Do pure EV players take out insurance?

[Fella]

Just a silly thread but I've been wondering about this, especially after some of the remarks in the TGT diary official entries thread. I'm talking about regular insurance, i.e. home insurance or whatever. Because insurance is, of course, effectively a -EV bet that people place in an attempt to reduce the variance of life. And although my actuarial skills are fag-packet at best, I would guess that in pure EV terms it's a VERY bad bet. Consider that:

- Warren Buffet seems to rate insurance as the best business on the planet.

- Almost every ad you see on TV is for an insurance company or a company that provides comparisons of insurance companies. They must have tons of money sloshing about to be able to afford those non-stop ads that appear pretty much continually. All those insurance/comparison companies incidentally, have clearly decided that their target meerkat is so stupid that they only understand nodding dogs, talking telephones or fat opera singers.

- Large companies do not actually take out insurance in lots of cases. I discovered this when BT were broken into & had loads of IT equipment stolen. In fact it's far better for a company the size of BT to forego insurance & simply suffer the financial hit of a theft than to insure all of their buildings.

All of the above strongly suggest that the average returns on insurance, across the board, are more akin to bingo than to blackjack.

So: do you pure EV types extend that mentality into your regular lives & not bother with it?



cheers
Fella

[nixonite]

Interesting question and something I'm sure others will be able to give a more refined answer to. It all comes down to being risk averse. I am, so I generally take insurance (assuming it's reasonably priced).

- Warren Buffet seems to rate insurance as the best business on the planet.

I might be wrong here, but I don't think Buffett advocates insurance as a business for profit generation. He uses it as an 'investment vehicle' to drive other far more profitable businesses with the funds he obtains through his insurance business.

- Almost every ad you see on TV is for an insurance company or a company that provides comparisons of insurance companies. They must have tons of money sloshing about to be able to afford those non-stop ads that appear pretty much continually. All those insurance/comparison companies incidentally, have clearly decided that their target meerkat is so stupid that they only understand nodding dogs, talking telephones or fat opera singers.

The fact that in some cases you are almost forced into taking out insurance (e.g. car insurance, home insurance) does mean that we never know what would happen if these individuals were given a choice.

[Hippyer]

Interesting post. I hate insurance, I think it's a rip off and always try to avoid it.

I have car insurance of course and I would take out travel insurance but as far as mobile phone insurance, credit card insurance, insuring a new electrical item such as a microwave, laptop or TV it's a big no no.

Never, I simply prefer the money to be resting in my bank account than the companies for a pretty much nothing service. Complete waste of money IMO.

[sKiTz0]

I have to say I'm with hippyer on this one. In cases such as car insurance where you must have it, yes I do.

Anyting else I generally never bother. Take the phone insurance as an example, I would rather gamble on the fact that I won't be losing/breaking my phone, and in the event that I did I would just be able to buy a new one with the money I'd saved from not taking out insurance.

That has always really been my mentality towards it, although I've never thought about it in the same context as the original post - i.e. -EV bet that people place in an attempt to reduce the variance of life.

Very interesting thought Fella, will be interesting to see other people's views from here as outside of this forum, in my group of friends, I'm the only one who thinks like this really.

sKiTz

[zenmaster]

House insurance and car insurance thats all i take out. If i was self employed id make sure i was covered in the event of injury etc etc though but any other forms of insurance, warranties etc not a chance.

[PeterGriffin]

i am risk averse in the AP game so am always covered bar the odd low WR casino/games offer.

in real life i have:

car.
car breakdown.
car hire.
no claims protection.
motor legal protection.

house - buildings & contents.
mortgage payments cover.
boiler breakdown cover.

life insurance x 2.

i dont consider any a waste, maybe the motor legal protection.

i guess that exposes me as totally risk averse?

[blowingbubbles]

Interesting post. I hate insurance, I think it's a rip off and always try to avoid it.

I have car insurance of course and I would take out travel insurance but as far as mobile phone insurance, credit card insurance, insuring a new electrical item such as a microwave, laptop or TV it's a big no no.

Never, I simply prefer the money to be resting in my bank account than the companies for a pretty much nothing service. Complete waste of money IMO.

Everything hippyer said. Waste of money.

[Diamondgeezer]

I'm thinking of getting my right index finger insured for £100k .

[wobbler]

Great post fella.

I avoid insurance where possible but I do have home insurance as I live in a block of flats with a flat above and below me, all it takes is a fire (or the person upstairs flooding) and I could be well in the sh*t. Also I have some very expensive stereo equipment and I live in a dodgy area so I see it as a must.

In terms of -EV and the thing that pisses me off more than anything else is the biggest rip-off is the extended warranty. This kind of crap you get in PC World and other similar places like that.

Now if the item I am buying isn't built well enough to last a good few years then it shouldn't even be on sale. These people make a fortune suckering poor people in on this one and it makes me sick thinking about it.

[Clackerooney]

Surprised not to see if mentioned but doesn't anyone have health insurance?

Bupa is essential in my book. If you or a family member gets really ill you don't want to be on a waiting list or if in hospital stuck on an NHS ward, they're hell.

I've got that, life insurance & critical illness cover.

Like others I don't take out insurance on appliances or warranties but health & life is a bit different.