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Comment by roenxi | Hacker News Reader

But you can afford to replace your assets if a catastrophe strikes. Insurance won't help you if you die in a car accident, so you are taking out a negative-net-expected-value deal that protects you against a very slim selection of catastrophes. In my experience, probably protecting from risks that are less likely than dropping dead at random one day.

And taking the risk that the insurance company won't pay out for some reason. And creating more paperwork and recurring expenses to keep track of. $5 mil is a lot but it isn't enough to take eyes off expenses.

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If you drive without insurance, hit someone, and kill or severely injure them, you will almost certainly lose most if not all of your assets in the subsequent lawsuit.

If you have a house and it burns down in a fire, you will spend hundreds of thousands of dollars or more replacing it.

If you get rid of health insurance, there is enormous potential downside risk.

If someone is on your property and injures themselves or you accidentally harm someone, they can sue you for millions.

Insuring against all of this and more is almost certainly under 1000 per year. That is a trivial expense for someone with that much money. Even shit ROI on a portfolio is yielding at least a hundred thousand per year in growth assuming this person no longer works. The more money you have, the more insurance you want because you have far more to lose.

Unless you're in the US in which case just your health insurance could cost you $1000+ per MONTH.

...and that's if you never use it. If you actually need health care, prepare to shell out about another $5-$10k until you hit your annual out of pocket maximum.

> Insuring against all of this is almost certainly under 1000 per year.

Um, no.

Average auto insurance premium is $1,470/yr. [0]

Average homeowners insurance is $1,130/yr. [1]

Average health insurance (in 2018, probably more now), was $440/mo., Or $5,280/yr. [2] (And average health insurance will leave a lot of exposure to costs, so you still have a lot of downside risk at that price.)

The idea that you could almost certainly insure against all of that for under $1,000/yr is...wildly inaccurate.

[0] https://www.thezebra.com/auto-insurance/average-auto-insuran...

[1] https://www.creditdonkey.com/average-cost-homeowners-insuran...

[2] https://www.ehealthinsurance.com/resources/affordable-care-a...

At 5M+ it doesn't really matter if you pay $1000 or $10000 for insurance.

Being indifferent to a recurring unnecessary 9k annual expense is roughly being indifferent to 9000 / +4% * 5m) = 4.5% loss of income from investments. If you're indifferent to too many decisions of this form, it's a good way to solve the problem of figuring out how to manage your assets

I concur with your statements. My guess is the poster accidentally omitted a zero, and likely meant $10k.

>If someone is on your property and injures themselves or you accidentally harm someone, they can sue you for millions.

That was a bit of stretch, no? I agree with the other points.

> That was a bit of stretch, no?

No, healthcare costs plus lost wages and other damages for injuries can get into the millions quite easily, and slip and fall injuries are a real legal liability of property owners.

It really isn’t. I’m an advisor and work almost exclusively with clients who have $10mm or more. At that point if you get in an accident or hurt someone and someone finds out that you’re wealthy, there is a reasonable chance they will come after you. I’ve seen it happen and heard it anecdotally.

A $5mm umbrella policy with one of the best insurance companies in the US is like $500/year. I just went out and got a quote on it last week. The best part is if that were to happen, the person suing will have to go up against the insurance company’s lawyers, who are most likely very good.

Even if the probability of that happening was in the low single digits, would you really want to run the risk over $500/yr?

Do not underestimate the value of umbrella coverage. Cheap to get. Expensive to ignore.

$1M liability with car/home insurance is less than $500. Anyone with a 401k should have it.

If you end up in a bad situation, getting liquid enough to pay out a big judgement will kill you with taxes.

> But you can afford to replace your assets if a catastrophe strikes

No, you can't, unless your income is large compared to your assets and not dependent on them.

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