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> the only surprising thing about insurance is that people don't get more of it. That's a weird formulation. To me, the most surprising thing is that people in
by beefield 5y ago
> the only surprising thing about insurance is that people don't get more of it.
That's a weird formulation. To me, the most surprising thing is that people insure... wrong things. I mean, there are exactly two reasons to take insurance:
1. The economical effects of the event you insure against are beyond your comfort zone.
2. You are for some reason confident that the insurance company has miscalculated your risk profile.
Now, I ignore the second one. The question is, why people take travel insurances that cover lost sunglasses? I mean, to me, it would be obvious that the equilibrium is that people choose so high deductibles that they just can afford/are comfortable with, which means cheaper insurances for two reasons: Insurance company pays out less money and needs to do less work per paid out dollar. But high deductible insurances are almost non-existent.
- kqr 5y agoYou're right, of course. I think the formulation was aimed more at general life events that we don't even think of as insurable. I can't recall any concrete examples from that person, whoever it was, but one thing I've long wanted is insurance against bad weather on family outings planned well in advance. Some days when I have more important meetings to get to farther away, I would also like insurance against unexpected traffic jams and other holdups. Essentially, we make all these tiny little bets every day, and while it's possible to hedge them[1], it's complicated compared to just straight-up money-based insurance. [1]: I can for example reserve a table at a fancy restaurant halfway to the important meeting, so if I get stuck on my way and miss the meeting I can at least get a nice meal out of it, at the cost of the table reservation.
- hhmc 5y ago> The question is, why people take travel insurances that cover lost sunglasses? I think the answer could be a quite mundane appeal to 'bundling'. i.e. I get very comprehensive travel insurance when travelling to the US due to the punitive cost of healthcare (your (1)). This comphrensive insurance can often cover unrelated and unneeded items, but it's hard to slice and dice the coverage exactly.