Let insurance experts worry about the risks

Imagine, I trade in my clunker and on the way home I hit a deer. As I pull into my driveway, I notice smoke coming out of a basement window. Quickly, I call an insurance agent, and tell him I just bought the car and, by the way, I really need some fire insurance, too ... can I get a deal if I cover them both with the same company?

Do I have any right to expect to be able to buy auto or homeowners insurance today? Can you say “pre-existing conditions”?

Should insurance companies be required to accept such risks?

Suppose you are insured by the company in question. What might happen to your insurance rates if that company is required to cover me? Layman's lesson number one: The right to underwrite and accept or decline applications for insurance exists to protect you and keep your insurance rates as low as possible.

When rates do rise, “good” risks (like you in the example above) will shop for lower prices. The technical term that describes the tendency of insurance companies to accumulate higher-than-average risks because good risks leave and the bad risks can't is called “adverse selection.” That's why insurance experts like Barack Obama and Dave Loebsack should not be dictating insurance reform.

Jay Kacena

Marion