The One-Bite Rule

In most jurisdictions, the law recognizes that the owner of a dog should not be held responsible if their dog unexpectedly bites someone. The first bite is free. After that, it is foreseeable, and the dog owner has a responsibility to contain the animal for the safety of the general public.

Not surprisingly, insurance takes the same position. Insurance, after all, is there to protect you from unexpected losses and occurrences. They’ll pay for the unexpected event–but not for the foregone conclusion. There is no advantage in it: insurance being loathe to pay out in the first place; and it doesn’t serve public policy to encourage risky behaviors.

Which brings us to Texas, specifically, and FEMA generally. Despite their anti-socialist political rhetoric, Texas is more than willing to seek, and accept disaster relief for their recent cold-snap debacle. I tend to want to help folks out when disaster strikes, and many of the people of Texas are struggling, largely without fault on their own part. After all, part of the purpose of the social safety net is too help in emergencies, even if the emergency was foreseeable. But we might want to look a little harder at the underlying circumstances, and adopt an insurance viewpoint–the one bite rule…or else our policies risk making the foreseeable inevitable.

Texas, as a state, and as an energy provider, was well aware of the risks posed by winter weather. A number of reports had pointed out its vulnerability–the cause of which was not winter weather, but by the fact that the Texas Grid failed to provide safety measures for perfectly predictable cold weather. After all, Iowa does it–and they were hit by the same storm. In fact, all of the northern states have safety redundancies built into their systems to address both excessive hot, and cold weather. Texas doesn’t. In fact, Texas opted out of the national grid decades ago, specifically to avoid the kind of regulations required in other areas. Texas decided to go it alone. You know, it’s that Texas rugged individualism–that spirit of personal responsibility. Yeah, right.

Whose hand is out now?

I am not suggesting that we do not help the true victims of this emergency. But I think we need to look hard at the next emergency.

When disasters hit–hurricanes, earthquakes, wildfires, droughts, floods, etc., it is only humane to provide emergency relief. But we have done more, using federal tax dollars to rebuild in the wake of catastrophes. We need to be smarter about that, especially since we’ve done so little to forestall the impending impacts of climate change. I’m not the first to advocate the one-bite rule, but too frequently, it’s advocated in harsh Biblical terms, instead of connecting the dots of common sense.

We can, and do, investigate the causes of natural disasters, and what could have been done for prevention or mitigation. Sometimes, we’re even smart enough to require changes to building codes or zoning, to prevent recurrences. Not always.

By providing rebuilding relief, in areas plagued by fire, flood or hurricanes, without restrictions, we may ensure repeat failures. So it isn’t unreasonable to require that such relief come with commons sense conditions. Perhaps rebuilding should require fireproof construction methods–or braced construction designed to withstand earthquakes. We shouldn’t provide flood relief to areas that we know will flood again. There are some risks that are so likely that areas should be abandoned to further development. That doesn’t mean we don’t help at all–it just means that the help is conditioned on higher standards, and/or relocation. And we really need to look at this, now–before the worst of climate change hits our coffers.

FEMA relief affects all of the other market driven systems. If FEMA restricts future bail-outs in a given area regarding a particular risk, insurance companies will back away from that market. After all, insurance isn’t in the business of saving us from known hazards. If insurance backs away–the banks will follow. Developers won’t be able to get financing for building where the risks are too high. One wonders if the ultimate beneficiaries of generous FEMA policies haven’t been unscrupulous developers and financiers. It’s time to make policy make sense.

There’s one more step to minimizing losses in the future. Let’s revisit that heralded concept of personal responsibility. And by this, I don’t mean that disaster losses should fall on the shoulders of the innocent. I mean that those who don’t prepare for foreseeable risks should bear the costs of that failure. Hello Texas! Your energy companies should be responsible for ALL of the repair costs to homeowners, cities, counties and utilities for their dereliction of duty regarding winterizing their facilities. After all, there have been several reports on ERCOT’s risks regarding cold weather operations–each report following smaller disasters. We’re not talking impossibility here–northern states do it. What we need is responsible stewardship. We cannot allow irresponsible, for-profit operators to ride on the backs of taxpayers with disaster bail-outs, when the disaster could have been avoided by common sense responsible operations.

If it can work for dogs, it can work on a larger scale.