What’s the point of insurance?

Let’s see – I had been with my insurance company for 11 years when I filed my first claim.  In hindsight may be it wasn’t the smartest move.  I had my bike stolen from the condominium garage, one of six bicycles stolen [during a garage repaving project; and management told owners that we could not keep our bicycles in our individual units].  Of course, I approached management about the stolen bicycle seeking compensation.  I was directed to file with my own insurance company.  I did.  After the deductible (I believe $250), I got less than $100.

About a year later a then boyfriend hurt himself and fractured some toes of his foot in my condo.  I recall driving him to the emergency room.  He didn’t have health insurance.  A work colleague mentioned that my homeowner’s policy provides some medical benefits when a guest is injured at one’s home.  I did inquire and my insurance company paid I believe $1,000.

Another year later I purchased my house.  I should say I almost didn’t purchase my house.  For reasons too tedious to repeat, I didn’t go with my insurance company to obtain homeowner’s insurance for the house.

I attempted to get a policy with State Farm but was denied.  Why?  Because I had filed two small claims in less than three years.  I couldn’t believe it.  My mother scrambled to find a company that would provide coverage.  Eventually, I was able to get a policy through Nationwide (but at a much higher rate).

As I reflect on that frantic and painful experience more than five years ago, I ask, what’s the point of insurance?  Wouldn’t it be smarter to open an account and deposit my monthly, quarterly, or annual insurance premiums?  At least I know when I need the money I will get it!

I wonder what the percentage of payouts are under insurance policies?  You know companies don’t want to pay too much because that affects the bottom line and affects how investors view the company.

Yes, insurance companies, the for-profit kind (is there any other?), have NO INCENTIVE to pay  under your policy.  They want to suck in those premiums without having to pay a dime.  They are more concerned about how financial analysts’ view their [the insurance companies] financial records than the individuals or companies they insure.

You think I exaggerate?  Remember Hurricane Katrina?  Recall those homeowners who didn’t receive money under their policies because the insurance companies deem that certain damage was due to wind, which was not covered (excluded from the policy) versus  flooding, which was covered [included under the policy].

I think about those individuals near San Francisco whose homes were damaged due to the gas pipeline explosion or the wild fires in Colorado.  Will these tragedies be included or excluded under the homeowners’ policies?  If there’s a loop-hole, the insurance companies will definitely find it.

So, again, I ask, what’s the point of insurance?


1 Comment

  1. September 15, 2010 at 12:23 am

    Amen sister. Despite my family’s ties to the industry, I think insurance is the biggest scam going. You can’t buy a car or home without it, but God help you if you’ve made a claim. I’ve been with Stayte Farm 20 (twenty) years. Shan had a 1000 accident which will cost me 1200 in premiums over the next 3 years! Inm the last 20 years I’ve had 2 (two) claims. A scam I tell you!

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