On: Did insurance fire brigades let uninsured building...

[fatbird]

A reporter on the scene spoke to the homeowner, who said he didn't pay the fee because he thought he could just pay after, like happened previously. He literally thought he could get away with not paying unless a fire happened. It's a textbook case of moral hazard.

I discussed the case a lot at the time it happened, and it never came out that he "forgot" to pay the fee. It was very clear at the time that he thought he didn't need to and they'd put out the fire anyway.

[LorenPechtel → fatbird]

Exactly. There are two separate cases:

1) Insured by another company. The sensible course of action is to fight the fire and bill them. Every company benefits from such cooperation.

2) Uninsured. The moral hazard problem, if too many people are not paying the only sensible approach is to let uninsured buildings burn.

[bombcar → fatbird]

People do the same with AAA - don’t pay to renew until you need a tow and pay the renewal over the phone. I think they’re a bit smarter now and make you pay for the years you skipped.

[grogenaut → bombcar]

That's hard as I wouldn't back pay but my insurance company goes back and forth on doing roadside depending on if you have comprehensive and has changed the rule and rates to be more or less competitive with AAA. When it's cheaper I use my I aurance, when not AAA. If they made me back pay I wouldn't use them. But I generally don't just do the sign up and tow immediately.

[bombcar → grogenaut]

I think it’s only when you want a tow same day - renewing a failed account has a three day waiting period if you don’t pay the rush fee.

[HWR_14 → fatbird]

I had not heard that. Reports I saw at the time said he "forgot".

At any rate, in response to the story, the county changed it so paying when your house was already ablaze was a punitive but not impossible option. I believe it was $3,500 when they instituted it.

Which, frankly, seems like the proper way to handle the moral hazard.

[david422 → HWR_14]

That's still the same problem though. If nobody pays the town is still going to be out money even if it's possible to collect $3500. And the reason they don't put out the blaze and then just charge if someone doesn't have insurance is because they won't be able to collect.

How do you deal with freeloaders in society?

[tsimionescu → david422]

Definitely not by letting them or their belongings burn down.

[HWR_14 → david422]

The town was paying for a fire department anyway. The additional fee ways for people outside the town.

Meanwhile, governments have excellent was of collecting on low-four figure debts secured by real estate.

And, as I pointed out, the appropriate punishment for freeloading is paying a heavy fine when you opt to use it.

[fatbird → HWR_14]

The problem is that the municipality is a subordinate gov't within the county. They have no leverage over people outside the municipality, and basically had to have a court fight for every uncollected fee/fine, which rapidly ate all the money that could be collected... if the person living almost tax free on unincorporated land in a mobile home had the money to be collected.