Hacker News Reader

Comment by matthewmacleod | Hacker News Reader

This is awful advice!

Losing a smartphone isn't going to ruin me, but it sure would piss me off to have to fork out £500 or whatever because it gets jacked. Similarly, someone could break into my house and clean it out. Not going to ruin me, but I'd rather not have to replace everything.

The whole point of insurance is collective risk-spreading. Yes, this means that the majority (by value) of people with insurance will have 'wasted' money, in the sense that they purchase insurance without claiming. But that's not what they're purchasing – they're trading off a small, certain cost for the elimination of a large, uncertain cost. That's a purchase of 'certainty' or 'stability' – and it's what they get.

In other words, since you have no reliable way to understand risk and likelihood of a particular event happening, it's not possible to decide if you are at a higher risk than average.

View on HN

No, that what you gave is awful advice, to anyone who cares about their money!

Go talk to an _honest_ insurance broker (not some State Farm or other company you see on TV commercials) or better yet a financial adviser. You should reserve an insurance claim for catastrophic issues only. You should also have max deductibles. Forking over 500 for a lost iPhone is a MUCH cheaper deal than paying insurance premiums for that coverage and then the INEVITABLE rate hike because this claim appears on your CLUE report.

I made the same naive mistake as your assumptions when I was young. Lost a 1k watch, made a claim, went about my jolly day with my nice check for $750 (250 deductible). 1 year later when I go to buy a house I am surprised by how much my insurance rates are. FOUR years later after that claim fell off my CLUE report my premiums went way down. I paid the insurance company more than the $750 I got from them.

I was lucky in that my neighbor was an insurance broker and told me low deductibles are taking advantage of suckers and the lesser fortunate who are scared into these policies. What he advises most of his clients to do is take the highest deductible they can, then put aside that amount of deductible in some low earning liquid account. Now when you have an accident you "pay your self" and keep your insurance rates low.

Don't be a sucker.

Why not put the money in the bank only and skip the insurance then, if you're not going to use it anyway?

Don't be a sucker.

Yes, for things that you can afford to cover yourself.

As a counterexample, for all but the richest people having catastrophic health insurance is a good idea.

I don't think there's any debate about the benefits of a high deductible, or that you should avoid claiming on insurance if you judge that the extra expenditure is worth saving your claim-free status.

I'm in the UK, so I can't help but assume there are differences in the insurance market. I have a comprehensive insurance policy that covers buildings, contents and accidental damage, and that covers things like smartphones too. Despite a couple of previous claims for stolen and damaged electronics, the rates are pretty good. The marginal cost for accidental damage is minimal.

But yes, low deductibles are a sucker's game.

"The whole point of insurance is collective risk-spreading"

If you can afford to replace the item yourself you can instead spread that risk over time (and multiple items) by essentially self-insuring.

I absolutely agree you should buy insurance for "large, uncertain costs", but a smartphone or laptop is not that for a lot of people.

Healthcare and liability (auto, homeowners/renters, etc) are two examples of actually "large, uncertain costs" for most people.

And even for healthcare and liability you can opt for high deductibles. (Though in some countries buying comprehensive health insurance perhaps via your employer even is either mandatory or tax advantaged. The tax advantage might be big enough to change the calculations.)

Over time, you're probably paying 2x or 3x in insurance premiums compared with what the loss would be.

Consider also the overall effect if you invested the premiums instead of paying them.

This is also nutty. The guy is clearly risk-averse, which means if he did invest he would go for a risk-free rate, which is.... 0.90% right now?

I've had this conversation with friends before. Some people can't see outside their own risk profile.

You can't guarantee 100% expense coverage during random events. Not everybody has thousands of dollars laying around in emergency fund for 12+ months. Committing to an insurance policy is simply a semi-guaranteed safety net.

Have tons of cash? You should still probably look at a cheaper plan with a super high deductible.

