the purpose of insurance

Today I paid about $85 out of pocket for things that could have been insured, but that I didn’t have coverage for. It was my choice, and I am glad to do it.

Let me explain.

This morning I had a doctor’s appointment. I paid $60 for the visit, because I have not yet met my medical deductible.

This afternoon, had a small chip in my windshield fixed. Because I have only very basic car insurance, that wasn’t covered, so I had to pay $25 for that.

In both cases, I deliberately chose a level of coverage that had very low monthly payments, and that in turn did not cover these types of small, unexpected inconveniences. It was my choice.

But let me go a step farther: I think it’s the right thing to do. I think it is the moral thing to do, and I think society would be better off if everyone had the same attitude towards insurance.

Personally, I don’t think insurance companies should ever have gotten into the business of offering “full” coverage that makes small inconveniences free for people. It’s a canard, and I actually believe it is harmful to society.

Why? Because now there are a lot of people out there who have the philosophy that the purpose of insurance is to make things “free”. Because they pay a monthly payment, they feel like they should get any and all medical treatments and car repairs without paying anything at all. So they resent every single penny of deductible that they have to pay, and they complain endlessly about every tiny exception that isn’t covered.

It creates an entitlement mindset. It makes people think that they should get things for free. And worse—because the insurance companies are paying for all of these little nickle-and-dime costs for people who have “full” coverage—it makes everyone’s insurance more expensive.

This is not what insurance should be for.

Insurance should not be used to make small annoyances free; it should be to make life-altering disasters affordable.

In my opinion, “insurance” should only be used to make sure that a life-altering disaster doesn’t completely bankrupt and debilitate you. So I absolutely refuse, on principle, to get insurance that pays for doctor’s visits or nickle-and-dime expenses like window pane cracks.

And I know it will never happen (freedom, choice, capitalism, etc), but I do imagine how much better off some aspects of our economy would be if everyone used insurance only for what insurance was really for.


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