On 30/07/2010 22:34, Tim Streater wrote:
In article DRG4o.4135$Rv5.1669@hurricane,
"Norman Wells" wrote:

Invisible Man wrote:

We pay �180. I am retired and don't have �1/4M+ to rebuild and replace
the contents. That is why we have house insurance, not for day to day
small losses.

Fair enough, but the chances of having to rebuild everything and to
replace all the contents must be exceedingly low. Normally, it's just
a bit, and a small bit at that, isn't it?

Mr Invisible has calculated the risk and decided it's worth �180/yr to
him avoid the various risks.

Insurance only really works when risks are fairly low. So if 1 in 10,000
houses burns down each year, and the average house is worth say �250k,
everyone pays �25/year in fire insurance (plus a bit more). That means
all 10,000 householders can cease to worry about that particular risk.

That's what you're paying the premium for - so you don't have to worry.
It's for you to decide which risks you don't care about. To do that in a
sensible way, of course, you'll have to do a risk assessment for each
type of risk. That's what insurance companies do, and they're quite good
at it (they go bust if they're not). Better at it than you are, at any
rate.

And better than govt depts, too. Remember the postman who was told he
couldn't deliver the mail to some folks anymore, because it involved
climbing over a style and crossing a field (dangerous!)? The powers that
be had identified that a risk existed (fine so far), and then done a
****ty job at *quantifying* the risk. They'd rated it high (high enough
to stop the postie doing his job) instead of low (number of accidents in
previous 50 years on that round - zero).

If a risk is quite high (e.g. for a tanker going up the Gulf during the
Iran-Iraq war), then the premium is correspondingly high, and the notion
of "insurance" ceases to mean very much.

There is one overriding reason why people should buy lots of insurance -
to make sure the company can continue paying my pension.