51–60 of 317 posts
Earlier quoted context omitted.
depends on the premium, obviously
What depends on the premium? In my mind, you state the item and the value, they tell you the premium they would cover it at. Where's the perverse incentive, and why is it relevant what anybody else would pay for it?
Earlier quoted context omitted.
What depends on the premium? In my mind, you state the item and the value, they tell you the premium they would cover it at. Where's the perverse incentive, and why is it relevant what anybody else would pay for it?
If you intend to insure a pillow for $1 million, expect the premium to cost about $999,950.
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.
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.
1. Know your insurance contract, know what's actually covered and what not (sometimes describing the same facts in two different yet truthful ways will result in your claim being accepted or denied) and have a non-shit insurance company (check reviews that talk about how they handle claims or ask friends that had claims).
2. "Self-insure" risks where the variance won't hurt you. In other words, if you can grudgingly eat the loss if it happened, don't get insurance and eat the loss if it happens. If you have a lot of disposable income, you don't need insurance for something that won't noticeably shift your budget. Likewise, pick high deductibles. What would you rather do: Eat a $300 loss, or have paid $200 in additional premiums and spend two hours of filling out their paperwork?
3a. An exception is if you just really want the peace of mind, are willing to pay for that, and think you can find an insurance company that will actually pay.
3b. Another exception is if you think they miscalculated the premiums. I know that this is unlikely, but it ties into the "peace of mind" criteria - if you think a risk is more likely than it actually is, just insuring it might be an easy way out. The premium might also be accurate for the average, but you might also think or know that you are at a significantly higher risk than average.
For the latter two points, I like to consider insurance cost "per decade" or "per lifetime".
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?
It makes the market for insurance much better if everyone actually has insurance. Because it reduces cost. It also keeps the industry legitimate, preventing gambling legislation from applying, and anti-gambling activists from targeting insurers.
You'll have to go to a bookie if you want to gamble.
Earlier quoted context omitted.
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…
Having to pay the fence to get your stuff back is so California. In the more civilized states pawnbrokers are expected to know the risks of buying potentially stolen property, and if they do they get to eat it. Maybe that's why property crimes short of grand theft aren't really enforced in California?
Earlier quoted context omitted.
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…
Offering a deal that nobody honest would take is a waste of time for everyone involved.
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 difference between gambling and insurance, is whether you have an insurable interest. It makes the market for insurance much better if everyone actually has insurance. Because it reduces cost. It also keeps the industry legitimate, preventing gambling legislation from applying, and anti-gambling activists from targeting insurers. You'll have to go to a bookie if you want to gamble.
I don't get the comparison to gambling either, that reads more like an appeal to emotion than actual reasoning.
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.
When it does work is when insurance has no influence on the price of goods, and is a minor consumer. For example, when fire insurance pays to replace your goods that burnt up.
When it doesnt work is when insurance is the predominant purchaser of those goods. A good example would be US health insurance, which has an 80/20 rule just like your proposal. Health insurers by law (ACA) must pay out 80%, with 20% allowed for opex and shareholder returns. The Hazard is that as an industry, to increase returns, you want the cost of care as high as possible, thereby maximizing your allowable profit.
It is a similar problem to how power is regulated in California, which has a mandated profit cap as a percent of costs. As a result, these regulated companies have the highest opex and cost of power in the nation of approximately $0.50/kwh