Unfortunately there's a fair bit if industry built around charging people who are stretched financially more, but it's possible to avoid that.
Also, that $4K cash for clunkers was a lot. I agree with the author, that would've totally gone into my pocket if they did it today. I still have my old car from college that's worth about $500 now, purchased for $1500, and I don't need it.
Obviously insurance companies make money on average for every policy. If they didn’t, they would go bankrupt. So on average, every time you buy insurance, you lose.
So insure only what’s required by law, or things that would throw your life off track if they vanished.
Sure, you can use HSA/FSA money on these things, but better to go through "insurance" and keep/use that money for other things.
In an accident, your risk becomes not the cost to restore your ride, but the cost to defend yourself from vampire litigants looking to suck you dry.
Without significant assets, you can just treat bankruptcy as your answer here. With growing assets at middle-class and higher levels, that would be a pretty painful outcome for most.
I suppose, once you are fabulously wealthy, you can wisely be self-insured again, simply trusting that your wealth can defend itself in a sustainable way?
If there is an accident, the insurance company will say: Your car is only worth $700 per blue book value and your deductible is $500 so here's $200 and your title is now totaled.
Buy liability only and self-insure for any damage (or just buy a new beater as needed).