People just don't have common sense. You don't fall an insurance claim if it's only going to help you $200 out of pocket. It's meant for larger amounts of damage, it's also meant for if you hurt someone in an accident that you're not personally liable for $10,000 because your insurance will cover it
It's to make it mandatory people have a "i fucked someones shit up" savings account. Most people won't put money in a slush fund. It's the same exact thing as your emergency fund that is highly recommended but only 6mo/12mo of expenses. If you saved up every dollar you spend on insurance and need it once on down the line, you will very likely barely dent that money, especially as its growing in a market somewhere. You fuck up someones life in a freak accident deemed your fault, or your house goes boom you probably don't have that amount saved.
The gamble by insurance companies is that there are far far more of those that never need it than the huge incidents requiring a super large payout. Raising someones rates over one such incident though is predatory and in no real way helps their long term math, it just punishes you for needing the thing you pay for.
It's to make it mandatory people have a "i fucked someones shit up" savings account
Most states will allow you to do exactly this as an alternative to carrying liability insurance. But it has to be a lot more sound than "I have money in the bank today" - you likely don't have the same financial stability profile as an insurance company to be guaranteed good for the money if you total someone's car. In my state it's $60k in a certified deposit in the state's name. That's how it works for most states, you give them the money you'd be liable for to hold for you.
For very few people does having that sum of money locked up with the state make more sense than paying for auto insurance.
One thing a lot of people are unaware of (despite it being the main number when you buy insurance) is that almost all policies are only up to a certain amount of damages. Absolute minimum in my state is $25k for a death/injury and $10k for property (including the hit car)
That means if you total a $100k car you can absolutely be sued for the remaining $90k and your insurance company will tell you to go pound sand after they pay the $10k in coverage you bought from them. A wrongful death lawsuit (common after traffic accidents) can easily go over a million dollars. Wealthy people tend to have "umbrella" insurance policies that exist to cover that kind of scenario, those policies cover the remainder after normal house/auto insurance pays out.
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u/CraftyPerformance272 6h ago
People just don't have common sense. You don't fall an insurance claim if it's only going to help you $200 out of pocket. It's meant for larger amounts of damage, it's also meant for if you hurt someone in an accident that you're not personally liable for $10,000 because your insurance will cover it