THE U.S. is a riskier place than it was only a few years ago. Racial unrest, drug addiction, campus mayhem and rising crime have added not only social hazards but also economic costs to everyday life. When a house is burglarized or a school vandalized, almost everybody has to pay some part of the bill—through higher insurance rates. Changes in society, including the real or imagined decay of moral standards, have also exacted a toll. Insurance executives used to assume that loss claimants were honest; now the presumption is that many people cheat a bit. Greedy motorists and crooked repairmen conspire to kite repair bills and split the dividend. Noting that fire losses have climbed 15% so far this year, one Manhattan insurance broker says: "No one ever loses an old suit in a fire."
Partly because of the shift in attitudes and partly because of inflation, insurance for auto, fire, and especially burglary, is becoming much costlier and, in many areas, hard to buy at any price. Burglary insurance is no longer generally available in the larger cities of at least a dozen states—California, New York, Pennsylvania, Illinois, Ohio, Michigan, New Jersey, Massachusetts, Missouri, Maryland, Connecticut and Delaware—plus Washington, D.C.
Many companies now avoid writing policies on mountain, seashore and vacation homes because they are too exposed to vandalism and fire. One loss is often enough for underwriters to cancel a home or auto policy. For example, Greta Waingrow, a housewife in Brentwood, Calif., not long ago collected on a policy after the mysterious disappearance of her engagement ring. "It was the only thing of value I'd lost in 17 years of insurance," she contends. A month later, the company canceled her policy—without explanation.
In the field of auto insurance, blameless motorists are sometimes left uncovered because their companies have quit writing insurance in states with heavy claim losses or high auto-theft records, like New York. A number of insurers refuse burglary policies to bachelors, divorcees and widows because they live alone; others try to avoid writing auto coverage for the young, the aged, bartenders, race-track employees and clergymen.* A few companies are pulling out of the auto field entirely. Insurance companies are not obliged to underwrite doubtful risks. But applicants who are rejected for auto or housing policies can generally get at least some insurance at higher rates through assigned risk pools.
Cost of Design. In some places, premiums are going through the roof. Auto-liability rates recently jumped 23% in Florida and 90% in Hawaii. That may be enough to push some motorists into alternative means of travel. Bernard White, 23, a teaching assistant at Michigan State, saved $2,100 to buy a new car this summer. Then he discovered that liability insurance would cost him anywhere from $330 to $650 a year, depending on what company wrote the policy. A bit shocked, White did some figuring. "In three years," he explains, "I would have paid 50% or more of the purchase price for insurance." Instead of a car, he bought a motorcycle.