Technical Ben wrote:There appear to be 2 extreme categories here. Those who think they should only pay for themselves. In which case, why "share" the risk with insurance. Just pay for the damages yourself. You don't want to pay for some one else's. Then there are those who think we all should share the risk equally. But without a restraint (or is it responsibility?) on peoples actions, will result in careless driving from a few or a lot.
The two camps are how insurance is viewed. The first camp believes that insurance is risk management, hedging, or whatever you want to call it. The second camp believes that insurance is a social safety net.
I am part of the first camp, if you didn't guess from my previous posts. I could have 10X in damages with 10% probability and 0 with 90% probability, and so my expected damages will be X. But 10X in a year could bankrupt me, or at least be so detrimental that I may have to take out loans or refinance, effectively costing me more than 10X. So I buy X worth of insurance so that I always pay X (well, 1.2X), rather that take my chances and end up paying 10X or 0.
The second camp, which you seem to be a part of, believes in the social safety net. Insurance is there to make sure that resources go to those who were injured, to maximize societal utility. If that is the case, then the government and taxes should provide it, and not the private company.