41–50 of 59 posts
Car insurance premiums grew 3.8% to 5.4% annually over 30 years, compared to 2.4% average inflation rate. Why?
Complex technology and labor required to fix cars.
Costly claims for rising medical bills, increased litigation, severe climate weather damage, and distracted driving accidents from smartphones
The last 3 years, profit is way up from excess cash after post-pandemic rate increases. Before that, profit wasn't great.
At this point, I buy all insurance (home, auto, health etc.) with highest deductible and lowest premium knowing that there is a high probability that insurance will not pay (or pay only partially). I mainly buy insurance to avoid catastrophic losses and hope that, if such an event were to happen, they would cover the loss at least partially. For smaller losses I am willing to absorb the loss and save money on premium…
What do you consider catastrophic loss? I’ve found in home insurance the delta on lower deductibles isn’t that meaningful and when something happens, the pay out is almost always worth it. Something like water damage from a burst pipe can be 20-50k very quickly, and having to pay a 10k deductible is quite a big hit in addition to the remediation needed.
Earlier quoted context omitted.
What do you consider catastrophic loss? I’ve found in home insurance the delta on lower deductibles isn’t that meaningful and when something happens, the pay out is almost always worth it. Something like water damage from a burst pipe can be 20-50k very quickly, and having to pay a 10k deductible is quite a big hit in addition to the remediation needed.
By catastrophic loss I mean an event that has the potential of causing bankruptcy (such as house burned to the ground). Home insurance rates vary a lot depending on where you live so our math is likely very different and we both could be right. While a big expense in one shot definitely pinches more, paying higher premiums every year, the annual premium hikes, in addition to raised premium for subsequent years due to…
That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people.
Insurance should set a maximum cap to your pain no matter the circumstances… and I think the pain being >50k is quite unreasonable unless we’re talking about property that is worth in the millions.
Earlier quoted context omitted.
By catastrophic loss I mean an event that has the potential of causing bankruptcy (such as house burned to the ground). Home insurance rates vary a lot depending on where you live so our math is likely very different and we both could be right. While a big expense in one shot definitely pinches more, paying higher premiums every year, the annual premium hikes, in addition to raised premium for subsequent years due to…
Total loss being the bar seems crazy to me. A 20-50k unexpected expense for almost everyone would essentially result in bankruptcy or at minimum insolvency and long term debt. That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people. Insurance should set a maximum cap to your pain no matter the circumstances… and I…
Earlier quoted context omitted.
Total loss being the bar seems crazy to me. A 20-50k unexpected expense for almost everyone would essentially result in bankruptcy or at minimum insolvency and long term debt. That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people. Insurance should set a maximum cap to your pain no matter the circumstances… and I…
Your point is perfectly valid. There is no single right answer. It just depends on what risk level one is comfortable with and that varies from person to person.
This isn’t like putting all your money in meme stocks or something, this is more akin to selling risky stock options. The downside potential is massive and essentially uncapped, whereas the upside potential is meager.
A touch of nuance from someone in the industry (CTO at a startup that sells home and umbrella insurance): Most of the issues here stem from problem the sales as opposed to the claims process. Customers are, structurally, under-educated on what their policies actually cover and this produces unrealistic expectations about what they should file claims for. Emphatically, this is not their fault but an industry-wide issu…
Dropping all forms of insurance was the #1 motivation for me to pay off my mortgage. My rate was under 3%, but insurance is absolutely brutal once you factor in the bureaucratic hell that must be navigated to get any kind of payout. The premiums are off the charts too. $10k+/yr for a ~$350k cardboard box in Texas is absolutely insane. The biggest scam I've seen in real estate is mandatory windstorm insurance (TWIA &…
Paying off a 3% mortgage means you could not invest that money, which would return 7% on average or like 10+% recently. That is a lot of lost money.
Anyone whos not L5 at bigtech cannot afford any home on a cash basis. That’s not a realistic bar.
That being said, insurance is wildly different by state and location and it sounds like it royally sucks in Texas.
I live around at around a 150ft elevation above the ocean, but technically within My car insurance is above $4k/yr for two family cars, rising annually despite no accidents. Meanwhile, "normal" countries are solving these problems in reasonable ways. Back home in Central Europe, you get state mandated car insurance at pre-negotiated rates that are based on the car, not the driver. US insurance is a scam.
That’s massive operational overhead and is definitely not as simple as looking at elevation, and that overhead is reasonably not worth it for those companies.