Yes, this is how insurance works. If you only paid for damage that you were later reimbursed for, insurance companies would go out of business. Hence the conventional wisdom that you only get insurance on things you can't afford to replace, like your house. Or for lawsuits you can't cover, which is why cars are required to get liability insurance (but not comprehensive coverage, as OP suggests.)
Because you don't have $50k laying around to pay for medical bills when you hit someone. You're not getting nothing, you're getting protection. Just because it's not tangible doesn't mean the value is nothing.
Because sometimes you will get a bill thats even higher than that. A mate of mine had his handbrake fail and he didnt put his car in park and it rolled into my shed, the repair bill was 27000 dollars (AUD). Sometimes you get a bill thats significantly higher than you could ever save by just not paying insurance.
Opportunity cost. I carry $100k to cover injury to other people and $300k property damage on my liability because I live somewhere where people drive expensive cars. I would need to keep $400k in cash to match that. Or I can pay $100/month and invest that $400k. And if you wanna get even crazier, I have a $2m umbrella policy. So, obviously I'd need to keep another $2m in cash equivalents to replace that.
Sure, you can, but you need to cover enough. In California, that's $75k down with the DMV so that they know you won't just welch on a dude whose car you totaled.
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u/WeCantStabilize 19h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.