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> Insurance is a "smoothing" tool, it lets you break a $5k lump expense out into $50/mo payments, it's not free money. This is called a loan. Insurance "smoot

> Insurance is a "smoothing" tool, it lets you break a $5k lump expense out into $50/mo payments, it's not free money. This is called a loan. Insurance "smooths" across the population, because not everybody breaks their laptop. Of course you pay more after renewal when you make a claim (because you've shown yourself to be at risk for breaking laptops), but if you are able to make an insurance claim for something you generally do better in the long run making that claim than not - that's the entire point of insurance, nobody would get it if it was a net negative when you had to use it.

paulmd 4y ago
> but if you are able to make an insurance claim for something you generally do better in the long run making that claim than not nobody has ever disputed that, but if you read my comment again, you'll see that I was discussing expected value of writing/taking a policy. > that's the entire point of insurance, nobody would get it if it was a net negative when you had to use it. in fact, on the topic I was discussing - everyone takes insurance policies even when they expect it to have negative net expected value - which all homeowners insurance policies are underwritten to have. Yes, if you make a claim you come out ahead, but on average you are expected to come out behind. The fact that you also remembered some other thing that also works by the same method, is not particularly interesting or insightful. See: > This is called a loan Yes, indeed, loans also have neutral or negative expected return, so do lotteries, and that doesn't mean that insurance doesn't too. A is a member of S doesn't mean that the cardinality of S is 1. You're trying to be cute and contrarian, in the finest HN spirit (it's also not cute or funny when anyone else does it, fyi) but you're going off on irrelevant tangents. Please, you're not furthering the discourse here, you're just being tangential and contrarian. Please re-read the rules, it is very explicit that you need to take the most generous interpretation of a comment, and the reason that rule exists is because it's tiresome dealing with this contrarian nitpicking mindset. It's pretty clear that this statement does not imply in any way that you shouldn't make a claim if you have an event, only that taking a rider generally has a net-negative expected value - as does all insurance. Your entire comment chain here is the least-generous interpretation and should not have been posted. > Generally speaking equipment riders are generally not worth it except for during a larger event (home burns down, etc) because of this - they get you on premiums if you don't make a claim (generally it ends up zeroing out after a couple years) and they get you on premium increases if you do make a claim.
- sokoloff 4y ago
  I do think your original text was clear enough that I was able to figure out what you meant, but it would have been a lot clearer if it explicitly mentioned spreading a lump-sum expense across multiple people rather than only mentioning spreading a lump-sum expense over a multiple time periods. By only mentioning the time-series of payments, it took me more than a single read to understand and I could easily see someone genuinely misunderstanding your point.
  - paulmd 4y ago
    I actually don't know what you mean by that, but, the "insurance industry comes out ahead on average" is true both of individual policies and on average, which is why his response is kinda irrelevant. If you're a high-claim buyer that will get passed along to you in your premiums (which is what I specifically said in the first paragraph). They don't just write "here's the average policy, we'll do this for all situations" because then they would be hit by adverse selection. All homeowners/etc are underwritten against a specific property and person. Of course any particular policy may end up being a win or a loss for the insurer - but - the policy is written so the insurer wins on average, and that's also true of any particular rider or supplemental coverage. The expected value of all particular policies and all particular supplementals/riders is, from the insurer's data, negative for the buyer, otherwise they won't write it. I did not address it in that comment in particular, but in the specific case of when you already have an accidental damage rider or it's generally included in your policy, whether you should take it... the answer is probably yes, but, you should also expect it to impact your rates down the road, especially if you do it more than once. You'll have to weigh that, and sometimes it's not worth it unless it's part of a larger claim. Yeah, sometimes you do win on a particular insurance policy but... the insurer can still win on the backside too, with higher premiums in the long term. And even if you pick up and move insurers, the next insurer will see that claim too and it will affect the quotes you get. Again, not a money fountain, it's just risk smoothing. What I was more going for was, in general the net expected value is negative so you shouldn't take the rider, because it will come back in your rates if you actually need to use it. The rider premium isn't the total cost here, there's additional long-term costs if you end up being a claims pest. Homeowners is not designed for every time you drop your laptop, and if you use it in that way you'll end up with substantially higher premiums in the long term to account for it.

