Homeowners Insurance Policies are getting CANCELLED

This is episode number 295 of The Homeowner Show. Whether you're DIY or looking to hire, we're here to help you find the best information and options for you and your home. My name is Kevin Hackett, and here with me is Craig. William.

Hello, hello, hello, and welcome to The Homeowner Show. We are so glad you could join us for another live episode. Here in the studio. How you doing, Kev?

Well, I'm just glad we're here right now.

I know how you're doing. It was an empty question. Cheers.

Cheers. Yeah, it's, uh, it's been an interesting night here at the Homeowner Show. We've been trying all kinds of new interesting things and nothing has changed.

Nothing's changed. Nothing's changed. We thought we could be innovative and cool and we thought wrong. We thought wrong. Let me tell y'all something. It is not easy to do a show like this.

It's not.

I mean, and we, we had some issues with our live, uh, episode, uh, a couple weeks ago.

Yeah.

And it made us like go into evaluation mode on some of our gear. Um, and we have good gear. Like, we have, we have, we have probably way better gear than most other podcasts. And that's not like being bragging or anything like that. It's just like, we, we have good gear.

Yeah.

And it was— it's just frustrating when your stuff doesn't work.

Yeah.

And it like, like the audio went down 30 minutes into the show and we lost a lot of good conversations.

Yeah. So, well, and on top of that, we chose— this was a choice.

Uh-huh. We chose not to record that one on, like, on site to have a redundancy recording. We recorded it, which, which— right, just recorded nothing.

Right.

For third— for like 2 and a half hours.

But We're so far we have audio, it looks like.

Yeah, it looks—

we look good. We'll see.

In other frustrating news, I got a little toy in my pocket here.

What is this?

Let's see here.

Here we go. Oh my goodness. What? Oh.

So in other frustrating news, here's the official dove report.

Yes.

For South Central Texas. It sucks out there.

The doves are nonexistent.

Or highly intelligent.

Yeah, well, I'm sure that's not the truth. So they're just— They've just decided— here's what's happened. They've decided it's way too hot over there. I'm not going.

Here's the thing, man, like opening, opening day was on Sunday. I didn't get to go that morning, but I went that evening. And, and then I went again the next morning and the next evening.

Yeah.

And we got skunked. I think the whole time we were there, saw maybe 7 birds.

Oh my goodness.

And like, like if you've, if you've ever been dove hunting, like you're used to taking like 10 to 15 a day.

Sure.

Like, that's your harvest. That's your actual state legal limit is 15, right?

And it's, and it's not terribly difficult to get there if you're a decent shot.

No. Yeah, especially if there's birds.

Well, that is, that is a prerequisite.

Yeah. But yeah, so, and we're, we're out on a lease and we've got access to like 1,000 acres or something like that. And, and so I'm getting frustrated. I took my kids. This was like my kid, like my kids all together first hunting trip.

Right.

And I'm wanting it to be like a good experience. They had a blast, by the way.

Sure.

Like, we made it as fun as we could. We took them out to eat during the day, and like, we did all the fun like hunting stuff.

As you should.

And, uh, but I was getting frustrated, and I was like, you know what, I'm gonna, I'm gonna take the ATV, I'm gonna drive over to some of the other lease spots, and I'm gonna, I'm gonna see what's going on. I heard there were some, there were some, I heard lots of gunshots to the east of us.

Okay.

Um, And I don't know if all those guys were just shooting at chichi birds or what.

They're just testing the rifles.

It could be. I mean, but like, more than likely they saw some dove. Maybe there was a good spot and we just didn't have it. But everybody that I talked to, everybody is getting skunked, man. So now I saw, I, you know, like, you, you know, those— there's the guys that get on Facebook and they post their, you know, their, their tailgate full of dove and You know, and they probably had like a food plot and all this kind of stuff, right? But like, dude, it sucked. It just sucked. And like, here, okay, and I had like the worst— like the one time I get, you know, when there's no birds flying, you're like, man, I just wish one would fly by.

Sure.

One so I could take a crack at it.

Sure.

And so I was— we had moved over to this other field And I was like, I'm gonna walk the fence line because there was nobody else there, and I'm gonna see if there's any birds, like, you know, sitting down in the grass or perched on the fence or anything like that. So I'm walking down the fence line and this one flies up in front of me, and so I take a shot at it and I miss it, and he goes flying over the fence. And I'm like, well, he gone, right? And so I'm watching him, you know, just kind of like, well, this is kind of fun. I actually get to see a dove.

Sure.

Um, so he flies like 60, 70 yards away and then does like a 180 bank and then comes back across in front of me, not even flying that fast. Like just kind of like, you know, just cruising along.

Was his middle feather up?

Yeah, might as well have been. 'Cause I was like, all right, cool. I took 2 more shots at him, still missed him. And it's like, these are shots that I make like all the time. It's like, while my daughter's watching me, and I'm like, I just walked back to her and I was like, Dad sucks.

