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It seems silly to me that people spend money on spurious insurance. You're effectively betting in a Casino (you're not the house). Unless you think you have som

It seems silly to me that people spend money on spurious insurance. You're effectively betting in a Casino (you're not the house). Unless you think you have some sort of edge on their team of actuarials, or you think you're an outlier (w/ exceptionally bad circumstances), you're better off keeping the premium (along with its expected profit). I suppose if you want to be super technical, you should weigh the risk/reward factor of the profit margin in the costs and the value that would be paid out. I'd argue few of us are capable of doing that math well, nor would it be profitable to spend our time doing it (because we have a business to run/build) In my case, the only insurance I carry is that which is required by law, or offered for "free" (eg, employer paid insurances). I'd still prefer to have my money. I'm betting that Im quite normal.

a8da6b0c91d 13y ago
You would go uninsured rather than get catastrophe health insurance? You do realize that in America an uninsured trip to the emergency room with trauma means bankruptcy. Farmers hedge risk for the same reason. A cash crunch could put them out of business. But now that I think about it I can't guess what this weather insurance offers farmers that the commodity futures markets don't.
- maerF0x0 13y ago
  I think you hit on the breaking point for me. The point is even if I went bankrupt I could come back. But if I cant afford the surgery that saves my life, there's no coming back (that I'm aware of). So yes, when I travel abroad I do buy health insurance. But I dont carry tenants insurance (for my possessions) or buy other insurances... I guess if I were so leveraged like a farmer I'd have more fear. But i have almost exactly $0 debt at any given time meaning even if I were to lose my job, I'd be fine. If I had 4 kids and a mortgage and a tractor payment and... and.. debt and leverage, I guess I'd be a lot more worried.
notahacker 13y ago
The insurance isn't necessarily "spurious" if the adverse weather is an existential risk to the business, which it might be for farmers in particular. Sure, you might be better off saving to cover predictable small losses to one crop from a bad winter every few years, but it's probably practical to cover the one in 30 year drought that kills everything. You'll regret bankruptcy if the drought dries up your bank balance before you've saved enough to cover the risk so much more than the opportunity cost of paying out premiums for a drought free half-century. Similarly, paying hefty premiums to insure cheap consumer goods like mobile phones that you could replace for the cost of 12 months premium plus excess isn't a smart move unless you're especially clumsy, forgetful or liable to be mugged. But a non-wealthy person not getting affordable insurance for lifesaving treatments[1] is crazy (even after factoring in the insurer's margin, and interest on savings you're still gambling on your lifetime treatment costs being not much above the average for a person like you and the bills not coming before you've saved enough - two things which your insurer doesn't care about at all if he's pooled risk well enough.) Not playing Russian Roulette also has a negative ROI... [1]or living in a country with decent public healthcare

a8da6b0c91d 13y ago

You would go uninsured rather than get catastrophe health insurance? You do realize that in America an uninsured trip to the emergency room with trauma means bankruptcy. Farmers hedge risk for the same reason. A cash crunch could put them out of business. But now that I think about it I can't guess what this weather insurance offers farmers that the commodity futures markets don't.

maerF0x0 13y ago
I think you hit on the breaking point for me. The point is even if I went bankrupt I could come back. But if I cant afford the surgery that saves my life, there's no coming back (that I'm aware of). So yes, when I travel abroad I do buy health insurance. But I dont carry tenants insurance (for my possessions) or buy other insurances... I guess if I were so leveraged like a farmer I'd have more fear. But i have almost exactly $0 debt at any given time meaning even if I were to lose my job, I'd be fine. If I had 4 kids and a mortgage and a tractor payment and... and.. debt and leverage, I guess I'd be a lot more worried.

notahacker 13y ago

The insurance isn't necessarily "spurious" if the adverse weather is an existential risk to the business, which it might be for farmers in particular. Sure, you might be better off saving to cover predictable small losses to one crop from a bad winter every few years, but it's probably practical to cover the one in 30 year drought that kills everything. You'll regret bankruptcy if the drought dries up your bank balance before you've saved enough to cover the risk so much more than the opportunity cost of paying out premiums for a drought free half-century. Similarly, paying hefty premiums to insure cheap consumer goods like mobile phones that you could replace for the cost of 12 months premium plus excess isn't a smart move unless you're especially clumsy, forgetful or liable to be mugged. But a non-wealthy person not getting affordable insurance for lifesaving treatments[1] is crazy (even after factoring in the insurer's margin, and interest on savings you're still gambling on your lifetime treatment costs being not much above the average for a person like you and the bills not coming before you've saved enough - two things which your insurer doesn't care about at all if he's pooled risk well enough.) Not playing Russian Roulette also has a negative ROI... [1]or living in a country with decent public healthcare