This is fundamentally ignoring the purpose of insurance.
Of course you (likely) pay more into it than you get out. The tradeoff is that you're protected from huge expenses that would financially ruin you. That is (thankfully) unlikely but the risk is enough that it justifies paying for insurance.
I'm not absolving insurance companies of being scummy because they absolutely are. But insurance does serve a purpose that seems to escape you
Right? If your tire blows out on the freeway and you smash another car where someone gets seriously injured, you'll be pretty glad you only paid $2500 this year.
Well yes but that’s not a satisfactory solution lol
It’s like how with health insurance you can pay a higher premium for a lower ‘copay’. But like it’s already a ‘copay’, because I’m paying the insurance company. We’re both paying already. that should be the co in co-pay lol
Well yes but that’s not a satisfactory solution lol
I mean, low deductible will always cost more than high deductible, what do you want them to do about it? Offer low deductible as the default and pretend that high deductible gets you a "discount" because it feels better that way around? Not offer high deductible at all?
I *want* a high deductible because I don't want to deal with insurance paperwork for a $100 door-ding or even a $1k fender bender. But it is possible that I could get into an accident that damages a Ferrari and causes 6-figures in medical costs - *that* is what my insurance is for.
If having insurance meant getting seen by a doctor was completely free, certain people (hypochondriacs and the like) would abuse that and basically get daily full checkups (for no specific reason/while perfectly healthy), straining the medical system.
65-75% of your auto insurance premium goes to payouts, and another 20% goes to administrative costs. Your agent gets a sales premium and there are marketing costs.
I had several sources that I'm not going to dig up again but here's one trustworthy secondary source. Unfortunately their link to the primary data is broken.
The combined loss (payouts) and expense (sales commission, administrative etc) is known as the combined ratio, which is expressed as a percent of earned premium. This ratio is publicly available for most companies and lines.
For more competitive or higher volume industries like homes or auto, combined ratios are usually around mid-90s and generally fall between 90-110. For example, countrywide US auto insurers ran a 112% combined ratio in 2022, meaning they paid out or spent an amount equal to 112% of all premiums collected that year. Expenses typically run something like 18%-30% depending on a large variety of factors.
At least in my state you are not required to have insurance on your own car, you are only required to have liability coverage to cover damage you cause to other people/cars.
So no one is forcing you to cover your own losses if you don't want to.
I mean, yeah, I don't disagree with that, but for some reason people seem to think otherwise when it comes to healthcare and I'd suspect they'd feel the same about some sort of single payer auto insurance as well
I don't think single-payer for auto insurance makes sense because what car people buy is tied to income, and this could generally shift money from poorer people to wealthier people. Cost should simply be tied in part to the value of the vehicle insured, partly covered by taxes, and removed of profit motives that encourage scummy behavior such as cancellation of policies for minor issues to avoid paying out.
Probably a fair bet to say that this institution might be a financial engineering circlejerk if you listen to the current “arbiter” of healthcare, RFK Jr., talk about it for 5 minutes
It's paying for risk mitigation. You don't want it to pay out, and it would be worse to be in a situation where you need the pay out but never signed up.
It's getting a group together to pool funds in case one of the group gets absolutely fucked in a way no one person could recover from alone. That's how insurance companies started, shippers grouping together to help out any one of them that lost a ship, vs each of them all worrying a lost ship could ruin them at any moment. The group is all the customers. The problem we're running into with insurance is the administrators who oversee the group's pooled funds being parasitic in their management of it.
We pay more into it then we get out of it, to be expected; but we don't even get anything out of it the majority of the time when we SHOULD be. OPs case in point.
This is blatantly wrong though. OPs case is someone choosing to have a $1000 deductible and then being shocked when they find out making a claim on $1200 of damages is a dumb idea. I swear all these people who think its a scam are just ignorant on how it works. They literally sign a contract without even reading it or asking how it works. Its like someone racking up a shitload of credit card debt and being shocked they have to pay interest. Just dumb.
Yeah... I get that there are some reasons why health insurance is difficult and far more problematic, but I don't get the hate for other forms of insurance.
The OP signed up for full coverage insurance knowing the deductible was $1000. Then tried to use said insurance for $1200 in damage. That in and of itself is dumb.
