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[icon] Anybody have fire statistics? - Patti
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Subject:Anybody have fire statistics?
Time:01:21 pm
I'm trying to figure out the approximate probability of having your house destroyed in any given year. I'm pretty sure that the major non-natural-disaster cause is fire, so I'm focusing on that.

Basically, I'm trying to back-of-the-envelope the EV of homeowners insurance, and I want to do it with "what are the odds that your house gets destroyed next year?"
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hgfalling
Link:(Link)
Time:2009-01-07 09:41 pm (UTC)
Here's some data:

http://www.iii.org/media/facts/statsbyissue/homeowners/

So according to this nationwide, the frequency of fire claims is 0.58 per 100 house years, and the severity of such claims is $19,666 on average. Also note that fire claims make up only about 25-35% of total claim dollars were fire/lightning related; water damage, wind, etc.
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whipartist
Link:(Link)
Time:2009-01-07 09:48 pm (UTC)
Actually, the pie chart at the bottom was pretty close to what I needed. On average, $.53 of every homeowners insurance dollar is paid out as part of a claim.
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prock
Link:(Link)
Time:2009-01-07 10:12 pm (UTC)
I'm impressed that 22 cents on the dollar goes to sales comissions.
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andrewhime
Link:(Link)
Time:2009-01-08 07:07 am (UTC)
Wow, which company is THAT?!
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gurzil
Link:(Link)
Time:2009-01-07 09:44 pm (UTC)
Obligatory.


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whipartist
Link:(Link)
Time:2009-01-07 09:49 pm (UTC)
One of my favorite movies.
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gurzil
Link:(Link)
Time:2009-01-07 10:22 pm (UTC)
Been a long time since I have seen it, but just remembering this scene makes me laugh.
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shabbirjsafdar
Subject:Calculating the EV of insurance
Link:(Link)
Time:2009-01-08 06:40 pm (UTC)
I find insurance for things like your home to be one of those situations that doesn't lend itself well to probability calculations. Why? Because the consequences of losing your home are disastrous. The probability calculation helps you decides if you're being grossly overcharged, but in general you go into the experience knowing you're going to pay more than it's EV.

Conversely, I feel the same way about the lottery for decisions regarding a $1 (and only $1, no more) play per draw. It's life-changing money, so the -EV is compensated.
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whipartist
Subject:Re: Calculating the EV of insurance
Link:(Link)
Time:2009-01-08 07:34 pm (UTC)
Right. But I can say, "You know, insurance is a really sucky bet in terms of EV. However, there are other factors that make it sometimes worthwhile."
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shabbirjsafdar
Subject:Re: Calculating the EV of insurance
Link:(Link)
Time:2009-01-08 07:38 pm (UTC)
I suppose if you were to put a price tag on the emotional toll it would take, it would come out even or +EV unless it was particularly poorly priced insurance.
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whipartist
Subject:Re: Calculating the EV of insurance
Link:(Link)
Time:2009-01-08 07:54 pm (UTC)
Exactly. Sometimes just pure mathematical EV isn't the whole equation.
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[icon] Anybody have fire statistics? - Patti
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