Scams upon Scams

Insurance is a brilliant, beautiful idea. People come together to pool resources so that in the rare event that a catastrophe befalls someone, that unlucky person does not lose everything.

The idea of insurance went wrong when for-profit companies were allowed to get involved. Public insurance is cheaper and better. I'm not sure if it is still the case today, but until a few years ago public insurance in Saskatchewan cost a couple hundred bucks a year while people in other provinces were paying $1500 for the same coverage.

Here is an exhaustive list of things that were improved when it was made for-profit:
Can confirm, SGI still exists in Saskatchewan. It is definitely more than a couple hundred bucks a year but it is nice knowing that they don't make a profit. They sent everyone a rebate a few years ago because they had a surplus

The point of insurance is to protect your standard of living. If you can absorb the loss of something then you don't need insurance for it(game controller for example). Most people can not absorb the sudden loss of a car(or house). So a company takes on the risk for you for a fee. That's the general idea anyway.

This is a bunch of bullshit. Car insurance is a massive scam. Do you realize how many millions upon millions upon millions of dollars these companies take in and yet the minute you have to make a claim they fight tooth and nail for every single dollar to keep it in their pocket. It's bullshit it was propagated by lobbyists. Fuck that scam.
- Also you are required by law to have car insurance so they can do whatever the fuck they want.
- I agree in that claims should not be a part of an insurance company due to the obvious conflict of interest. Without insurance though many families would be devastated into poverty or homelessness without it. It sucks but protects people from catastrophic loss. If it were run properly it would be cheaper but alas...greed.
Even if you can absorb it your still required by law to have it. So no it's nothing like a game controller. Its nothing about protecting your standard of living.
It's about protecting others standard of living from yourself. Insurance end of the day isn't for you, it's for others. So when you fuck up they arnt punished.
To some degree yes it is for yourself but that's by far the least of its reasons for existing. To the point of it being more a happy accident then the intent.
- Even if you can absorb it your still required by law to have it.
  But the coverage you're required to have isn't for damages to YOUR car, it for you damaging MY car. YOU are required to have insurance so that when you total my car and cripple me for life, you're able to pay that. That's entirely different from a house.
- You are not required to have it. If you own the car you do not have to have full coverage.
The main reason for car insurance is to make sure you can’t fuck someone else’s life up, that’s why it’s state mandated
- You are taking about liability insurance. The post is about the insured's car.

Things like insurance, home and auto need to government run and not for profit

insurance, home and auto
And the biggest one: health
- True, sorry, I'm fortunate enough to live in a single payer Healthcare country. Although it desperately needs reform, vision and dental aren't really covered
Single payer insurance of any type pulls from a far larger pool than any company could have, lowering the individual cost and allowing a bigger risk coverage. But... what about all those insurance companies (of all types), as well as other industries that rely on the increased costs? How will they survive? /s
- Ahhh I'm sorry! I forgot about the poor shareholders! Forgive me!
Home insurance should absolutely NOT be government wrong. That's just government sponsored building in flood zones at that point
- Flood insurance largely is only government run, it's far too costly for private companies. The flood insurance program started paying for people to not rebuild
- I mean they can stop allowing building in flood zones. Home insurance should not be for profit

I'm currently having some suspect cardiac issues, but my insurance won't pay for "preventative" treatment. I t seems I have to have, and survive, an actual heart attack, in order to be reimbursed for my treatment.

So, just like car insurance, where you can claim only after an accident.

It's fucking stupid and makes no sense, because AFTER an incident is far more expensive....

Wait to get hit?

I don't think you're doing it right.

Step 1 make sure you have gap insurance.

Step 2 never make more than the minimum car payment.

Step 3 when your ready for a new car, side swipe a car on the left and drive into a brick wall on the right. Make sure there are no cameras.

Step 4 enjoy your new car.

Step 5 commit identity fraud so you can keep a low insurance premium!

Step 6 do none of this because it's all crimes. I really hope you read the instructions to the end before starting.

Hi, I followed your comment while reading it. I'm stuck after step 3, the police are asking lots of questions. Pls help.
- New number
  Who dis?
I really hope you read the instructions to the end before starting.
"Remove the diskette from its protective envelope" (it stayed in the box)
"Take the diskette by one of its corners" ("What corners, it's round?")

The biggest thing with auto insurance isn't covering your car, it's covering the cost of whatever you hit sueing you.

Your car may only be worth $3,000, but if you hit a pedestrian and they require a dozen surgeries and are wheelchair bound for life, you bet you're ass you're getting sued for a few million in medical costs.

In a reasonable country, those medical costs would be free, but since they're not you need some sort of protection against once accident bankrupting you in civil suits.

