> I just don't like betting against myself.
Hm? That's not how insurance works.
Hm? That's not how insurance works.
You can think of insurance as a small & certain loss to hedge against a large & uncertain loss.
If stuff happens and you do need to cash in on that insurance policy, the payout should be thought of as saving your butt, also known as indemnification.
An airbag in your car is a form of insurance. You spent $X to protect yourself in a collision. The small & certain loss is spending the $X. Say you unexpectedly end up in a crash, but instead of dying, the airbag saves your life. It protected you from a death, the large & uncertain loss.
The idea of that buying an insurance is making a bet against yourself doesn't make sense to me. Insurance is more about making sure you don't lose. It's reducing risk, and a bet feels like taking on risk. The insurance company is the one making the bet, not the policy holder.
Replace the airbags by a long pointy metal spike that goes next to the driver throat.
Would that impact the way you drive? I think you would be super careful. Then, why do you think an airbag will not impact the way you drive? It does - only in the other direction.
We all have unconscious bias. Insurance increase risk. I want to minimize my risk, not my average payout. This requires recognizing my own biases.
If I'm kidnapped and dead, all the money in the world won't bring me back. So I'd rather feel unsafe, as it will discourage me from taking risks. In other words, I will not bet against myself.
I don't like making bet against myself, regardless of the reasons behind. So in general, I only take the minimum insurance legally mandated.
In the OP post, you can see that the existence of an insurance will increase his desire to take the job, and thus the risk of being kidnapped. I wouldn't do that, but I'm just talking about me
[1] https://en.wikipedia.org/wiki/Transportation_safety_in_the_U...
This does not hold if the reductions in fatalities caused by the safety features are larger than the (alleged!) increase in fatalities caused by additional recklessness.
Why do you think this is more than an infinitesimal change?
I see people driving classic cars, which would probably be instantly fatal in a crash just like a motorcycle, and yet they are driving conservatively.
That's why it's usually not legal to take insurance out on things that are not you or that you own or are responsible for. Like me taking life insurance out on you, then convincing you to take up crack or simply killing you. I'm betting you're going to die at some odds, then I'm massively changing the odds in my favour relative to the initial bet. Insurance is just gambling with vast sums. Sometimes it makes sense, sometimes it doesn't.
No, insurance is gambling with small sums from the point of view of people selling it, and it is avoiding gambling with large sums from the point of view of people buying it.
But probabilistically doesn't it make sense to skip insurance altogether?
If insurance manages to turn a profit despite having overhead expenses (salespeople, infrastructure, lawyers, etc) and assuming they don't have a special discount in whatever they're ensuring then there are more people paying without using than there are people who need it.
If I'm an average or above average driver, for example, then it doesn't make sense to have insurance, does it? Wouldn't it make more sense to save the money I'd otherwise be using for insurance and pay myself in case something happens? That way my money would go only towards my problem and not towards worse drivers and insurance company expenses.
Is the product that insurance offer really just peace of mind?
You’re waiting at a red light when a drunk driver smashes into you. Your skills as a driver can’t affect the probability of this. It may not be your fault, but someone needs insurance.
The difference between owning a total of 0 and a total of 10000 USD is way more important than the difference between owning 10000 and 20000 USD.
So assume you have 20000 USD. There's a 10% change that you will lose it all and become homeless. It makes sense for you to pay 2000 USD at the start to get 10000 USD back in case that happens. Because being homeless in 10% of the cases is way worse than having 18000 USD instead of 20000 USD in 90% of the cases.