This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest.
These prediction market events don’t have the usual insurance interests involved.
You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.
This may vary by country, it isn't a subject I'm particularly familiar with, but at least in the UK that isn't true - many, I think most, life insurance policies here do pay out for suicide. There's just a period of years between the start of the policy and when suicide starts to be covered, to prevent people who are planning on killing themselves from being able to take out insurance just before doing so.
if there is evidence that someone took out the policy with the intention of creating a claim then the insurer may treat it as fraud and decline it.
Yep, we're in full agreement here
Evil, but most everything in real estate is evil.
With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.
This has worked well millions of times (and occasionally failed too with people ending in prison or with huge fines). Where I can agree however is that Polymarket makes that much easier.
> This is done because the insurance company wants you to prefer that the covered event doesn’t happen
But buying the insurance cancels exactly that. Insurance fraud is a thing.
For example, I have a decently-sized life-insurance policy. If buying insurance "exactly covered that", I would be indifferent to whether I lived or died. But I'm not. And I can't think of a policy-size that would make me so. Money is an imperfect substitute.
Less dramatically, I have really good auto coverage. The car itself is nothing special, and the coverage I have would make me whole (minus a very small deductible) But I am very much not indifferent to replacing the car with money, and it would take way more than the deductible to change my mind on that.
The hassle-value alone would go way over. And hassle-value is usually not insurable.
Insurance fraud is absolutely a thing--but the insurance company still wants you to prefer that the event doesn't happen. That it doesn't work perfectly doesn't really invalidate the point.