Why is car insurance so expensive in all the other countries then?
- In addition to what everyone else said, property damage is a big part of it as well.
  Let's say you run into a building and knock out a load bearing wall. Or plough through a business or government office. It's not impossible to rack up a couple million in damages if you crash bad enough.
- Real answer: in most other countries you can be punitively sued, ex: if a person wants to recoup the emotional damages from being crippled. You can also, depending on the country, be made to cover the cost of services provided by the medical system if you were found to be at fault (I don't know how often that happens for an individual vs. a large company, but that's how the rates were explained to me by a UK colleague)
- Even in countries with universal health care surgeries aren't typically free. They are just paid by a public health insurance. That health insurance will pay at first but it will try to get it's money back from you if you injured somebody.
- Third party liability for my policy is a few million last time I checked, if you somehow cause a heavy truck to crash or damage a piece of infrastructure you can run into those figures pretty fast.
- ##ItsAScam
I never really thought about that before. That's probably why america hasn't had healthcare for all, the insurance companies are lobbying (bribing) the shit out of the republicans.
- Health insurance companies are lobbying the shit out of both parties. Car insurance companies would love universal healthcare. It would drop their outlays which would increase their profits.
- I DETEST both-sides-ism, but yeah actually in this case, both sides are being bribed and blocking true progress, just the paid off Democrats have been doing it more quietly by slow playing and avoiding real single payer solutions when the party actually has power.
In a reasonable country, public insurance would charge your auto insurance to recover costs. The harms and risks of car ownership don't need further subsidies
- In reasonable countries they do exactly that. The health insurance ensures that your victim gets the required treatment. But they also ensure, that in the end the damages you caused aren't paid for by the public.
It's in you're contract how much they'll pay out for this. $50-$100k is common. After that it's on you. But you're right in the sense that law suits often happen to seek this amount.
Even in a country with „free“ healthcare, if you are at fault for the accident, your car insurance will have to reimburse the other parties health insurance for their medical costs.
I love the idea is the only thing justifying one racket is another racket

Let’s not forget when you get hit not everything is covered, also some damages like trees falling in your car from storms etc. Is also not always covered unless you have specific and even more expensive insurance. Also you don’t even cover your own car, you cover the other persons car.

In conclusion: insurance is a fucking scam

IDK what's worse about that, that it's called force majeure or that it translates to God hates you, so ain't paying for that.
If Bob hates you and drops a branch on your car with a chain saw, then suuuuure you might get something, after your deductible of cause, but if you've pissed off God then...

The idea is that what you pay goes to a fund that is used when the insurer has to pay a client, therefore socialising the costs of fixing whatever the clients insured.

If every client could get their money back, the company would likely have less money available for the payouts (and would risk everyone taking their money out once a big payout is due), and might go bankrupt if too many payouts come up at once.

So instead the idea is that ideally you end up paying less than you'd get if you needed to fix whatever you're insured for... but it's like a bet: you bet that shit'll happen before you've paid more, the insurer bets that it won't.

Of course, though, like in all businesses based on gambling the house always wins.

Even if they weren't scamming you, they've got actuarial tables telling them how much you have to pay to make sure they'll have a certain amount of profit... but of course they are scamming you, and they'll do everything possible to avoid paying you even in the unlikely event that you fall on the wrong side of the actuarial table.

Actuarial tables are only used on life (life, retirement, workers compensation, health insurance) on top of them you need guaranteed interest rate and that give the risk price, but can be mathematically prove that charging only the risk price the insurance company eventually is going to fail, so an actuarial rate is added to avoid that. On top of that, another rate is added for administrative costs and "cost of capital" AKA profit for the shareholders. Finally, comercial costs are added and that's the price you pay.
For casualty (no life) the risk price is probability of event × cost of event, the rest is the same.

It's not a scam, it's just how companies work. By definition, every insurance will pay out less than they collected in payments. They have to pay their employees, their offices, taxes an yes, also their shareholders. That's why, on average, insuring something is always a loosing bet.

You should only insure yourself against things that are potentially threatening your or your family's existence: Liability, health, home, occupational disability, survivor benefits. For everything else it's almost always better to just put the money into an account to have it at hand in case.

