Setting aside catastrophic losses˚ there seem to be roughly two strategies. You can take out insurance on your non-catastrophic items, or you could take the mon

Setting aside catastrophic losses˚ there seem to be roughly two strategies. You can take out insurance on your non-catastrophic items, or you could take the money that you would pay into insurance and instead save / invest it. We should expect the insurance strategy to be a net win iff the insurance company loses money on the account. If it feels otherwise, a combination of the loss aversion and hyperbolic discount rate biases may be at work. On the other hand, it's easy to end up in a financial situation where coming up with $2,000 on short notice is very difficult, and at that point there may be value in using insurance to shift the cost from a random large cost to smaller and more predictable chunks. It's just worth knowing that this is not cheaper. ˚ I'll define catastrophic losses as those things that must be replaced quickly and which cost enough that replacing them out of pocket would be a severe hardship if they're able to at all.