Yeah.

I mean, just, just so you know.

Uh-huh.

And couldn't even get the one.

The one.

And it was taunting. And it was like on the way back, like the one dove with a suicide wish.

Yeah, exactly.

It's like, he's like, come on, man. Couldn't you get that?

What are you, what are you gonna do over there, old man?

Get the job done. It's like you had one job.

One job.

Kill me. I'm going back though. I'm going back. It's always— of course, man, anytime and anytime out in the woods is a good day.

It is a good day. Yeah, so for sure.

But, uh, so let's— well, let's do our sponsors.

Oh yeah, let's do it.

We got, we got some news stories to get in. We're gonna talk about homeowners insurance and all the nonsense happening there. Um, who we got up first? Well, let's start with Lone Star Appliance Repair.

Lone Star Appliance Repair, they're awesome, man. Like, I, uh, I was— we were at our, at our last show, we were sitting there talking to, uh, to one of the, the head maintenance guys, and— or the head maintenance guy. And, and it's just really great talking with him. And I'm sad that we—

Sad we missed that.

Lost all of that because what he was talking about was gold. And, and basically he said, look, there's so many things that you can fix and that you should fix. And one of, one of the big ones that I just thought, you know, we, we've talked about this before, but I want to talk about again is that so many times whenever an appliance goes out in your kitchen specifically, yeah, most people have purchased kitchen appliances to match. And so if you have this desire to just replace your appliances, but they're not going to match.

No.

Because those manufacturers, they're making new stuff every year like every other manufacturer out there. So it's going to look a little different, it's going to have a little different you know, feel to it. It's gonna look, you know, the, the finishes aren't gonna be the same. The handles aren't gonna be the same. The logo's probably gonna be in a different place. All this kind of stuff.

Yeah.

And, and most of, most people that come over to your house probably aren't gonna notice, but you're gonna notice.

You're gonna notice.

It's gonna be a lot easier if you will just call the appliance repair person. They will come out and most of the time they're gonna be able to fix it, fix it for cheaper.

Yeah.

And get you, you know, hooked back up pretty quickly.

Really, the, the, the thing that gets expensive on the repairs is like the computer boards.

and stuff like that.

Yeah, those are the parts. But like, if it's, you know, if it's other things other than like that computer on a lot of new appliances, it's relatively cheap to repair.

And a lot of those are repairable too, or replaceable.

They are. Yeah, they're just expensive parts.

They are.

Um, so it's— I mean, and there's no getting around it. I mean, like, you gotta— you can get them from one spot and one spot only, and they know it, right? Um, but if you want to, you know, if you want the people who are going to treat you right in the midst of something horrible happening to your appliance, this is a great company to call, Lone Star Appliance Repair. You can reach them at 936-647-2364.

Perfect.

Give them a call, guys. Also, we have True Texas Solar. True Texas Solar.

They're the ones. And, I actually, we, we just put a reel up about this the other day. I think I was talking about it. And, and the thing I love about True Texas Solar is they are the leader in the area. In fact, I, I was talking to the owner, Josh, the other day, and he was telling me that that there was some another business that was saying, hey, in the North Houston area, or really the Houston area in general, if we were to look for like the best company to partner with— this was another business— the best company to partner with for solar, who would it be? And everyone they talked to is like, True Texas Solar. Those guys are doing it right.

Yeah.

And now they've added roofing as well, so they can take care of you from A to Z, all your roofing needs, your solar needs, battery backup needs, um, all your top home coverings. Yeah, I mean, everything that you need, um, is exactly— I mean, it's, it's, it's what we need. So take care of your home's energy source by working with True Texas Solar.

Yeah, and I just— a quick reminder, everybody, because it's not just solar that they can provide you with. They also, you know, have the whole home battery backup systems as well as redundancy generator systems. Yeah, whole home generators. They can do those as well. And so like, you know, they can provide just a full suite of home energy independence for you. And who doesn't like not being at the teat of a tyrannical government?

Yeah. Yeah. And you know, there, there's actually some pretty cool new solar stuff coming out. I don't know if you've seen this. Have you seen the— have you Were you with us when we were talking about the new technology that's been developed that's like super thin, uh, solar panels?

I don't know.

Like, you can— you could literally, like, like a wrap on a car, you could make solar. Oh, that's cool. Yeah, it's that thin. It's very pliable, very workable. And, uh, they were talking about you can literally put it on a wrap on a car, or— That's super cool. Yeah, so there's some really cool technology coming out. Who knows? what, what all that looks like. But—

So could it, could it be like almost like a membrane that you would put like on a metal roof, I guess?

Yes.

Okay.

Yeah. And so, so now you're, you're basically putting— it's almost like you would put a tinting film on a window or, or, you know, yeah, you could literally just wrap your, your roof with this stuff.

Yeah.

