Fri, 02 Jun 2006
The insurance you don't need
I have a friend who likes to have everything insured, just in case something happens. He has even been trying to persuade me to buy an insurance for something, and he was offering to share his rebate with me. At that point I thought that from a basic fact of "the insurance company needs to make a profit" it is clear that every insurance is in fact (on average) a loss for the insured person.
So I think the insurance is only worth it, when you are not expected to have money to cover the damage yourself (such as when you buy a new car, and do not have money to immediately buy another one, when the first one is totaled or stolen). But for things like damages in order of low tens of thousands CZK (cca 30 CZK = 1 Euro), the insurance is acutally a nonsense, because you can well cover the damage yourself, without routing the money through the insurance company.
Today I have found an interesting article on K5: it has a title Don't buy insurance you don't need!, and the author gives my above thougths a more clear wording, and mentions also another things like deductible money. You may also want to read the comments, especially this one, which mentions the role of a bonus for claim-free time.