I don't think the logic follows. > For example, if I had a 15 year-old, unremarkable used car but insured it for $1m, then I'd have an incentive to leave it pa

I don't think the logic follows. > For example, if I had a 15 year-old, unremarkable used car but insured it for $1m, then I'd have an incentive to leave it parked (but locked!) in sketchy areas of town in the hopes that it would be stolen. No, you wouldn't if the premium is high enough (i.e. your net gain from doing so is small enough).