And someone's developed this technology and apparently it's super, like, I want to see it. Like, I think, I think they said it's like 2 microns thick or something like that. It's like super, super thin. Um, but it would adhere to just about anything. And, um, yeah, more efficient. So we'll see. I don't know. But if you're interested in solar, want to learn more about solar, give them a call. True Texas Solar, 936-286-8325.

Awesome.

Yeah.

Give all of our sponsors some love. Go like their social media, but, you know, give them a call.

Let them know that we sent you.

Yeah. So anyway, this, this episode, I, I actually, I called Kevin earlier today, and I was like, hey, man, I think we need to talk about this because I was listening to the, the PBD podcast. And Patrick Bet-David and Tom over there were talking about some of the homeowners insurance stuff that are coming up in California because both those guys used to live in California, and they used to be in the insurance business in California. And, and so they, I think they have their heads wrapped around straight on this thing. Now, you could say that they're probably biased because they were in the insurance business, but they had some things to say.

It, it also means that they probably know more than you and I do.

Yeah.

Right.

They, they, they're, they're closer to the pulse of the insurance business in California for sure. Sure. Because they still consult in that business. But anyway, here's, here's the thing that the, the factual bit of it that actually sparked a news story out of the Wall Street Journal is that State Farm announced back in March of 2024 of this year. Okay. That it would not renew around 72,000 homes and apartment policies in California.

Now, we've talked about— before you continue, we've talked about the fact that there are places that are trying to cancel roof, like, insurance policies and try to segregate some things.

And, and that's already happening in Texas.

Right. Um, but that's, but that's not what we're talking about here. They're just canceling the homeowner's policy altogether.

Not renewing them.

Which, by the way, if you have a mortgage, you are required to carry homeowner's insurance. If you don't have a mortgage, I assume you can get around it, but why would you not? But still, you have most, most everyone that owns a home has a mortgage.

Right. And so the, the question you need to ask yourself is, and, you know, $72,000, you know, in, in the big scheme of things is not that much.

Right.

It's only affecting 2% of policyholders in the state.

Right now.

Right now.

Okay.

So, and that's, that, that's an excellent word to use, Kev, because I think, I think that's what's coming down the pipeline.

Yeah.

And, and so, like, this is, this is almost like a signal.

Right?

So what you— what I think everybody needs to understand is there's a reason that they're doing this. They're not doing it to just pick on 72,000 people.

Sure.

There's a business reason that this is happening.

I mean, it's almost like any, any time you want to figure out what's going to happen in college football, just watch the NFL. Anything you want to know what's going to happen in high school football, watch college football. It's a trickle-down effect. Absolutely. It starts at the top. And, and eventually Little League is doing it. Right?

Right.

Or, you know, Pop Warner or whatever you're calling it. Right? So this is what you're talking about right now. It's affecting these people.

2% of people, 2% of policyholders in the state of California.

Right.

And I, you know, I, my prediction is it's gonna begin to affect more insurance policyholders in California.

Yeah.

Because here, here's the other thing people need to understand is not renewing policies is one thing. Many, many insurance companies in, uh, particularly in hazardous areas to live of different states— because we're going to get into Florida here in just a minute, because in Texas is affected by, by both of these— but like, excuse me, there are insurance companies that are quietly saying that they're not going to write any new policies.

Interesting.

In those states.

Are they— but, but are they canceling these outright before the renewal?

So that's, that's a totally different thing.

Okay.

That's a totally different thing.

Okay. Gotcha.

Yeah. And so, so you, you have both happening simultaneously.

Geez.

So you, you have— and I'm, I'm gonna get into why I think this is happening here in a minute because there's some numbers that correlate that I think are pretty interesting. I, I kinda— I could—

I did a little bit of a deep dive on this.

I'm by no means an expert, but I was just kinda like following the, the cookie crumbs, and I was like, oh, Oh, isn't that interesting? Oh, isn't that interesting? Not not writing new policies is totally different than not renewing policies.

Okay.

So so you and so you have like companies like Allstate, right?

Right.

Allstate. I think it was last year, and I'll have the ba da da da da da da. See if I think I have this right here.

Yeah.

Okay. Yeah. In California, I think this is right. Someone can fact-check. I think it's in California, but Allstate quietly stopped writing new homeowners, condo, and commercial policies last year. So while maintaining the policies they'd already written, which I mean, I think is a good ethical and moral thing for them to do, they wrote the policies and the people have paid the premiums.

Right.

So, and they're— so they're honoring those, but they've said like, nope, don't write any new ones, man. So, but this— but like, things like that have a massive economic trickle-down.

Oh, sure.

Because if you don't know, like, insurance agents don't make most of their money on residuals, right? They make money on writing new policies, right?

That's it.

That's how they make their commissions. That's how they make their bonuses. That's how these guys make their money.

Right.