I'd buy a cheaper computer before one so expensive it would be a fiscal catastrophe if I lost it. Buying a computer on credit is just as bad, might as well just set fire to money.

In fact, my laptop is a $500 one I bought 2 years ago for travel use and didn't want to be too upset if it was lost/broken/stolen.

My previous one was 10 years old and was a bit heavy :-)

A $500 laptop is garbage and hardly adequate for the use of most of the people that frequent HN. I mean, what does $500 buy you? A shitty TN panel with a subpar resolution, color reproduction and viewing angle, often shoddy build quality, tons of bulk and probably a spinning drive (I wouldn't buy a laptop without a SSD today).

Not everybody on the planet needs something svelte and sexy, but for those of us who work on their machines a $500 POS doesn't cut it.

You do have a good point, a $500 laptop doesn't make for a great development machine. But that's not what I use it for, I use it as a travel machine. (It can be used for dev in a pinch, and I carry along a full size $9.99 keyboard and wireless mouse for that purpose.)

I use a desktop for dev built with about $600 in parts from newegg, excluding the display. I do get a bit spendy on the display, as that is the most bang for the buck value to me. None of the high end laptops have a display large enough for dev for me. Portability and dev are at odds.

But this thread is about insurance to protect against the loss of a high end laptop. I presume that someone doing serious computer work is making enough money that they don't actually need insurance to cover the loss of even a high end laptop, and the premiums hence won't be worth it.

BTW, my laptop is an ASUS X202E. It's small, and the build quality is surprisingly good. You can also get usable laptops from the pawn shop for $150. A bonus is you'll never have to worry about someone stealing it :-)

I did work on an Acer C7 ($200 with about $200 worth of SSD+Memory and a $100 23" LCD when I was home, total cost $500) with Ubuntu for about half a year. I initially bought the machine to travel with, and it became a workstation when another machine malfunctioned. I do a mixture of C, Python, Javascript, and Clojure development. It was absolutely fine. Clojure needed a settings tweak to bootstrap the repl properly (it was slow at over a minute), but I never left the repl, so it was a one time cost. C/Python/JS have compilers that were fast even on a dual-core Celeron. tmux/bash/vim were fast (as always).

I did everything on that machine up to and including playing TFC via Steam. It ran an IRC client, Chrome, Firefox, VirtualBox for Windows, and my xterm w/tmux. I don't know that I'd give up my rMBP for it, but I did a lot of work on the chromebook.

As far as a developer machine goes, a $300 special 14-15" screen plus $200 of RAM+SSD would probably be fine for 99% of what I do. This likely doesn't work for those who need Photoshop, do video editing, or need to rebuild their OS (rebuilding world in FreeBSD on the thing would have been a bit much). If you're slinging JS, Python, Ruby, Erlang, Clojure, Java or something similar and you can't get by on 16GB of RAM and a 128GB SSD, something is atypical.

"Buying a computer on credit is just as bad, might as well just set fire to money".

You are not living in reality. Most of people live on credit and can't afford to pay for things in full.

Especially not $500 laptops "for travel".

Please take a look at the antecedents in this thread. The person had a Surface Pro 3 (a thousand dollar item) he was buying insurance for.

If I had to buy such on credit, I'd opt instead for a $150 machine from a pawn shop I could pay in full.

I pay $45.00 a year for a $2,062, no-deductible policy on my MacBook Pro through State Farm. I'd have to have the MacBook for 45 years for the premiums to even equal the payout on loss.

22 years if you invest the premiums at 7%. (At 45 years you'd have $12,858.70.) Add this up for all the other non-catastrophic items you have insurance for.

I know when you're young 45 years seems like it'll never happen, but if you're lucky it does.

What is stopping me from putting away in a saving account (or any separate account) some 20-30 bucks every month/year so I can retrieve them later in case I need them to replace my laptop/phone/tablet/whatever, instead of giving more than what I'd need to somebody else and effectively lose that money?

House always wins.

Or at least, on average.

Reply on news.ycombinator.com