Why do people pay for insurance? If they have the money to ensure protection in the case of damage or loss that isn’t guaranteed, why not save the money for when something actually happens?
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In the strictest sense, you should only insure against damage/loss that you can’t afford to pay yourself. For example, those ‘extended warranties’ on consumer devices are largely a scam – on average, consumers pay more for the warranty than they’d pay if they just replaced the device.
With that in mind, insurance also comes with other benefits in many cases.
Consider your the non-collision portion of your vehicle insurance. Even if you weren’t legally required to carry it, it would still be a good idea. If you do get in an accident with another vehicle, the legal consequences are borne by the insurance company rather than you. Outsourcing this potentially unlimited liability that few people have the legal acumen to navigate to a large corporation is a huge benefit. The same could be said for the portions of your homeowner’s insurance that protect you from someone slipping on your walkway.
Health insurance is another example. The price of care for an insurer is significantly less than the out-of-pocket cost you’d pay as a private individual due to their large negotiating power.
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