> With insurance it’s very difficult to get more than the market value out of the destroyed thing on payout. Yes, of course. But that's not what I was talking

> With insurance it’s very difficult to get more than the market value out of the destroyed thing on payout. Yes, of course. But that's not what I was talking about. I was talking about whether your payout is less than the value of the premiums you have paid; it can be even if the payout is not more than the market value of the destroyed asset. To take an extreme example, suppose you buy a house for $100,000 and insure it for that value, and the next year the house is destroyed by a covered event. Your insurance payout will be $100,000 (which will be spent in rebuilding your house), which is the market value of the house, not more, but you are certainly not going to have paid anywhere close to $100,000 in premiums, so your payout will be much more than the premiums you have paid. Of course this situation will be very rare, but that's the point: the insurance company certainly cares about not paying out more than the market value of the asset (for the reason you give--protecting against insurance fraud), but they don't care in an individual case about not paying out more than the premiums that were paid in by that individual customer. They only care about the latter on average, and of course their actuaries get well paid to make sure their premiums are high enough to ensure that they still make money on average.