> With this in mind insurance is a service worth paying for as long as the fee is lower than utility you gain from it.
Why even consider the insurance as investment (money increasing tool)? A stock market would get you higher gains at more controlled risk.
The 3rd best financial advice I got is about insurances: "Pay the insurance only if the negative outcome would cause you a significant financial loss" (and is of relatively high probability)
So, insuring a house from fire etc. makes sense. But, my $2k bike is not worth covering (from my PoV). Or, if we go to extreme, my (unnecessary) motorbike/boat/jet ski as if they are destroyed, I can continue living without them (a bit of exaggerated example, but I hope you get my point). Same for insuring a house from unlikely events.
Disagree on the probability bit. The important part is the severity of the negative outcome.
And if you can't afford to lose the toy you couldn't afford to buy it in the first place. Thus toys should never be insured.
(That is, of course, assuming they aren't mispricing it. I've seen a situation like that where I considered it: There are companies that offer small-appliance warranties at approximately an x% of price model--reliability doesn't enter into it. If you know that with your use case the product is likely to fail within the warranty... But some searching shows the real business model is to make it nearly impossible to actually make your claim.)
> And if you can't afford to lose the toy you couldn't afford to buy it in the first place. Thus toys should never be insured.
You’re getting this wrong.
Being unable to afford to lose a toy doesn’t mean you weren’t able to afford it, it means you weren’t able to afford buying it twice.
It works the same way with home insurance. I can afford the house. I can’t afford two houses if my current house burns down and I need to buy another one.
Why even consider the insurance as investment (money increasing tool)? A stock market would get you higher gains at more controlled risk.
The 3rd best financial advice I got is about insurances: "Pay the insurance only if the negative outcome would cause you a significant financial loss" (and is of relatively high probability)
So, insuring a house from fire etc. makes sense. But, my $2k bike is not worth covering (from my PoV). Or, if we go to extreme, my (unnecessary) motorbike/boat/jet ski as if they are destroyed, I can continue living without them (a bit of exaggerated example, but I hope you get my point). Same for insuring a house from unlikely events.