Insurance should always be public. If you feel the need to say things like “companies need to pay their shareholders,” you are only one braincell away from saying “gotta keep the lights on”.
- Why should a travel cancellation insurance or a mobile phone insurance be public? You can take out an insurance for almost everything, from wedding insurances for when your spouse gets cold feed to alien abduction insurances. I don't see why the state should be involved in that.
  And of cause companies need to pay their shareholders. That's how our economy works. Even if an insurance is state funded, it needs seed money, and that money costs interest. Either the state (i.e. you) pays the interest, or the insuree (i.e. you) pays the interest, but it has to be paid for either way.
You should only insure yourself against things that are potentially threatening your or your family’s existence: Liability, health, home, occupational disability, survivor benefits.
That, and anything that's legally required (such as auto insurance if you want to legally drive a vehicle)

There is plenty to criticise about insurance companies, how did they stumble upon the one thing that is fine?

The difference is that (in theory at least), insurance will pay your full costs, regardless of how much you've already paid in. You can sign an auto insurance on one day, pay in 100$, then get into a 20k$ crash the next, and get the entire costs covered.

A retirement savings fund is capped by how much money you've put in it. You can never take out more money than you've put in (+interest/portfolio growth).

That's kinda the whole point of insurance. If you want an insurance model like described in the post, well nothing is stopping you from opening an ETF or other savings fund, and dedicating it to auto payments. It's not like you need a dedicated industry/service for that.

Exactly. Insurance is best thought of as similar to gambling, but functionally the opposite. It's "I'm giving you $x per month knowing that I'm probably going to lose money on this exchange, but in return if I'm hit with y disaster that it would be very difficult to financially recover from then you pay for it".
I get that some people are frustrated by it during financial squeezes, and with liability insurance it can be annoying as it's mandatory. But as someone who's gotten a renter's insurance payout, the relief of "thank fuck I'm not out thousands of dollars while having to deal with this disaster" is immense
- I can't fault people for being confused or frustrated when we also have insurance that's intended to work as the primary means of payment.
  Having our crap tastic excuse for a medical payment system be based in insurance, and then having another mandatory insurance system that's somehow less helpful is reasonably frustrating.
- That's exactly how it started! People would go to a major bookmaker like Lloyd's coffee shop and place a bet against themselves. So you would bet that your ship would sink or your house would burn down or that you would suffer a crop failure. Then if the bad thing happened you would win the bet.
  Of course, if the odds are close the bet would be very expensive, so you'd have to do monthly financing. But what if the catastrophic event happens before the bet is fully paid?
  Somebody had the genius idea to pool everybody's bet and run the odds.
- I think of insurance as a cost limitation device. In case of disaster it limits the potential costs to something manageable in exchange for a manageable monthly payment. As you acquire more expensive things (house, car, etc.) those potential costs expand significantly. With vehicles your car insurance also covers some medical expenses after an accident, as well as covering any other partie's vehicles and medical costs should that be the direction the claim goes
  I can pay a couple thousand dollars a year to insure my house but I definitely couldn't have paid the 40k out of pocket to replace my roof, siding, a couple of doors and windows and repaint the garage after a recent hail storm. Every vehicle I've lost to nature's chaos had a loan tied to it which would've been very difficult to both continue to pay back and repair/replace the vehicles. Insurance limited those costs
You still have to pay for insurance even with the fund though. It's required by law.
- It probably varies based on states but in CA you can put a deposit in with the DMV in lieu of getting insurance. The deposit would be used for any damages you are liable for. I don't remember the amount but it made insurance seem like a better deal to me personally since the coverages went way beyond the deposit amount.
I mean outside of the fact by law you have to have car insurance.
- Depends. You can also deposit so much to the DMV instead for them to hold in place of insurance. In California it's $75k.
- The insurance you're required by law to carry is liability imsurance that ensures you don't ruin someone's entire life with no ability to compensate them. If you own your car free and clear, its completely on you whether you want to insure your own property.
The difference is that (in theory at least), insurance will pay your full costs, regardless of how much you’ve already paid in. You can sign an auto insurance on one day, pay in 100$, then get into a 20k$ crash the next, and get the entire costs covered.
I've had basically this. In the decade or so I've been paying for my own insurance, I've had about 75k paid out in claims (hail storm totaled 2 cars and did heavy damage to the house, plus a third car totalled by a deer on a blind corner on a county highway)
Climate change is absolutely turning the entire insurance industry on its head given places like the southeast with frequent hurricanes and the southwest with frequent wildfires. And for everyone else the increasingly severe storms are raising the chances of a random incidence of chaos leading to a claim

Then if you are in an accident or something happens to your car, they'll try not to pay out and even if they do, they'll make you pay even more every month, regardless of whether the accident was your fault or not. Oh and you have to have it where I live or you're breaking the law.

Where I live, you can choose to not have it as long as you take $50,000 and put it into a bank account and secure it and not touch that $50,000 as long as you are driving without insurance.
- What if you hit a lambo?
Also they will arbitrarily decide how much your car was worth. Did proactive maintenance and no accidents? Cool, now it's assessed to be the same as if you had six unrepaired fender benders and kept raccoons in the back seat.

