Pricing Money: A Beginner's Guide to Money, Bonds, Futures and Swaps

Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by nostrademons on Friday June 16, 2023 @06:04PM (#36364544)

Note also that in some cases you might be the optimal person to hold the risk that your house burns down, if, for example, your liquid net worth is 100x the replacement cost of your home. And that's illustrative of the value of markets: you can choose to transact in them, depending on your personal circumstances. The insurance market exists because for the vast majority of people, rebuilding their home is not feasible with their current net worth. But for a small number of people it might be, and for a small number of firms it's probably worth it to insure many thousands of people, and then you can even slice up the shares of those insurance firms and sell them on the stock market so that the risk of your house burning down gets socialized across all the other shareholders but at the same time you have a stake in the profits.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by nullindividual on Friday June 16, 2023 @08:33PM (#36365849)

It’s not a choice to be part of the insurance market for the vast majority of American homeowners. What you describe is choice in name only.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by rfrey on Friday June 16, 2023 @08:55PM (#36366019)

Your parent literally said

  if, for example, your liquid net worth is 100x the replacement cost of your
  home.

and

  for the vast majority of people, rebuilding their home is not feasible with 
  their current net worth.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by ezconnect on Saturday June 17, 2023 @01:09AM (#36367494)

He's saying you are required by law to buy insurance for your house because of government regulation. There's no way of saying no.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by borski on Saturday June 17, 2023 @03:32AM (#36368119)

Please point me to this law. Unless you are in a mortgage, no law requires you to hold homeowner’s insurance, and you can absolutely self-insure, to my knowledge.

The same is not true for auto insurance in most states, though most also have an option to self-insure by putting up collateral.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by h2odragon on Saturday June 17, 2023 @07:08AM (#36369098)

There may not be a law explicitly stating you have to have homeowner's insurance. But.

Without such insurance, specifically the "injury liability type" with its limits; then if someone gets injured on your property there may be no limit to your liability.

So even people who could afford the loss buy insurance because it is the best method of limiting intangible risks.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by borski on Saturday June 17, 2023 @08:12AM (#36369546)

People who can afford the loss buy insurance because it is simpler peace of mind to do so, not because it is the law.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by robocat on Saturday June 17, 2023 @08:56AM (#36369807)

> there may be no limit to your liability.

You can put the house into a limited liability company, which theory should limit the liability to the value of the house.

Depending on whether director negligence was involved etcetera.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by MechanicalTim on Saturday June 17, 2023 @03:43PM (#36373825)

My understanding is that for an LLC to provide protection the house would have to be used for purely business purposes and that there can be no co-mingling of personal finances. the concept is called "piercing the corporate veil". IANAL but I looked into this pretty extensively when choosing how to protect myself with investment properties.

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by nullindividual on Friday June 23, 2023 @02:28PM (#36450551)

Insurance is required by the lender (yes, I understand people purchase with cash outright, but that's a vanishingly small portion of the population).

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Re:Pricing Money: A Beginner's Guide to Money, Bonds, Future... by im3w1l on Saturday June 17, 2023 @10:06AM (#36370268)

Rebuilding a shitty house is quite possible for a person. Like people can literally build simple shelters in a time frame of hours. It's only because of so many regulations and rules that you have to go into multi-decade debt.

For instance, apparently the EU is currently considering a regulation that houses must be energy efficient. Getting a current house into compliance would cost on average $50k. That kinda stuff adds up.

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