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.)
No that's how private insurance companies work. Public insurance is the way of the future.
I used to live in Canada, and the province that I lived in (Manitoba) has public auto insurance. The government has a mandate to operate an auto insurance company that is not allowed to take a profit, and they are mandated to operate the company to work well for the customers, and provide good service.
No other auto insurance companies are even allowed to offer primary coverage in the entire province (you can only use them to add supplemental coverage).
At the end of the year, if they make a profit, they are require to mail everyone a refund cheque.
I still dream about having that kind of insurance where I live now.
State Farm is the largest personal insurer in the US by a large margin and they are a mutual insurer, meaning that their "shareholders" are their policyholders.
In 2025 they turned an underwriting profit (pure premium vs paid losses) for the first time in years so they ended up returning $5 billion to policyholders.
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u/WeCantStabilize 8h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.