How insurance should work: Disasters are unpredictable, are bound to happen and can be very expensive to resolve. So instead of each individual risking bankruptcy for participating in a system, everybody pools together money at a much lower individual cost. That money goes toward a statistical guarantee that the cost of any disaster will be covered.

How insurance actually works (under capitalism): For-profit companies use every tool at their disposal, regardless of ethics or legality, in order to take as much of your money as they can possibly get away with while simultaneously paying out as little as they can possibly get away with, and then pocket the difference.

I used to be with a mutual insurance, which was still actually a mutual insurance, meaning the customers were also the shareholders. I got a small dividend most years out of whatever surplus existed.

The idea is when everyone pays into insurance the collective fund is used to pay for the costs any individual wouldn’t.

Thankfully accidents or thefts don’t happen to everyone, but if they do you usually get more out than you put in (personal liability is usually millions of dollars, nobody puts that much in individually).

Where this goes wrong is when fraud happens or insurance companies are incentivized to manipulate rates to increase their profits.

I have to wait to get hit???

I'm guessing she hasn't figured out the concept of insurance fraud...

Need a new paint job? Get in an accident. Check engine light? Get in an accident.

I am not a ~~lawyer~~ person whose advice should be listened to on anything, ever.

What op is describing is called "self insured"

Liability insurance: legally required.

Also liability insurance: costs hundreds and the price gets jacked up every few months because fuck you.

Protection racket.

If it were a socialist systemic thing, and we rephrased it to, we all contribute a little each year and it goes into a pot for anyone who needs their car fixed, who contributes? (but then you gotta erase the evil corporation that rakes in billions and pays ceos unimaginable money)

And the best part is it's mandatory!

This already exists, and they are called unit linked insurance plans. Basically the insurance company provides you some units in an investment/trust fund, in addition to the policy benefit, for your premiums (obviously higher to compensate).

They are actually much scammier, because the insurance company administers the unit fund as well, and the fees are often much higher than if you just buy the policy and an exchange traded trust/fund separately. They were formulated by insurance companies basically for the sole purpose of bamboozling people who echo this meme. Back in the day, door to door insurance salespeople would say "even if you never claim, you still get a payout!".

Unit-linked insurance plan - Wikipedia - https://en.m.wikipedia.org/wiki/Unit-linked_insurance_plan

Its like gambling, I bet 100 bucks something will happen to my car this month. Damn nothing happened, lost again.

its a MLM, just like health insurance. theres no guaranteed they will cover your cost in damages some of the time.

• Léon: Tony... All the money I make, that you keep for me...
• Tony: You need some money?
• Léon: No, just curious... Because, I've been working a long time... And I havent done anything with my... I thought maybe someday I could
• [uncomfortable]
• Léon: use it.
• Tony: [Figuring him out] You met a woman.

Funny enough, if somebody offers you insurance that builds cash value, even though the sound of it does make sense you should probably run.

Insurance is valid, profit from insurance is where it gets problematic cause the whole point of insurance is to have a similar average outcome, just less extremes in the worse case scenario.

Everybody is 12

That's basically what whole life insurance is, and it's a complete scam IMO because premiums are high (to allow for investment) and the investment is too conservative. You're much better off buying term life insurance and investing the difference.

You can partly do this DIY with self insurance. Basically, you put a certain amount of capital into a bank account or something and hand that over to the state treasurer in a trust, and it needs to be about $200-400k in my area (range is because the law isn't clear to me). If you can stand to part with that much, you probably prefer to have the insurance take that risk for you so you can retain control over that money and not worry about lawsuits.

Any guesses as to how much money would be in the pool if every person in your country paid into a single pool for automotive insurance? I bet that if such a pool existed, then there would be a lot of motivation to use that money to reduce the risk of paying out. Which makes me wonder if public transit is better in countries with national health insurance as a result of the national health insurance.

How do the 'ppl who actually know' defend this obvious scammy aspect of the whole thing? Genuinely curious