The insurance company expects to make a profit on insuring thousands or more of you. It will take a loss on tens to a hundred or more in that thousand, but overall make a profit. It may even take a loss overall in a given year but make it up over any N year period.
You are free to not buy insurance but could have an issue if your loss is say a year or more in wages. For instance, it is unlikely a tornado will totally destroy your house. However if it does, can you afford to rebuild without insurance? The insurance company can afford to rebuild because tens of thousands of people bought insurance and only 10 people got hit by the tornado.
Latest Answers