover.
Unfortunately nobody could explain to me the precise details of these clauses - what counts as a "result of" or "public access".
I wonder how much extra insurance companies are able to charge consumers because it is so complex for most people. There is massive information asymmetry there in favor of the insurance company which almost certainly is reflected in higher margins than they'd otherwise have if they had an educated customer able to properly assess the offering.
The point of briandear's example was that wind had damaged the roof and walls, and wind storms were covered by the insurance; whereas flooding had damaged the floors, and flooding was not covered by the insurance.
When you get insurance, it doesn't necessarily cover everything. You might have insurance that will pay for your home if it catches fire and is destroyed accidentally, but will not pay if a person deliberately commits arson. Insurance might pay of your home is destroyed by a storm, but not by a landslide, and so on.
The main problem I heard with briandear's example is that people apparently didn't understand the coverage they had purchased. If I operated an insurance company, I would consider summarizing the policy that people were about to purchase with a simple form showing the most common hazards. Maybe even show them with simple glyphs depicting fire, floods, storms, etc., and indicating whether their plan covers that scenario or not. Ask them to sign or initial that form. It's not a legal form, but you'd present it to them and ask them to confirm they understand it along with the contract text version.
Then, when an event happens and they're asking for an insurance payment, you show them the form that they had initialized, and explain how things were covered or not covered.
I would also want to explain to people that multiple disasters can happen at once, and explain how the insurance company will reason about what's covered, based on the cause of each thing that was damaged or destroyed.