How about the fact that home insurance doesn't cover preventative care. We had a branch fall on our roof and the insurance had to pay out to get that part of the roof fixed. I pointed out that there's another dead branch up there that I'm a little concerned about hitting the roof, and maybe they would prefer to pay a few hundred to get a guy up there to remove the branch than a few thousand to get the roof repaired the next time, and the insurance company said absolutely not.

¯(ツ)/¯

Insurance is about compensation for loss, and that's it. It's not their job to keep your house safe, that's still on you. It's their job to give you money if something happens beyond your control. Now that you mentioned that other branch, you should probably take care of it, if it falls they could deny your claim since you were negligent in preventing a known risk.
- Insurance is about compensation for loss, and that’s it.
  That's certainly not true of medical insurance. Preventative care is part of the whole package. In fact, certain preventative care is encouraged. Health insurance companies are more than happy to pay for UTIs, for instance, because they're so much cheaper than pregnancies.
- Insurance provider in my area has premium discounts if I do certain things. If I get my boilers checked and serviced, it reduces my premium next year. And cases as dead branch falling, they have a form that I can fill up to send for review, however in reality they will wait for the annual home inspection before renewal to asses threat, but they would pay for dead branch to be removed.
  A bloke down my street had a tree growing too close to electrical wire and he kept complaining to the electric company to trim the tree or risk a fire to no avail. Then he told this to the insurance and they sent a strongly worded letter prompting electrical company to fix it in 2 days.
  Also I have some experience with flood risk underwriting in Malaysia, we'd pay to have Strom drains cleaned, and fix some supports for buildings who we'd deem flood prone, because fixing those would be a 1-2% cost of replacing the entire house.
  Point being insurance providers definitely can and do spend money on preventative care. I guess US very strongly doesn't believe in that.
They'll make those thousands back when they raise your rates.

Well because if you crash right after making the insurance there won’t be enough in your “savings”.

What if we do pay insurance and never get hit?
To me, both are not ideal. But somehow we as a society have accepted one as default and other as an extreme.
And the default one just happens to benefit the "shareholders" and not the everyday people.
(Btw the taxes we all pay could easily cover the costs of occasional accidents, and accidents could be reduced by proper regulations)
- I mean thats the point, you are paying for reducing risk. If there is enough competition between insurers the average profit they make should be quite low.
- Conceptually at least, if you never get hit, your premiums paid for the repairs of other people that did.
  That’s the idea, no one knows if they will get in an auto accident. Most people cant absorb the cost of the ramifications. Instead of every person saving the full amount to replace their car, pay for hospital stays, make someone else whole (which is a ton of money out of the economy and you know for sure a lot of people wouldn’t be responsible enough to do that) we recognize that the number of people exposed to being in an accident is less than the number of people that will be in an accident.
  Everyone pays into the pool, if someone has an accident they get to take more out than they put in by design.
  That’s where your money goes if you never get in an accident. Insurance companies also make a profit by managing that pool of money, and they are incentivized to only insure good drivers or collect more money from bad drivers (which is why rates go up if you get in an accident)
  The alternative is that everyone starts their own savings account, one that would almost definitely cost more money, and the number of people that would just not save anything is probably pretty high because they would know that they can’t realistically save up enough.
- Some comercial insurance, workers compensation specially, have something called technical excesses sharing where the insurance company give back some money if the client company had less claims that the premium paid. But that only offered to really big accounts.

One car insurance company where I live operates kinda like this. USAA.

Every subscriber is a member. Every year, after they pay operating costs, they take the money left over from premiums and put it into accounts distributed across all the members. When you reach a certain age you can withdraw the money accumulated in your account.

It’s amazing what you can do when you aren’t accountable to shareholders
I haven't heard of this. What's this benefit called?
Edit: I should take one minute before asking questions.
Member-Owned Structure: Unlike a publicly traded company that pays dividends to stockholders, USAA is a reciprocal interinsurance exchange, meaning its members are also its owners. Profits, after expenses and reserve requirements are met, are returned to members.
Subscriber Savings Account (SSA): A small percentage of the property and casualty insurance premiums paid by an eligible member is retained by USAA and allocated to an SSA in their name.
Annual Distributions: The USAA Board of Directors decides each year how much capital is needed for reserves. Any excess is distributed back to members from their SSA. This distribution amount can vary annually based on factors like the company's financial performance and the member's longevity and account balance.
Payout Options: Members typically have the option to: Apply the distribution to their insurance premiums. Receive the funds via direct deposit or check
- Yeah I didn't know most of that. I'm not a veteran so I can't be a. Member even though I bank with them. Or couldn't last I checked. I probably can now because my MiL is a vet.
...i don't know man, i've been with USAA for fourty years and my dividends always amount to just a discount on my december premium...
There are a lot of them like that called "mutuals" which are just insurance cooperatives. If you're American you can probably get your insurance through one, although they aren't as popular.

