So thieves broke into your storage unit again • Hacker News Board

Re: So thieves broke into your storage unit again

#41

Post by js8 » Sun, Oct 06, 2024, 6:17 AM UTC

Magi604 wrote: post #5

Good old insurance companies, always looking for ways to get out of having to pay out for claims. I mean, I guess it is their job, so can't really fault them for that.

It's not their job. It would be easy to adopt laws requiring insurance companies to separate insurance pool money (used to pay out insurance) and operational money (used to pay employees and profits), and have these separated when showing the price of insurance. That would reduce the moral hazard of insurance companies paying profit out of the pool.

Re: So thieves broke into your storage unit again

#42

Post by praptak » Sun, Oct 06, 2024, 6:19 AM UTC

dataflow wrote: post #34

eastbound wrote: post #25

Earlier quoted context omitted.

The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives, the result is our current society.

> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?

If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.

Even in the legit cases the insurance companies have to account for the "don't worry, it's insured" mindset. Keeping the ceiling on the insurance value is intended to leave at least some of the incentive to prevent the damage with the owner.

The insurance companies cannot rely solely on the "don't be careless" contract clause.

Re: So thieves broke into your storage unit again

#43

Post by s1artibartfast » Sun, Oct 06, 2024, 6:19 AM UTC

praptak wrote: post #37

lazide wrote: post #14

Earlier quoted context omitted.

How about (accidentally) still charged high voltage capacitors?

Where I live the "accidental" part doesn't really get you off the hook. Negligence is better than intention but still. If it kills someone or causes grievous bodily harm, it's still on you. Yes, even if it's a burglar. You also have to think about the fully legal situations when it's firefighter or a cop with a warrant. Or an edge case like a stupid kid.

Where I grew up, problem thieves would just go missing, to be found years later dead at the bottom of a mine shaft.

Re: So thieves broke into your storage unit again

#44

Post by js8 » Sun, Oct 06, 2024, 6:21 AM UTC

dataflow wrote: post #34

eastbound wrote: post #25

Earlier quoted context omitted.

The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives, the result is our current society.

> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?

The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.

Re: So thieves broke into your storage unit again

#45

Post by dataflow » Sun, Oct 06, 2024, 6:23 AM UTC

praptak wrote: post #42

dataflow wrote: post #34

Earlier quoted context omitted.

> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?

If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage. Even in the legit cases the insurance companies have to account for the "don't worry, it's insured" mindset. Keeping the ceiling on the insurance value is intended to leave at least some of the incentive to prevent the damage with the owner. The insurance companies cannot rely solely on the "don't be careless" cont…

> If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.

So what, though? Can't they just adjust the premium to account for that? It's not like they can't do their own modeling of what the item is likely worth -- if they see it's 1% of what you stated, then they can just as well cite you a ridiculous premium so that you wouldn't feel it's worth it. What's wrong with that?

Re: So thieves broke into your storage unit again

#46

Post by userbinator » Sun, Oct 06, 2024, 6:23 AM UTC

Terr_ wrote: post #8

kstrauser wrote: post #3

There are a million reasons why you should never do this, but I would be tempted to use storage unit #3 as the place to keep my land mine collection. Edit: “You have a land mine collection?” No, but after storage unit #2, I’d daydream about starting one.

I imagine it'd be a lot cheaper and legally-viable to store your collection of electronic burglar alarms. Especially if they dial a human when triggered. There are some neat videos out there where people make their own with Arduinos etc.

Make them play sounds of approaching footsteps and gunfire.

Re: So thieves broke into your storage unit again

#47

Post by renewiltord » Sun, Oct 06, 2024, 6:23 AM UTC

If thieves had emptied my storage unit before I married my wife and she made the decision for me, they would have been doing me a favour.

I don’t think any advanced security storage solution is likely to get many clients since they usually choose based on pricing.

Re: So thieves broke into your storage unit again

#48

Post by kstrauser » Sun, Oct 06, 2024, 6:25 AM UTC

s1artibartfast wrote: post #43

praptak wrote: post #37

Earlier quoted context omitted.

Where I live the "accidental" part doesn't really get you off the hook. Negligence is better than intention but still. If it kills someone or causes grievous bodily harm, it's still on you. Yes, even if it's a burglar. You also have to think about the fully legal situations when it's firefighter or a cop with a warrant. Or an edge case like a stupid kid.

Where I grew up, problem thieves would just go missing, to be found years later dead at the bottom of a mine shaft.

I’m not saying I condone it…

…but I understand.

Re: So thieves broke into your storage unit again

#49

Post by dataflow » Sun, Oct 06, 2024, 6:27 AM UTC

js8 wrote: post #44

dataflow wrote: post #34

Earlier quoted context omitted.

> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?

The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.

> The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.

This doesn't pass the smell test, though. The premium would take care of that. You've told them you have a pillow, and that you want it insured for $1M. They could easily look at it and go "hm, this is worth $10", and give you a absurd premium of $999,900 in exchange for your absurd valuation. So happy accidents won't be worth it anymore. What's wrong with just letting the premium take care of it?

Re: So thieves broke into your storage unit again

#50

Post by smallnamespace » Sun, Oct 06, 2024, 6:34 AM UTC

dataflow wrote: post #34

eastbound wrote: post #25

Earlier quoted context omitted.

The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives, the result is our current society.

> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?

> why should it matter what others are willing to pay for it?

Because the actual value of the item determines your incentive to commit fraud.

If you insure a $10 pillow for $10, when you damage your pillow, you personally will definitely be out $10's value in goods in the hope you'll recover that $10 later. Since your only outcome is mildly negative, you don't have any incentive to file a false claim.

If you insure your $10 pillow for $1 million, as soon as the insurance is in hand, will have a strong incentive to destroy the pillow and try to collect a million dollars, since $1 million - $10 = $999,990.

This incentive exists regardless of what premium you had paid for the insurance (since it was a prior cost), and can't really be perfectly mitigated. Yes, you can criminalize fraud, ask for evidence, etc. but courts aren't perfect and it's always possible to be clever and fool people.

Also, some people are honest, and others are dishonest. An insurance company can't perfectly tell ahead of time who is who. Let's say I quote you $500k premium to insure your pillow for $1mm. A fraudster will see this as an opportunity to profit by $500k - $10. An honest person would see this as a terrible deal. Therefore only fraudsters would take this deal. If you continue to work backwards, as an insurance company you know there's no premium that you could quote that would end up in honest people taking this deal—there's no stable equilibrium where the premium charged ends up outweighing the (potentially fraudulent) claims.

Btw, this situation is famously described in George Akerlof's paper The Market for Lemons (he called it "market collapse"):

https://en.wikipedia.org/wiki/The_Market_for_Lemons#Conditio...

Another way to see this: rationally as an insurance company, if you ask me for a policy for $1mm on a pillow, due to the risk of fraud I will likely be quoting you close to $1mm as the premium. You (as an honest person) rationally would never take this policy. Therefore, I shouldn't even bother offering it, to save everyone involved time and energy.