And so, like, you have— if you're an Allstate agent in the state of California, man, like, you might as well find another job. And that's the thing, man, is like, when, when people are like, well, I don't understand why so many people live in California. Really? Like, here's, here's just another thing to add to the list. Like, if you're an insurance agent and you live in California and you're with Allstate, you, you have 2 choices. you can move over to another brokerage, right? Or you can go to another state, right? Or if you're a good— if you're a good Allstate agent, why wouldn't they move you to another state, right? I mean, because you can— I mean, you could technically keep your, your book of business in California open,

but like, hey, why don't you go to Ohio, right? We have a— you know, we don't have wildfires in, in Ohio, right? And so you're a great salesman, saleswoman, Why don't you go there and start a new brokerage and sell a bunch of homeowners policies?

Yeah.

And they'd probably eat it up with a spoon. Now, it's not as pretty—

Sure.

As California. Sorry, Ohio.

Yeah.

Um, but I mean, you're just not— you, you have other good qualities. Someone still wants to invite you to the prom, right? Um, but, you know, you just won't be the king.

Right. It's just you won't be the first pick.

It's But like this, but this is what's happening, right? And so like, but the reason I was listening to PBD about it is because he was talking about part of the reason that this is happening, and it's a multi-layer issue, right? And most problems are like, if we look at any issue, I think in the United States, it's never just going to be like, oh, it's that.

It's not black and white.

You know, it's not, you know, it's not that person. It's not this. There's usually like a lot of things happening.

Sure.

Some are bigger than others, but Anyway, what they got on was price controls, and they started talking about price controls because that's come up in this election cycle because Kamala has been talking about putting in price controls on groceries.

I've heard this.

And here's what I'll say about price controls on groceries. Do you know the price? Do you know the profit margin for most grocery stores on average, percentage-wise?

I'm sure it's not super high.

If you had to guess, what would you think it is?

Oh, geez. Maybe 15%.

15%?

Yeah.

1.6%.

Oh, geez. See?

1.6% on average.

I mean, and by the way, restaurants aren't much better.

No.

The food industry in general is not doing great on— it's not like people are raking it in.

You want, you want to see some scary numbers? Look at the number of like you know, chain restaurants that are closing across the country.

Yeah.

I mean, it's, it's scary. Yeah. I mean, I'm not a big fan of those restaurants, so I'm like, I'm not like heartbroken, but I know I'm not heartbroken over those restaurants not being there anymore. What I am heartbroken about is the people that don't no longer have a job.

Sure.

Because those restaurants have closed, right? People that depend on that income in order to take care of their families.

Well, and some people— and look, whether you, you know, frequent those places or not, there are people that their date nights are at those places, right? You know, and for those people, they need those places too. Yeah.

Well, and like, look, I mean, like Outback Steakhouse, not my favorite steak, not even what I would consider a great steak.

Yeah, right.

But there are people that make good money serving tables at Outback Steakhouse.

Absolutely.

Because of the, like, mid-range restaurants It's one of the upper ones. It is, you know, like if you have a choice between like Outback Steakhouse and like a Chili's, I mean, again, there's nothing wrong with these, but like Outback's just going to be like considered—

Sure.

A more upscale date night between the two, right? And so waiters and waitresses can make pretty good money at an Outback because, you know, if you're going in there for a date, you're probably going to have a bottle of wine, you're probably going to have a couple of steaks, you're probably going to have an appetizer, there's probably going to be a dessert.

It's going to be $100.

Yeah. Easy.

Easy.

And so all that to say, here's what's happening. And so there is the California Fair Plan. Have you heard of this?

No.

Yeah, this is, this is some weird stuff.

I can't imagine it's going to be fair, but let's, let's get into it.

Okay. So this was, this was actually a plan that was voted in over 50 years ago in the state of California. Oh. Okay. And, okay, so here's what it says. The FAIR Plan's mission is to protect consumers. The Department of Insurance, led by Insurance Commissioner Ricardo Lara, exercises oversight under California law to make sure the FAIR Plan addresses the changing needs of Californians. Okay. And here's what Commissioner—

Because, because Californians are like, our needs are different today than they are yesterday. They're always changing. Anyway, go ahead.

He says, I am using my— this is Commissioner Lara. I am using my oversight to make sure all Californians have options for coverage that meet their needs. While the FAIR plan has a long history of protecting consumers, it must continue to respond to climate change and future threats. Okay. And so if you get into their website, Okay, let's get into this. And so this is when the numbers become interesting. The FAIR plan is available to California residents and businesses in urban and rural areas who cannot obtain insurance through a regular insurance company.

Okay.

So technically, they're an insurance provider.

Oh, right.

As of 2020, the FAIR plan covers less than 3% of residents, meaning more than 97% of Californians have a competitive option for insurance.

They're contradicting themselves here, right?

Right. But, but wait, wait, wait. How many policies did State Farm affect by pulling out of California?

How many? I don't know.

2%. Wow.

