I have copied what I have put up in another thread and felt it was worth a new thread.
If insurance is so great why then do all the big companies self-insure?
Some say is it worth taking the risk not to have insurance? I say is it worth paying some one thousands of $ if they are just going to give u grief when it comes time to make a claim? Worst of all refuse your claim?
Self insurance gives you an opportunity to take more control of your life with alot less grief.
What are the opinions of other forumites on insurance?
Yes I have heard some good stories about insurance, but mostly bad, plus my own experiences.
So what are your opinion’s? Is Insurance a SCAM or a NECESSITY?
Regards Bear
Some insurances are outright scams.
But in this outrageously litigious society, I wouldn’t be caught dead without public liability and/or professional indemnity insurance.
you can insure aginst anything these days. alot are scams but at the end of the day its all a question of ‘risk’. the world is a riskier place these days. globalsiation, terrorism, etc mean that the stakes are quite high – so i reckon it depends on your personal position and exposure to risk whether it be finance, health or anything else.
the industry preys on insecurities and will remind you constantly about the bad things that can happen to you.
the best hedge against losing your lot is to ‘have nothing to lose’ or atleast very little to lose. if i save money, and dont be such a rampant consumer then im halfway there.
On insurance, I would consider:
1. risk
2. consequencesIf the risks are high and/or the consequences are severe then it’s worth insuring. If the risk is very low and/or you can handle the consequences, then it’s not worth insuring.
Re self-insurance, let’s say it’s a retail chain with many stores. Even the complete loss of one store might only make a small dent in finances.
Insurance can also (sometimes) mean that you subsidise the foolishness of others. If you can manage wisely and reduce your own risks, then you will get back less than what you pay out.
Given the large number of contingencies that could occur, self-insurance by building up a sinking fund might work out better, especially if you can get a return on that capital in the meantime.
I fully insure my IPs (incl landlords insurance) but have opted to avoid some other insurances, as I prefer to self-insure through having an available liquid portfolio that can be drawn on in emergencies (none happened yet – touch wood).
Peter
Ok, I agree it depends upon the perceived risk and the possible cost if the risk turns into the real thing.
However if you do self insure, how do you make sure you have the money available when you need it. OK, some are good at keeping funds separate to cover circumstances when they arise, but for many the money would be buring a hole in their pocket and it would be spent and then not accessable when needed.
So I think besides assessing risk, people also need to assess their own personal traits as to whether they could manage to self-insure.
Originally posted by wayneL:Some insurances are outright scams.
But in this outrageously litigious society, I wouldn’t be caught dead without public liability and/or professional indemnity insurance.
Hear hear!! You can usually work out the costs of replacing a house, or a car etc etc but you can NEVER have a figure for public liability. Claims can be in the millions, and that’s impossible for most people to self insure for. If nothing else, you don’t want to be involved in the stress and hassle of a public liability claim, you’d be much better off being able to handball it on to an insurance company and let them deal with it.
Keep smiling
Felicity
Personal public liability (in NZ) is normally covered by your regular house contents insurance.
I found that out when my 50kg BullMastiff ran out the gate chasing a cat across the road into an oncoming car. The dog was fine, the car was written off. My contents insurance covered the lot.
Insurance is a bit like lottery.
Lots of people put in a small amount, a few get paid out more than they put in.
The funds feed a whole industry, including taxes. There are also generous upfront and traling commissions paid to the insurance brokers. I have heard of upfront commissions above 20% on insurance products. That’s why you see so many people pushing insurance products.
Obviously, less money is paid out than coming in. It’s cheaper on average to self-insure than to buy insurance.
The problem is the ‘What if’ scenario. Insurance salespeople are trained at playing up with your fears to manipulate our emotions. Insurance is suppose to buy you “Peace of mind”. What is the price of that?
The bottom line is ‘Can you comfortably live with the risk?’. For many small issues, it would be financially better to have a small reserve cash fund, that pays interest, rather than to throw away money on insurance. For larger liabilities, the decision is more difficult.
Personally, I have personally given up on medical insurance, as I worked out that I paid out much more than I got back, and I was not facing a huge risk anyway. On the other hand, I decided to get car comprehensive insurance, as I facing a significant risk that I could not cover from my own funds. I have recently looked at income protection insurance. I found it extremely expensive for the risk it covers. And it doesn’t cover my biggest risk, which is that I lose my job…
In the end, I can’t be protected from everything. There are an infinite amount of unpredictable events that can hit me. Trying to assess them accurately is enough to give me a headache. The more money I give away in insurance, the less I have available to build up my retirement fund.
I prefer to live with relatively little insurance.
Cheers,
CarLover.
Heres a scenario for you, I have been riding Harleys for 20 years. I have been running a Harley Tour company for the last 10 years. In that time I have had insurance for 4 years on my bikes. Claimed $2500 after one of my riders dropped one of my bikes. I was the insurance companies best client with 20 Harleys insured with the company and would sit in their corporate box at the Adelaide GP. When I made that claim I showed the assessor that I could claim more so lets just get this settled and forget about the game of counter claiming, I just wana get the bike on the road s it can make me money. He said no probs. I could have claimed another 2k on jackets and superficial damage to the bike.
Sure enough he put in a counter claim, so I then claimed it all to the value of 4,500 did the work myself and payed myself for the work. In the end a good outcome for me however they couldn’t just see past the game which cost them their best client. I went back to self insurance.
The other 16 years I have not had insurance on my bikes at all and with out calculating it exactly I would assume I could have bought about 4-5 brand new Harleys with the money I have saved.
Regards Bear
INsurance insurance insurance…. Hmmm… Tough one. Unfortunately there are insurance scammers all over the world and the country which will always push the cost of premiums up. For example, in England, it cost us more in insurance on our tiny little Ford fiesta than the car actually cost us!! BUT I would not not have it for the fear of other people slamming into me and trying to claim my fault.
As for health insurance, well this has been a debate with hubby for some while until I needed my knee reconstructed, found out I had gall stones and urgently needed them out so I could actually eat again rather than thowing up all the time… and I wouldn’t have been able to have that happen without private health insurance. So unfortunately I will never be without it now…
My parents have had a bad run with insurance companies not coughing up when needed and legitimately so they have canned all forms of house and contents insurance on both their PPOR and the IP. Dad’s philosophy is ‘We’ll deal with it when we need to…’ Dunno if I agree but….
So yes I believe it is a bit of a scam but then again if used properly and investigated to get the best premium, it can work.
My 2c.
Steph.Success is 1% inspiration and 99% perspiration.
Just on this thread of insurance (the good, the bad and the ugly), what are peoples thoughts on income protection or disability protection? I’d be interested in people’s philosphies and/or experiences on this.
Cheers,
Gatsby.Self insurance really only works for bigger companies because they might hav eafleet of 1000 cars and that goves them a porfolio of spread risk. For a person with 1or 2 cars 1 or 2 houses etc it doesn’t work as well.
Health insurance: if you look at the claims charts you will see that people in their 20 and 30 pay more than they claim except for when they have babies then as you get to 55 you start to claim far more than you pay….hence the incentive to get you to join young and stay on.
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