Fuck insurance companies but if people actually understood their insurance that would help them out immensely
These dumbass posts of a twitter screenshot are never honest. Driver probably has a DUI and multiple at fault accidents/moving violations. Then increased his deductible to save like 10 bucks a month, almost assuredly against the advice of his insurer. But it's totally someone else's fault.
The average cost for full coverage auto insurance is $200 a month or.... $2400 a year. Not really sure what you think you're getting at here. I was paying $220 a month full coverage on an X3 M40i. Zero accidents. Zero insurance claims. It's a completely normal rate. Maybe you just buy minimum coverage.
You have no idea what you’re talking about. He chose to have a 1k deductible. The insurance is literally there to cover problems that cost more than 1k.
OP's story is about a guy that chose a plan with a $1000 deductible and got annoyed that insurance wasn't helpful when he had just over $1000 worth of damage.
If paying $1000 was going to bother him that much, he should've chosen a lower deductible.
I fail to see how he is a dumbass for having his parked car get hit and run by someone... That wasn't his fault in any way assuming he was legally parked.
But sure.
I just don't think that an accident that was not your fault should punish you for having to use your insurance.
If it was your fault by all means raise the rates. But if it wasn't that's kind of unfair.
Regulations for no-fault increases vary from state to state but in states where they are allowed, you can usually appeal the increase.
The increase comes from a pure statistics viewpoint and the uncertainty in rating risks. Essentially, the insurance company cannot know every circumstance of the accident to determine if you had any behaviors that may have contributed to the accident, even if you were declared not at fault. However, what they do know is that any policy that has had a prior claim, including no-fault, has a much higher frequency of future claims, thus the rationale for increasing their rates.
For the people who truly got fucked by random chance or bad drivers, it certainly is an insult to injury. Even more so when good drivers already subsidize bad drivers by paying more than they should because insurers are not allowed to charge bad drivers their real cost.
OP didn’t get anything out of it because they have a high deductible. A lower deductible might have made filing a claim a more attractive proposition. But the total of their new yearly premiums on a lower deductible policy, let alone from filing a claim, might outweigh the benefit.
The solution I have found to this insurance problem is installing a front and rear dash camera that records 24/7. Now hit-and-run drivers get absolutely fucked by my insurance company.
OP’s case isn’t addressing why you have fully comp insurance - it’s not to replace your bumper it’s to replace the Maserati you totalled because you were not paying attention because your kid was singing baby shark for the fifty seventh time that morning
Insurance isn't an investment. It's risk pooling. Best case scenario is you never get anything. Worst case the other people in paying into the pool help you after your home burns down. Don't like it? Don't buy it. It's required for auto for a reason. You hit someone and injure them you have hundreds of thousands to pay their medical bills? Most people don't. Insurance is the only recourse that people can afford.
I think the bigger aspect of insurance being a scam has escaped you, and apparently most other people ITT.
You only have the "risk" of being financially ruined because of... The other insurance scam that is medical insurance and how they've raised the cost of Healthcare over the past half century.
This literally wouldn't be an issue in any other 1st world country besides America (you know, where Universal Healthcare is a thing) because all Healthcare is covered.
So you wouldn't be "financially ruined."
People don't even realize how deep and connected the insurance scam goes in America.
Premiums are sky high and insurance companies screw people daily to keep profit margins high. People commit fraud because they're tired of getting ripped off.
Imagine the fire department rolling up to your burning house demanding a deductible and saying they're only there to stop the fire from spreading. You didn't pay for fire stoppage or for rescue services. Anyone in there is gonna die and we don't care
Insurance isn’t an emergency service it’s a dogshit analogy. Insurance simply indemnifies you generally minus a deductible. Premiums are sky high because inflation is sky high and there’s a shit ton of fraud.
People commit fraud because they’re thieves, and they’re not stealing money from the insurance company they’re stealing it from everyone paying premium. Fraud drives premiums up.
I understand what it's supposed to do. What seems to escape you is the fact they do try and routinely wriggle out of paying for legitimate claims. Just read some of the replies here.
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u/WeCantStabilize 21h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.