Eli5: If an insurance company is willing to sell you insurance, does that mean the insurance company is expecting to make profit and therefore you will make a loss and should not take up insurance?

Question

Eli5: If an insurance company is willing to sell you insurance, does that mean the insurance company is expecting to make profit and therefore you will make a loss and should not take up insurance?

In: Economics

Answer 1

In addition to what others have said about cost sharing and calculated risk, insurance companies also buy insurance. For example, if a hail storm destroys the roofs and siding of every house in town, the insurance company has an insurance policy to save them from the expense.