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being pedantic here but > You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home This

being pedantic here but > You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home This isn't really true. Lots of people take out life insurance on others as a hedge for many reasons, small business partner is one. Same fire insurance, we had a case where someone pledged a building as collateral and we took out separate fire insurance on the building so we'd get paid out immediately. I'm not sure where this false premise started but alot of people believe it.

hmry 5mo ago
No no I appreciate the pedantry, thank you for the correction
compiler-guy 5mo ago
The technical term is that you must have an “insurable interest” in what you insure. Both of your examples are people protecting their insurable interest. Ownership is the most common insurable interest, but there are many other ways to have one. This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest. These prediction market events don’t have the usual insurance interests involved.
- chollida1 5mo ago
  > The technical term is that you must have an “insurable interest” in what you insure. Yep, we're in full agreement here
- sandworm101 5mo ago
  Unless you short the property. Essentially, sell it now on the bet that it will drop in value later. Then it burns down and you repurchase the vacant lot and return the property to the original owner. Evil, but most everything in real estate is evil.
  - emsign 5mo ago
    And that's exactly the problem with Polymarket and such, it gives an incentive to be destructive because that's easy. Entropy is easy. With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.
    - WinstonSmith84 5mo ago
      > With an insurance this trick won't work, because the insurance company will notice what you are doing This has worked well millions of times (and occasionally failed too with people ending in prison or with huge fines). Where I can agree however is that Polymarket makes that much easier.
    - stressback 5mo ago
      I don't think any corporation "cares" about social issues, but, fwiw, polymarket isn't as ok with it as you imply. Polymarket reportedly detected the suspicious behavior, reported it, then worked with investigators to nab Gannon Ken Van Dyke.
- nivertech 5mo ago
  Even if you have an insurable interest, moral hazard may arise - acting recklessly or other abuse, while knowing you are insured/covered. Somewhat similar to friendly fraud in retail/ecommerce.
  - bluGill 5mo ago
    Insurance normally has fine print about those things. Life insurance doesn't pay out for suicide. Fire insurance doesn't pay out if you intentionally burn your house down (the fire department also will investigate because even though it is their job they don't like risking their life fighting fires) You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.
    - swores 5mo ago
      > Life insurance doesn't pay out for suicide. This may vary by country, it isn't a subject I'm particularly familiar with, but at least in the UK that isn't true - many, I think most, life insurance policies here do pay out for suicide. There's just a period of years between the start of the policy and when suicide starts to be covered, to prevent people who are planning on killing themselves from being able to take out insurance just before doing so.
    - DaedalusII 5mo ago
      some life insurance policies pay out for suicide after an initial exclusion period. this is often six or twelve months. insurers can include it because suicide claims are relatively uncommon. if there is evidence that someone took out the policy with the intention of creating a claim then the insurer may treat it as fraud and decline it.
- csomar 5mo ago
  Based on that logic, I can say I have a vested interest in the bet? > This is done because the insurance company wants you to prefer that the covered event doesn’t happen But buying the insurance cancels exactly that. Insurance fraud is a thing.
  - compiler-guy 5mo ago
    Insurance doesn't exactly cancel that. Maybe in a theoretical world, perhaps. For example, I have a decently-sized life-insurance policy. If buying insurance "exactly covered that", I would be indifferent to whether I lived or died. But I'm not. And I can't think of a policy-size that would make me so. Money is an imperfect substitute. Less dramatically, I have really good auto coverage. The car itself is nothing special, and the coverage I have would make me whole (minus a very small deductible) But I am very much not indifferent to replacing the car with money, and it would take way more than the deductible to change my mind on that. The hassle-value alone would go way over. And hassle-value is usually not insurable. Insurance fraud is absolutely a thing--but the insurance company still wants you to prefer that the event doesn't happen. That it doesn't work perfectly doesn't really invalidate the point.
mschild 5mo ago
To perhaps be a bit more pendantic. You're not allowed to take out life insurance on someone you don't know or have a relationship (business or otherwise) with. Life insurance on a business partner works. Life insurance on your spouse as well. Life insurance on the leader of a random country? Unlikely
- deleted 5mo ago
  [deleted]
- DaedalusII 5mo ago
  you cant take out life insurance on your spouse without them signing the paperwork in most cases you dont take out cover on your business partner, the company itself does
  - mschild 5mo ago
    True but you're still taking it out on another person.
PyWoody 5mo ago
> I'm not sure where this false premise started but alot of people believe it. It being the driving plot behind Double Indemnity probably started it. I always thought it was true until your comment, too.
SilasX 5mo ago
Yeah, you are being pedantic. The clear meaning is that you're not just allowed to insure arbitrary properties. If you wanted to correct a misconception, you should provide a better, more complete understanding, not just express frustration about a misconception that doesn't even exist outside of an uncharitable reading. In this case, that means refining the point to the more accurate model, that you need an insurable interest -- i.e. reason you don't want the event to happen, even knowing you'd get a payout[1]. Your counterexamples only work as such because that exists![2] If you want to fix all the people who don't have your superior understanding, that would have been a great way to help them out. >I'm not sure where this false premise started but alot of people believe it. It exists because it's approximately true: you can't get insurance on 99.99999% of buildings in the world because you have no insurable interest in them. And any time someone could correct that false premise, they probably just complain rather than providing the complete understanding -- exactly the choice you just made here. [1] IMO, this is the natural dividing line between gambling and insurance https://news.ycombinator.com/item?id=13916088 https://news.ycombinator.com/item?id=13916088 [2] Edit: And in your building collateral example, the policy would prevent you from double dipping -- getting both the building and the full payout.