I love how you pay them thousands every year, and then when you want to use insurance, you have to pay them EVEN FUCKING MORE in excesses. Then, despite paying them thousands, they argue with you and try to not pay it. WHAT THE FUCK AM I EVEN PAYING FOR??

All insurance companies and lotteries take in huge amounts of cash and pay relatively little back. The whole economy is a scam if everyone needs "insurance".

I don't mind paying for auto insurance, but I also get more out than I pay :(

I probably pay in 5-6k before my car gets totaled and I get a payout higher than that before I start the process again.

Just once I want to be able to keep a car to the point where it's actually paid off .....

Where do you live that you total a car every so often you don't even pay them off
What cars.? There's no way somebody survives more than 2 totals, are you good?
Do you still want to drive after all of this?
- When your car is "totaled" (from the perspective of insurance) it just means that it would cost more to repair your car than your car is worth.
  Mild hail damage can total a cheap/old car, even if you only need to replace the windshield for it to be drivable.
- To point 2, do you know how easy it is to total a car? If you have any appreciable damage to the vehicle, it can be enough to total it. 2 of the crashes I've been in were parking lot speeds and it's still enough to total it. Like, a light tap (<15mph) to the pillar separating the front and back doors is enough to total a car if it's not worth a ton

hi and would you like to talk about your car's extended warranty?

My bicycle theft insurance also pays for regular checks, and routine repairs.

I wonder if it's because bicycle insurance isn't required and therefore needs to actually offer something in order to attract customers. It's probably unwise that we leave to capitalism the kinds of insurance which are so important they need to be legally mandated.

In Germany this is usually pretty well handled, you paid a bit more for full coverage and they cover all costs of repair etc. But if you're in lots of accidents each time your insurance cost rises. If you have little to no accidents for a few years, the insurance cost sinks. It is also mandetory for your vehicle to have insurance, avoiding sudden private insolvency.

To be clear, you need liability insurance for your vehicle, so if you cause harm to someone else their claims are covered. You don't need to have insurance for your own damages. The state doesn't really care about your solvency, only for the solvency of your potential victims.
- You are correct, thanks for the clarification.

I self insure. I keep my state minimum and pay what I would pay in collision to myself in an interest bearing acct until I reach the replacement cost of the vehicle. Took a while the first time but after those first few years it has been worth it.

Hope you never get sued after an accident
- The minimum coverage of my state covers that. I'm required to carry liability insurance
Only a few years? What's the math on that? I looked into it and the minimum was 20k. When I looked at it I think it would take around 40 years to break even on premiums. It's not about the replacement cost of the vehicle but about damages that you could be liable for. If you're liable for a hospital bill, that minimum won't go far.
- The state minimum insurance for me is liability which covers all damage to other people's vehicles and injuries. What I insure myself for is damage to my vehicle. It costs $220 for full coverage and $20 for liability. I pay myself the $200 until it reaches the depreciated value of the car. After the first car I had enough money to buy in cash and just keep the fund going. I still pay the $20 a month to GEICO because it's required but I now can replace my vehicle in case of a wreck. After 5 years that $200 is $12k. All the gamble was on the first car after that not a problem as long as I don't try to buy a new or luxury vehicle.

There are comprehensive insurance policies where you can file a claim to get a repair done. It's not cheap AND they'll raise your rates, but you can get it :)

Same for the retirement fund tho. You have to be old to take some money out.

A lot of people with ultra expensive cars drive in my area If I ever hit one of them without insurance its game over for me

So if you think about it…
You are required to essentially stay destitute for their risk? They choose to drive around in a 180,000 dollar car and “the poors” better have insurance on those Toyota Yaris in case something happens.
- The insurance is for you, not them. Your action caused a loss, you are liable to pay for the loss. You can just not get insurance, but either way you need to pay for any damage you caused.
- They don't need to drive a 180,000$ car for your insurance being important. They don't need a car at all.
  If you hit a cyclist and after a lot of expensive medical care they end up in a wheelchair, unable to work their old job, required to move or rebuild their home to be wheelchair-accessible, you might owe them millions, even though the bike was only 300$.
So, a rich asshole can get another 3000€/$ on top of their upper middle class + money.

Wait, guys, insurance is paying out to you in a reasonable amount?!