What insurance do you buy because you want to and not because it’s required?

  • Homeowner’s coverage on the actual contents of the house (the mortgage only requires that the actual structure be covered), albeit with a fairly high deductible.
  • Earthquake insurance, also not actually required by the mortgage.
  • Comprehensive insurance on my car, which I don’t have to have since I bought the car outright, although again with a fairly high deductible. Also liability coverage beyond the minimum required.

Required or no option:

  • Really crappy liability ins for vehicles
  • Health insurance with dental and really crappy vision

Not required

  • House (we own our house outright)
  • Maxed out vehicle insurance with $1M umbrella to cover all vehicles and our house/land. My wife was in a serious accident and we are thankful the offender had an umbrella policy. And it was about $25 more per month to add it along with the vehicle (we had to up the vehicle to get the umbrella option)

None. Ever. Period.

My FIL had a car rental franchise. He went bare on 50 cars. If a renter totaled one, he ate it. Much cheaper than premiums in the long run.

In my experience, in almost all types of insurance, a high deductible (which is usually still something most people can afford to absorb without major hardship) gives you best bang for your buck in partially self-insuring. Think of it from the insurance company’s point of view:

(1) A high deductible gives you an incentive to be more careful about the risk, since you are taking a non-trivial portion of the loss on any claim;

(2) The administrative costs of smaller claims are eliminated.

These are attractive factors from the insurer’s point of view, and this will often be reflected in a significantly reduced premium for a high deductible.


Interesting comments about deductibles on car insurance.

You would expect a direct relationship between the premium and the deductible, but that (at least in the UK) does not seem to be the case. when I last renewed I had a play with the quotation page on their website (pretending to be a new customer). There was a point, above which increasing the excess made no difference and it tapered off too. Adding a thousand to the excess for a small reduction to the premium is not a good deal.

It is a choice, as with all the other add-ons like recovery, and replacement cars that has to be calculated. I thought that computers were supposed to make all this simpler?

Uncharacteristically, I bought the insurance for my iPhone.

Normally I never buy insurance for things I can afford to replace. It’s only for things that I need whose replacement cost would be a catastrophic expense if it came at the wrong time.

But, it occurred to me that my psychology is flawed to the extent that I would get substantially less utility out of the phone and contract because I was worried about dropping it.

Not sure, I might be over this foolishness by the next time I get a new one.

I did the same for exactly the same reason. And an aspect of that is that I refuse to get a beautifully designed phone and put a thick clunky plastic case on it. That’s like little old ladies who get a fancy sofa and leave a plastic cover on it.

You grok me! You grok me!

Hear here!

Tools that get used get bunged up. They need to be durable enough to take that licking and keep on ticking. But people should also to treat their tools well, not negligently. Nevertheless, stuff happens. So plan for it.

Insurance is good for something like a phone that’s not quite as durable as its mission dictates it should be.

Phones are also one of the most stolen items there are.

In the United States, about 113 smartphones go missing each minute (that’s 160,000 a day and about 30 million a year!). When an iPhone costs over $800, this becomes a very pricey problem. In 2011, 40% of all robberies in New York City included smartphones according to David Anderson, director of product for niche insurance company Protect Your Bubble.

The Top 10 Cities for Smartphone Theft and Loss (cnbc.com)

My son in law found out the hard way about the minimum requirement for insurance in Washington. Fell asleep at the wheel on northbound I-5 just south of Olympia. Drifted into a new Hummer H1 which caused a tractor trailer rig and 3 other vehicle to all crash in the median. The damage to the Hummer wiped out the $25,000 in liability, he was left with $140,000 in damages to the other vehicles. He thought he was in the clear after being told that the other drivers insurance covered the damage to the other vehicles. Then the lawsuits from the insurance companies started coming in. He was being sued for over $200,000. Ended up filing for bankruptcy and lost his license for 3 years. I consider myself to be properly insured in today’s world, I have a $250,000 liability policy.

Trip insurance always, kind’s superstitious about that, been paying for years, no claims

I buy an umbrella, and because I don’t own a home, I have to buy renter’s insurance on my goods in my fella’s house where I live rent free. But it’s cheap.