hmry 5mo ago

No no I appreciate the pedantry, thank you for the correction

compiler-guy 5mo ago

The technical term is that you must have an “insurable interest” in what you insure. Both of your examples are people protecting their insurable interest. Ownership is the most common insurable interest, but there are many other ways to have one. This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest. These prediction market events don’t have the usual insurance interests involved.

chollida1 5mo ago
> The technical term is that you must have an “insurable interest” in what you insure. Yep, we're in full agreement here
sandworm101 5mo ago
Unless you short the property. Essentially, sell it now on the bet that it will drop in value later. Then it burns down and you repurchase the vacant lot and return the property to the original owner. Evil, but most everything in real estate is evil.
- emsign 5mo ago
  And that's exactly the problem with Polymarket and such, it gives an incentive to be destructive because that's easy. Entropy is easy. With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.
  - WinstonSmith84 5mo ago
    > With an insurance this trick won't work, because the insurance company will notice what you are doing This has worked well millions of times (and occasionally failed too with people ending in prison or with huge fines). Where I can agree however is that Polymarket makes that much easier.
  - stressback 5mo ago
    I don't think any corporation "cares" about social issues, but, fwiw, polymarket isn't as ok with it as you imply. Polymarket reportedly detected the suspicious behavior, reported it, then worked with investigators to nab Gannon Ken Van Dyke.
nivertech 5mo ago
Even if you have an insurable interest, moral hazard may arise - acting recklessly or other abuse, while knowing you are insured/covered. Somewhat similar to friendly fraud in retail/ecommerce.
- bluGill 5mo ago
  Insurance normally has fine print about those things. Life insurance doesn't pay out for suicide. Fire insurance doesn't pay out if you intentionally burn your house down (the fire department also will investigate because even though it is their job they don't like risking their life fighting fires) You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.
  - swores 5mo ago
    > Life insurance doesn't pay out for suicide. This may vary by country, it isn't a subject I'm particularly familiar with, but at least in the UK that isn't true - many, I think most, life insurance policies here do pay out for suicide. There's just a period of years between the start of the policy and when suicide starts to be covered, to prevent people who are planning on killing themselves from being able to take out insurance just before doing so.
  - DaedalusII 5mo ago
    some life insurance policies pay out for suicide after an initial exclusion period. this is often six or twelve months. insurers can include it because suicide claims are relatively uncommon. if there is evidence that someone took out the policy with the intention of creating a claim then the insurer may treat it as fraud and decline it.
csomar 5mo ago
Based on that logic, I can say I have a vested interest in the bet? > This is done because the insurance company wants you to prefer that the covered event doesn’t happen But buying the insurance cancels exactly that. Insurance fraud is a thing.
- compiler-guy 5mo ago
  Insurance doesn't exactly cancel that. Maybe in a theoretical world, perhaps. For example, I have a decently-sized life-insurance policy. If buying insurance "exactly covered that", I would be indifferent to whether I lived or died. But I'm not. And I can't think of a policy-size that would make me so. Money is an imperfect substitute. Less dramatically, I have really good auto coverage. The car itself is nothing special, and the coverage I have would make me whole (minus a very small deductible) But I am very much not indifferent to replacing the car with money, and it would take way more than the deductible to change my mind on that. The hassle-value alone would go way over. And hassle-value is usually not insurable. Insurance fraud is absolutely a thing--but the insurance company still wants you to prefer that the event doesn't happen. That it doesn't work perfectly doesn't really invalidate the point.

mschild 5mo ago

To perhaps be a bit more pendantic. You're not allowed to take out life insurance on someone you don't know or have a relationship (business or otherwise) with. Life insurance on a business partner works. Life insurance on your spouse as well. Life insurance on the leader of a random country? Unlikely

deleted 5mo ago
[deleted]
DaedalusII 5mo ago
you cant take out life insurance on your spouse without them signing the paperwork in most cases you dont take out cover on your business partner, the company itself does
- mschild 5mo ago
  True but you're still taking it out on another person.

PyWoody 5mo ago

> I'm not sure where this false premise started but alot of people believe it. It being the driving plot behind Double Indemnity probably started it. I always thought it was true until your comment, too.

SilasX 5mo ago

Yeah, you are being pedantic. The clear meaning is that you're not just allowed to insure arbitrary properties. If you wanted to correct a misconception, you should provide a better, more complete understanding, not just express frustration about a misconception that doesn't even exist outside of an uncharitable reading. In this case, that means refining the point to the more accurate model, that you need an insurable interest -- i.e. reason you don't want the event to happen, even knowing you'd get a payout[1]. Your counterexamples only work as such because that exists![2] If you want to fix all the people who don't have your superior understanding, that would have been a great way to help them out. >I'm not sure where this false premise started but alot of people believe it. It exists because it's approximately true: you can't get insurance on 99.99999% of buildings in the world because you have no insurable interest in them. And any time someone could correct that false premise, they probably just complain rather than providing the complete understanding -- exactly the choice you just made here. [1] IMO, this is the natural dividing line between gambling and insurance https://news.ycombinator.com/item?id=13916088 https://news.ycombinator.com/item?id=13916088 [2] Edit: And in your building collateral example, the policy would prevent you from double dipping -- getting both the building and the full payout.