Okay, that's not even that many. Well, I mean, it's a lot of people, but it's not necessarily a large percentage.

So here's, here's my question. Who is State Farm most concerned about not having to cover with these unrenewed policies?

It's the 3% of the fair plan.

Of the fair plan.

Yeah. Yeah. But they, but they I would assume— They pulled out lock, stock, and barrel.

What, just on those 72?

On those 72.

Right. And so it's just those. And so I would assume the other 1% are being covered by other insurance companies. But like, they were the biggest. So what they're saying is we are dropping our riskiest clients.

Right.

Right?

Yes.

And if, if you read, if you continue, so like the FAIR plan Back in 19— what was that, '64? Or I don't know, when was it enacted?

Yeah, I don't remember what you said.

It says it's been around for 50 years. I think it's years.

So 70-something, '73, something.

Anyway, it's been around a long time. Yeah. So what it was initially put in place for was exactly for what it said, right? It's available to California residents and businesses in urban and rural areas who cannot obtain insurance through a regular insurance company. Why wouldn't they be able to obtain insurance through a regular insurance company?

Maybe their house—

You ever had to, like, apply for insurance?

I— well, I haven't.

Everybody does. Well, I mean, well, I guess on some level, but it's just so easy for most people.

Yeah. Most people can get it.

But why wouldn't an insurance company offer coverage?

Well, there would be a lot of reasons. It could be the house isn't in good enough shape. It's the area that it's in. It's in a high crime area. It's, you know, it's a high hazardous area because of You know, earthquakes or because of, you know, I don't know, all the— there's tons of reasons why people wouldn't be insurable as far as that goes.

Right. And so what the FAIR plan does is it forces insurance companies to take those policies. To take those policies.

And so State Farm's going, screw that.

Yeah. I'm out. Exactly.

Because—

and not only that, they're—

this—

the FAIR plan sets the rates.

Oh, so they don't have— so, so State Farm's losing money every time they have to sign one of these policies.

They're setting the rates and they're also setting the coverage limits. And so one of the—

Which means that State Farm's having to pay out on stuff they don't even want to pay out on. Right. Yeah.

And so in 2019, uh, Commissioner Lara, uh, raised the minimum— raised the limits for residential to $3 million.

Oh.

And raised the commercial to $20 million.

And I'm sure she had to raise them somehow. Just— Ricardo, excuse me. Yeah, uh, I'm sure he had—

they're sensitive about that stuff.

I know, I know. Sorry, sorry. So many things.

One day we might want to have him on the show. I doubt it.

I doubt it. Uh, she won't come.

Uh, but, um, so definitely not now.

But, but I, you know, the the price of houses have to go up at some— I mean, they're, they're going up. I'm sure the rate—

That's the excuse that they're using.

I'm sure it is. But $3 million, okay, $3 million in coverage on a— yes, in coverage on a home that's uninsurable. I doubt it.

Right, right.

I doubt it. It's probably— we're probably talking apples and oranges here. I will say this, and I'm, I'm not defending insurance companies, But if you really wanna figure out, I mean, insurance companies are in business to make money.

We assume.

And for themselves. They're in the business for themselves.

Absolutely.

And so—

It's a business.

It is a business, and it's equally a business decision to go, look, this isn't working for us.

Yeah.

So you're gonna have to make the choice. Do I stay in a situation where we're losing money Or do we make a choice to pull out? And, and ultimately, you— I mean, sometimes businesses' decisions suck, but you have to make them.

Yeah.

You know, so again, not defending them, but would you have done something different if you owned State Farm? Yeah, I don't think I would.

Well, and it's not, it's not just, uh, home insurance, it's also auto insurance.

Um, apparently that's getting increasingly more and more difficult because of all those EVs there. I mean, They're, they're not going to be able to buy a vehicle that, that isn't electric in what, next year? No, 2026, I think it is. In, in California, you're not going to be able to buy any vehicle that's not electric.

So this is, this is a quote from Mike Dorelli. I think I'm pronouncing that right. He's the executive director of the American Agents Alliance. He says, the withering availability of auto and home insurance in In the state— California is what he's talking about— seems headed for a death spiral. Never in my career have I heard from so many insurance agency owners and consumers desperate to buy auto or home insurance, yet unable to purchase it due to a lack of availability.

I love this. It's like, it's like supply and demand somehow. Oh, it's like, it's like, oh, you ran out of them?

Mhm.

Yep. You know why? Because we're not writing anymore. That's what it turns out.

Yeah. And so, like, you, you have big, big companies, big name brand companies.

Yep.

State Farm, Allstate.

Mhmm.

No longer writing any new policies in California. Jeez. And do you know, do you know the reason that they're pointing to?

Is it, is it the hazard stuff that they're canceling stuff across the nation for?

It's— so it's weird, man.

It's—

so what they'll do is they'll say, well, we've had too many catastrophes. And it's all because of climate change. And so that's— climate change has caused the forest fires.

