Clive George wrote:
On 31/07/2010 09:18, Norman Wells wrote:
Tim Streater wrote:

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.

Judging by the profits they make, they're much, much better at it than
me, to the extent of charging me possibly double what the risk actually
is. That's the gripe.

I just wonder if anyone here has actually received back from their house
insurance company more than they've paid out in premiums. There should
be some if the companies aren't rampantly profiteering on the back of
unjustified anxiety.

I think I have on buildings (flood), though in another 10 years I'll be
back on the other side, and you still miss the point. We're a small
group, the odds of a huge claim are tiny, so the chances are none of us
will have had one, but those huge losses are potentially catastrophic so
it's still worth covering against them.

The general rule is to insure against losses that you could never
afford to meet. Or are mandated to have.

To repay the loan on a burnt down house you no longer have to live in,
is such a loss.

The general rule is that if you can afford to repair replace whatever,
and the risk is moderate to high, don't insure.

E.g. my claims are a bit less than my payments, on car insurance, over
the years.

But a third party claim against me by a smart lawyer if I cocked up and
ruined someone life, would ruin mine. Without insurance.

So third party is always worth it.