Jack is a gambler. However, he does not bet on card games or slot machines.
Jack: Hi, I want to place a bet on my actions at a place called State Farm. I will bet 200 dollars a month I will get into an accident soon. And if I do, I bet the accident will be more costly than all the money I put into this bet by the time I actually get into the accident.
State Farm: Okay sir, and if you win this bet and we suffer a net loss, then understand that we will raise your rates to compensate for the loss if you wish to continue with the gamble. If your accident isn't expensive and we can cover it without suffering a loss, we will still raise your rates. If you drop out of the gamble, we will require you to give up your privilege to drive.
Jack: So... the only way I won't suffer a net loss of money, which is why I'm making this bet, is if I either wreck into an insanely expensive vehicle or if I nearly kill someone??
State Farm: That's right. Also, we will fight you and try to make you pay for as much of the accident as possible. If we can't do that, we will drop you and you will have to give up your driving privileges.
Jack: Oh, I see.
If you want to drive, you MUST gamble.
It's the law.
That can't be right. I must be missing something that justifies insurance.
I think you should read listman's post a bit more carefully. Basically you can lose if you don't get into an accident but your rates will stay low or you can win if you do but your rates will increase. Personally I like the protection even if the system could be made better.
Either way, you are paying hundreds of dollars a month. Accident or not. So the person paying the insurance is guaranteed a 100% chance of being screwed over. The only people that win are the one selling the insurance.
Having to pay money to save money is in, no way, sensible. Unless you totally wreck your car on the first day after getting insurance. Which, even in that case, means insanely high rates across the board. So it is really just a short-term sensibility.
Here's a true story. My brother-in-law kept the same HO policy for so long his insurance company finally pink-slipped him and he was forced to seek insurance elsewhere. Pink-slipped means the insurance company dropped him. They sited, as a transparent reason, that in all of those years he was a faithful client, he had never had to file a claim. The insurance company dropped him because the odds of him having a claim soon were too great a risk.
I wrote the above words odds and risk in bold type to illustrate that, yes, insurance is gambling. Gambling is illegal in the state of NC but we the people,(peasants), are forced to buy insurance if we want to enjoy the privilege(s) of driving, owning a home, getting sick or dying.
What makes my blood boil is that we have to purchase additional coverage to cover the ones who are underinsured. This is a ripoff and it should be illegal. People drive illegally every day but it only matters when our fenders get bent! Then, it's the one who has the most coverage, not necessarily the one who's at fault that winds up paying the lions share of the money. It's as if those of us who can afford good coverage are used as the scapegoats for those who shouldn't even be diving in the first place.
You know, I'm surprised the OP hasn't mentioned death, oops, I mean life insurance. That's the real kicker! We purchase life policies so we don't leave our loved ones paying off our debts when we die.
Almost everyone loses money when buying insurance. Almost everyone is getting ripped off. As was mentioned before, another reason why insurance is so high is because of ridiculous law suits.
Agreed, agreed, and its the insurance companies that create the ridiculous lawsuits (either real or fake) just to scare people into buying insurance and putting things like "warning, this can of tuna fich contains fish" on to a can... of tuna... fish...
So not only do I believe insurance for most things is a scam, but I deffo believe that the insurance companies themselves are creating the circumstances for the scamming.
