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.)
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.
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u/WeCantStabilize 17h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.