When the subject of unusual insurance policies comes up, people usually think of Lloyds of London, the venerable insurance syndicate that has been insuring almost anything for over 300 years. In addition to writing mundane policies, Lloyds has insured Tina Turner’s legs, Keith Richards’ fingers and even Tom Jones’ chest hair.

Now we have a San Diego firm offering to write policies that some observers might find just as odd but, sadly, could be a prudent investment for California property owners. The Ward Group LLC, in partnership with the AmWins Group, Inc. is offering to write policies to protect property owners against losses suffered if they become victims of eminent domain — the government taking of private property. A Home Value Safeguard policy would provide up to $200,000 to cover loss of market value when the home is taken, plus up to $50,000 to relieve the expense of moving.

The use and abuse of eminent domain has become a major issue since the 2005 U.S. Supreme Court decision in the case of Kelo v. the City of New London. In this case, the city wanted to take the middle class homes of Susette Kelo and her neighbors to make way for a development including an office building for Pfizer, the giant pharmaceutical company. The court said there were no federal constitutional protections for the homeowners — even if the property would not be used for public purpose — as long as the city could claim that there was some "public benefit." (Of course, the plain language of the Constitution refers to public "use," but so what?) In this case, the public benefit was higher tax revenue. 

However, the Justices added that individual states were free to establish more stringent protections for the owners of private property.

Not surprisingly, most states reacted very quickly to this horrendous decision by making it more difficult to take private property from unwilling sellers to be turned over to other private interests, while maintaining the traditional power of government to use power of eminent domain for public purposes like schools and roads.

California is notably absent from the list of states providing these protections to property owners. Here, government can continue to take homes, business, farmland and even houses of worship to be turned over to private developers for strip malls and other profit-making projects.

While some property owners may want to consider eminent domain insurance, there is even more powerful insurance being offered on the June 3rd ballot, and it’s free. Proposition 98 will bar governments from seizing private property to be turned over to other private interests, without interfering with government’s legitimate ability to acquire property for truly public projects, like roads, dams and fire stations.

If voters approve Proposition 98 three weeks from now, they can take great comfort in knowing that their property will not be taken by greedy governments looking to increase tax proceeds. And isn’t providing peace of mind what real insurance is all about?