Oh, okay.

And, and so they're able, they're able to have like this boogeyman.

Yeah.

Because of climate change.

Yeah. Because forest fires have never happened before the climate change. Not only that, California.

Not only that, man. Like, you, you have states with really dumb policies whenever it comes to fire. States like California and Colorado. And like, I've I've actually read some about this. They don't do any controlled burns in those states.

No.

And historically, controlled burns have been done in order to prevent massive forest fires.

Yep.

And unless they've changed things recently, which I doubt they have, because it's not considered super cool and hip to do a controlled burn.

Right.

But that tends to be what causes— when you do a controlled burn so that you don't build up all of that thatch, Right. That causes fires to sustain when they become big.

Yeah. Because if, I mean, if, if you've ever, if you've ever even watched, like, a fire show, like, one of the ways that you stop a fire from continuing to burn is to cut a line around it to where you're, it literally has nothing to burn.

Right.

And, and that's part of what you're doing in controlled burns. You're, you're making it to where the burn cannot spread as quickly. And so if you're not giving yourself that— I mean, here's the deal. At my house, I, I live on acreage. You do too. At some point, you got to cut your grass, even in places that you're like, I don't, I don't have to cut that more than a couple times a year, but I gotta cut it.

Yeah.

Because if I don't, it's gonna get overwhelming. Which is exactly what happens in a lot of these places. We have forest fires.

Yep.

So figure out a way to take care of the situation so it doesn't get out of control. But in those scenarios, what happens is now you're uninsurable because you're in an area where we're unwilling to do what needs to be done.

Yeah.

It's a problem.

It's a big problem.

And, and, and now, now we're having to have this conversation about people not being insurable.

Right.

And, oh, by the way, Guess what can happen if you don't have insurance on— homeowner's insurance and you have a mortgage? The mortgage can drop you.

Yep.

For, for that alone.

Mhmm.

And if you have no control over getting insurance and your mortgage company drops you, guess what's gonna happen?

Yeah.

You're gonna lose your house.

Yeah. Well, and, and what's gonna happen when California finally runs out all the, the reputable companies?

Oh, geez. I mean, like, really, it's gonna be, it's gonna be like Uncle Harry, you know, waltzing in there going, I'll do it. Yeah, I'll insure these people.

This, and this is, this is the problem, is we're going to create the wrong kind of monopoly.

That's right.

You know, I mean, and, and so, like, you're gonna be forced to pay these guys who provide no service, who refuse to pay claims. And, like, they'll probably pass some sort of legislation that makes them pay something or another. But, like, sure. They won't, they won't care.

No.

Like, like, it's going to come down to like 2 companies running the whole state of California because everybody else that has any business sense, why would you do business there?

Well, because in, in, when, with laws like this FAIR plan that you're talking about, which is fair to who exactly?

I mean, exclusively the consumer.

Exclusively the consumer. And I'll tell you right now, like, for people that own businesses, If your product is only valuable if the consumer wins, only the consumer wins. Yeah.

And you lose every time.

Then your product becomes useless.

Right.

And you will take it off the shelf. You will remove it from your service list. But if you don't have that option, what are you gonna do? You're gonna leave.

Right. And I, I think everybody can understand this pretty, pretty well when I, when I said that you know, grocery stores' profit margin is typically like around 1.6%.

Yeah.

And I think part—

So low.

I think part of the reason is that in grocery, there's a lot of waste. Not because they're wasteful. It's food. It spoils. Things get in it.

Yep.

Stuff happens. There's a lot of lost product.

Sure.

In between creation, packaging, and actual sale.

Sure.

And not only that, we're dealing with produce. Not all the produce sells. And so you have a lot of loss. It doesn't— like, those stores have to buy all that produce.

Right.

They don't just like—

And if it goes bad, it's not on loan from the farmer. No, you throw it away.

You throw it away.

That's right.

And that's a loss.

Yep.

And, and so like that, I think that's why their profit margins are so—

Dude, I opened up yesterday, uh, uh, a carton of sour cream.

Okay.

And it wasn't— it like the, the, the expiration date on it was like October 3rd, something like that.

Okay.

it already had mold in it. Oh, it just sucked. And I'm like, what in the world?

Yeah.

And, and it's that kind of stuff, right?

Right.

Like, and that, that quality control from the, from the manufacturer, whatever it is.

Yeah.

But I, I wound up, just because I don't care, I just scraped it off and got the stuff underneath it, you know? But there's gonna be some people, they're gonna take that back.

Yeah.

And they're gonna want their money back. And what is the store supposed to do?

Give it to them.

Give it to them.

Or give them another thing.

And what— and exactly. And what are they gonna do?

They're gonna throw that away.

Yep. and they've just lost all that money. Right.

And so, but here's, here's what I'm talking about. So, and just, just assume that I'm right, that it's 1.6%.

