I have come to realise that I don't understand insurance. Not at all. Let me try to explain it to you. First, we take out insurance on an item in the unlikely event that something bad will happen to it. Now, any right-minded person would say that the unlikely event is perhaps so remote that spending a non-negligible amount of money to someone is perhaps foolish.
Then there is the argument that perhaps the negligible event is so catastrophic that it would cost a lot to recover the item. And, there are lots of examples of terrible events around the world that we would be even more foolish not to insure against those events. That may be. But, in those places that have had terrible events the insurance is, well, prohibitive and only in places that will never suffer those events is the insurance affordable.
So, I have come up with a question that should help you and your insurance racketeer to assess whether it makes sense to insure your item or whether it make sense to use the money yourself for something more sane:
1) Is the probability of a whale destroying my item greater than the event for it is to be insured against?
1a) If so what is that difference in probability and what is the error?