paulmd 4y ago

> but if you are able to make an insurance claim for something you generally do better in the long run making that claim than not nobody has ever disputed that, but if you read my comment again, you'll see that I was discussing expected value of writing/taking a policy. > that's the entire point of insurance, nobody would get it if it was a net negative when you had to use it. in fact, on the topic I was discussing - everyone takes insurance policies even when they expect it to have negative net expected value - which all homeowners insurance policies are underwritten to have. Yes, if you make a claim you come out ahead, but on average you are expected to come out behind. The fact that you also remembered some other thing that also works by the same method, is not particularly interesting or insightful. See: > This is called a loan Yes, indeed, loans also have neutral or negative expected return, so do lotteries, and that doesn't mean that insurance doesn't too. A is a member of S doesn't mean that the cardinality of S is 1. You're trying to be cute and contrarian, in the finest HN spirit (it's also not cute or funny when anyone else does it, fyi) but you're going off on irrelevant tangents. Please, you're not furthering the discourse here, you're just being tangential and contrarian. Please re-read the rules, it is very explicit that you need to take the most generous interpretation of a comment, and the reason that rule exists is because it's tiresome dealing with this contrarian nitpicking mindset. It's pretty clear that this statement does not imply in any way that you shouldn't make a claim if you have an event, only that taking a rider generally has a net-negative expected value - as does all insurance. Your entire comment chain here is the least-generous interpretation and should not have been posted. > Generally speaking equipment riders are generally not worth it except for during a larger event (home burns down, etc) because of this - they get you on premiums if you don't make a claim (generally it ends up zeroing out after a couple years) and they get you on premium increases if you do make a claim.

sokoloff 4y ago
I do think your original text was clear enough that I was able to figure out what you meant, but it would have been a lot clearer if it explicitly mentioned spreading a lump-sum expense across multiple people rather than only mentioning spreading a lump-sum expense over a multiple time periods. By only mentioning the time-series of payments, it took me more than a single read to understand and I could easily see someone genuinely misunderstanding your point.
- paulmd 4y ago
  I actually don't know what you mean by that, but, the "insurance industry comes out ahead on average" is true both of individual policies and on average, which is why his response is kinda irrelevant. If you're a high-claim buyer that will get passed along to you in your premiums (which is what I specifically said in the first paragraph). They don't just write "here's the average policy, we'll do this for all situations" because then they would be hit by adverse selection. All homeowners/etc are underwritten against a specific property and person. Of course any particular policy may end up being a win or a loss for the insurer - but - the policy is written so the insurer wins on average, and that's also true of any particular rider or supplemental coverage. The expected value of all particular policies and all particular supplementals/riders is, from the insurer's data, negative for the buyer, otherwise they won't write it. I did not address it in that comment in particular, but in the specific case of when you already have an accidental damage rider or it's generally included in your policy, whether you should take it... the answer is probably yes, but, you should also expect it to impact your rates down the road, especially if you do it more than once. You'll have to weigh that, and sometimes it's not worth it unless it's part of a larger claim. Yeah, sometimes you do win on a particular insurance policy but... the insurer can still win on the backside too, with higher premiums in the long term. And even if you pick up and move insurers, the next insurer will see that claim too and it will affect the quotes you get. Again, not a money fountain, it's just risk smoothing. What I was more going for was, in general the net expected value is negative so you shouldn't take the rider, because it will come back in your rates if you actually need to use it. The rider premium isn't the total cost here, there's additional long-term costs if you end up being a claims pest. Homeowners is not designed for every time you drop your laptop, and if you use it in that way you'll end up with substantially higher premiums in the long term to account for it.