> Sure. And how many people do that today? Ummmm....
Can you explain why you think people will act like rational actors and buy insurance rather than act like rational actors and save that same money in mutual fund for emergencies?
I never understand arguments that boil down to "people' won't do X smart thing, they'll do Y smart thing because I support Y".
Sometimes people are forced to buy insurance. In the UK it is mandatory to have car insurance (else the police will literally take away and crush your car). My mortgage demands that I take out home insurance. And of course the state provides a kind of health and unemployment insurance which is mandatory for UK taxpayers.
In many (most?) jurisdictions you can post a bond for liability insurance. This is typically used by fleet managers etc, but is also available to HNW individuals.
Essentially you prove to an insurer (by posting a bond) that you can and will pay for any third party damage you cause, and in return they give you a practically free (or cheap, super-high-deductible) policy.
In the UK you can post a bond in lieu of having motor insurance, but it's something like £250,000 so rather out of the range of the ordinary car driver. (It's mainly used for commercial vehicle fleets as you say.)
Sure.
Because, at the rate you pay premiums, it would take somewhere between 8 and 20 years to save up the full coverage amount.
So either
a) You had to have started saving as early as possible, or
b) You have to save a much larger percentage of your income to catch up
Also, you might have rational purpose for not saving that much, so you can deploy your income in a more productive way.
Similarly, why would people get a car loan? Just save up and pay cash!!!!! Why waste money on interest payments (particularly when interest rates on loans were much higher.)
Some people could do that, some couldn't.
Now you have an option you didn't have before.
Can you explain why you think people will act like rational actors and buy insurance rather than act like rational actors and save that same money in mutual fund for emergencies?
I never understand arguments that boil down to "people' won't do X smart thing, they'll do Y smart thing because I support Y".