It, it could be 1.7%.

1.7%. Let's just—

It's not like you do— you and I don't have a friend who might know a little something about this, manage a fairly large grocery store.

Let's, let's, let's be generous and say that it's 2%.

Okay. Okay.

And, and someone comes in and says, you know what, I'm I'm implementing price controls on all groceries.

Okay.

Right. You can't— and you can't charge more than this amount for a gallon of milk. You can't charge more than this for a loaf of bread. You can't charge more than this for a pound of ham.

Right.

And so they just go through and they do that because this is what should be an affordable price for food.

Right.

We all know exactly what's going to happen.

Oh, yeah. The many— I mean, You have to buy that from a distributor, and the distributor gets it from the manufacturer. This is the way that happens.

The distributor's prices aren't going to change.

They're not going to change. You're going to pay the same price because, because the, the distributor has to— the distributor has to make money, and they're getting the money— the, the product from the manufacturer. And guess who's going to make money? The manufacturer. So the manufacturer's got to make money, the distributor's going to make money, the grocery store has to make money. But if the grocery store has to sell it for per a certain price, they're the end— they're the end of the line.

So one of two things is going to happen. They're either going to drop the product.

Yep.

Or the government's going to start subsidizing the cost of food. And we all know how that goes.

Well, I'll just tell you, we wind up in a completely form— a completely different form of government at that point. Or it—

we create a massive bubble that's unsustainable because the government doesn't have any money.

No. Well, they can print more. They can—

Look, this is, this is always the solution, right? Let's just print some more.

Right. But it happens daily. Every day. Yeah.

But like, this, this is, this is what I'm talking about. And this is now happening with the insurance business. It's because California is coming in and saying, Look, insurance policies need to be at this price.

Yeah.

And they need to be able to cover this much.

Yeah.

And if you can't get insurance through regular provider, we're going to provide you with insurance.

Right.

Right? Here's the other sneaky thing that I learned is the reason that this actually works for them. What, what do governors do every time there's a natural disaster?

Uh, they trot themselves out in front of a camera and start talking about how they're going to take care of everybody.

And what do they ask the president to do?

Uh, come in and, you know, they ask them to make a declaration, right? Declaration. Yes, it's a war. It's a, it's a natural disaster.

Natural disaster.

Natural disaster.

Why do they do that?

Uh, because so that the insurance can take care of all the people.

No, no, no, no, no, no. It's so that it opens up FEMA.

Oh, FEMA. So the government has to take over so the insurance doesn't have to?

Because as soon as the president makes it a natural disaster and FEMA is involved, the state then begins receiving federal money.

Yeah.

And, and so they can now fund their FAIR Act.

Yeah.

Through FEMA. They can get all that money and, and, and the state will go, hey FEMA, don't even worry about it. We got, we got a way to distribute everything and get everything. We, we already have the, the system in place. And so like, it's, it's like they are funding these weird bureaucracies that aren't even necessary. It's like, Let insurance companies be insurance companies.

Right.

Let the market do its thing. Let the cheap guy be the cheap guy. Let the expensive guy be the expensive guy and let it all come out in the wash.

And so, by the way, and, and again, we, we do our very best not to, you know, necessarily take strong political viewpoints on the show, but I will say this because we have opinions, but I will say this. who you vote for matters.

Yeah. Because there are consequences.

There are consequences. And, and honestly, I— there's, there's a lot of people out there that are going, look, I'm not one of the people that's probably gonna be affected by the FAIR Act. Like, I can take— I can afford my homeowner's insurance. I can do things on my own. And those same people many times would say, I care about The person who can't. Right. I do care about those people. Now, how do I, how do I help them? You know, I, I, I feel helpless. I can't just help everybody.

Right.

And honestly, to help one person's like thousands and thousands of dollars. How, how can I actually help them? But I do care. I wish they weren't in a scenario where they feel completely entrapped. Right?

Right.

You, you can choose who you vote for. Yeah. And you can choose how the person that you elect actually is going to take care of things because you voted for them.

Yeah, I think— but I think we're also witnessing the amount of despair that people, or at least the faith that they have in their vote counting, because I think what we're seeing is a lot of people moving to areas where they feel like their values are represented.

Yeah.

And I think that's a lot of the mass migration that you see from California, from New York to places like Texas, Tennessee, and Florida.

That's right.

And again, that's not to degrade anybody's political view. It's like, I think there are conservative people living in California and New York that are just done with having to live in those regimes that are not going to change.

Right.

anytime soon.

No.

And so they're like, I'd just rather— I'd rather relocate and go to Texas, Tennessee, or Florida and, and find new people, right? Um, and I, I, I've— I can't tell you the number of times I've, I've read it's like, I've been in California for 60 years and I finally had enough.

Yeah. And I was like, good Lord, finally enough.

Look, I meet some people, I'm done in 5 minutes.

Yeah, that's right. Your pain tolerance is higher than mine.

Yeah, you're a better man than me.

That's right.

Um, but anyway, so here's, here's kind of the last bit of this is big news story not too long ago. This was back in July, but it, it came as much of a lot of relief to homeowners in Florida as State Farm, uh, decided to stay in Florida and Farmers Insurance completely pulled out of Florida.

Oh, really?

Yeah. And, and so, like, and, and so, like, like, Farmers pulled out, but, like, State Farm was, like, on the fence, and they decided to stay. And I think it had, like, a lot of negotiations going on with DeSantis.

Sure.

But, uh, it was a big deal. It was a really big deal.

Yeah.

Um, because you lose those 2, and, like, you're down to next to nothing.

Yeah.

I mean, and, and, and here's the thing, man, is, like, in Florida, I don't know that you have anything like the fair. And when you, when you lose 2 big ones like that and you don't have price controls in place, what are the ones that are left gonna do? Well, they're gonna jack their prices up.

They have to.

They have to.

Yeah.

And that, that's the thing I don't— I think a lot of people don't understand is, like, the reason some of these insurance companies aren't writing new policies and wanna move out of these states is because they're coming up against legislation that is forcing them to behave in ways that are contrary to their benefit, to the, the well-being of their business, right? And, and, and so like, it's not— and this is, this is very much like the restaurant thing. Like, we're going to run up against where you're not going to have any more good agents in the states in which you live because you're not allowing the business to operate. And what has happened— and, and again, this is part of like a bigger

picture, you know— everyone got really excited about the places that they lived during the pandemic when the prices on their homes got jacked up.

Yeah, of course.

Right?

Yes.

And so even though the prices got jacked up, a lot of people's insurance policies didn't change.

Right.

And, well, the price of materials went up. The price of gas went up.

Yep.

Cost of living went up. And so an insurance company, when you live in a state like Florida where you have the potential for natural disasters, a hurricane come in and blow your house down.

Mhmm.

What would have replaced your house 4 years ago—

Doesn't anymore.

It doesn't anymore, but you're operating under that same policy.

Mhmm.

And so now the insurance company doesn't have the bandwidth to repair these homes because the cost of the materials is 3 to 4 times what it was before. The, the cost of the labor has gone up.

Yep.

Everything has gone up, and they're looking at it going like, oh my gosh. Like, if we have the same kind of policy claims that we did over previous years, like, we're gonna be upside down.

Right.

And, like, it doesn't take an idiot to look at that and go like, oh my god. Because, like, you know, you have the guy come out, the, the claims adjuster and all that kinda stuff that comes out and looks and, okay, what's it gonna cost? What's this gonna cost us? And those guys are independent. And so they're just, they're just feeding numbers back and forth. And, you know, even though people look at them and go like, you work for the insurance company and you're just here to screw me.

No, they don't.

It doesn't work like that.

No.

Um, they're not all nice people because they get booed and hissed at all day. But sure. Um, there's some good guys, good guys out there.

Sure.

But like, they're, they're just reporting back and the insurance company is like, oh my gosh, like our, our costs on these policies has doubled, if not more.

Right.

So how can we sustain business? We can't. So it's more worthwhile for them to go, you know what, we're not going to do business in hurricane states, we're not going to do business in wildfire states, we're not going to do business in tornado alley.

Right.

I mean, I guarantee you they're looking at all the most high-risk areas of America and going like, look, we can make, we can make way more money by selling policies in the safest places in the states.

Yep.

And why wouldn't they?

Why wouldn't they?

I don't know. So I would. Yeah, especially when you have states like California that are going like, well, you can be here, but you're going to operate under these. And so like, you can't write policies that are going to be paying more than this, but they have to at least pay out $3 million, right?

The, the policy dictates you have to.

Yeah, the state's dictating that.

Well, I know, but I mean, that you wrote the policy.

Yeah.

And so you have to— you're bound by it at that point.

So, and, you know, in our business, what we've always said is like, whatever's happening in California, just know it's going to be here in 10 years. And I, I think that's true across a lot of businesses. California is the— I think it's the biggest economy in the US state.

I think so.

Um, which is a weird one to me.

Yeah. Uh, there's a lot of stuff out there, but it's a huge Silicon Valley.

And well, Silicon—

well, because, because so much of it is, is high dollar too.

Yeah, you're right. So, so anyway, that's all I got for tonight, man.

Yeah, me too. I think we're— I think we're good. It's late here, so we're gonna— we're gonna end this, y'all. Um, thank you for hanging out with us, even if you are watching us live. We appreciate you very much. If you have not already found us on all of your favorite channels— YouTube, Facebook, Apple Podcasts, Spotify, Pandora— wherever you want to look at us, we're probably there. Thank you for hanging out. Leave us a 5-star rating review on Apple Podcasts. Subscribe. Tell your friends about us. Until next time, we'll see you later. See ya.