Comment by ramraj07 | Hacker News Reader

Comment by ramraj07 | Hacker News Reader

The post didn’t cover an essential part where insurance makes sense: I.e. when you believe you know the odds of the adverse event happening is much higher than what the actuaries estimate (either because the actuaries are wrong or don’t care or have a bigger model than that particular insurance, or because you know something about yourself that they don’t). For example phone insurance, a friend always buys it because she knows she’s butterfingers and she has also used them. Another is stuff like applecare. I don’t buy it for most products but I did buy it for my AirPods Pro, because I believed apple would have made it not that well. Further, apples warranty policy in india is weird where they’re more liberal in replacements as long as you have a care plan. So I took the care plan and am happy about it.

Another place is where you really just don’t care about the marginal extra cost for the peace of mind you get, which I believe is what most people consider when taking the majority of the insurance especially stuff like rental cars.

I rent cars frequently and never take their predatory extra insurance. It can frequently add 50% to the cost of the rental, and in about 50 rentals I've only had to pay damage out of pocket 3 times (all three because of parking bumps while the car was parked over night and the other person just left without leaving a note or anything). The out of pocket costs easily come below the total amount of insurance fees I'd have paid. Plus you always have a maximum you'd have to pay out of pocket that is not even close to the total cost of the vehicle, usually under €1.5k, and with minor bumps from parking or something like that it won't ever get even close to the max, sometimes it's even under what the insurance would've cost in the first place. I think it makes no sense and the "piece of mind" is overrated, even if you drive in to return a car with minor damage they'll just charge your card, it's not like you have any extra work or worries to deal with.

> out of pocket costs easily come below the total amount of insurance fees I'd have paid

Most major credit cards come with a good amount of rental car insurance.

2 of the 4 credit cards in my wallet have greatly restricted the coverage they provide for rental cars in the last 2 years. Check your cards to be sure you're still covered.

Almost all credit cards I've seen only provide secondary insurance, which means that if you already have normal car insurance, the credit card insurance only kicks in after that is exhausted.

One of the few cards that provides primary rental car insurance is the Chase United Explorer card. If you rent cars regularly it can be worth the annual fee for that feature alone.

(Assuming you have car insurance to begin with -- if you don't, then there is no difference between primary and secondary coverage)

If you're not otherwise covered, I think it makes sense to accept their liability insurance, since that could involve significant sums. But yes, most should decline damage waivers etc.

I guess that is different between the EU and US:

Here in Europe, for almost all car rentals the maximum you will pay even if you rear end another car is around €1500 (may be higher depending on the class of the car). However as I understand, they are well within their rights to charge you that even for a tiny mark on the bumper.

It is mandatory for all vehicles (rental or not) to have insurance that covers damages to the other party in the event of a RTI - this is on the responsibility of the vehicle owner and covers anyone authorised to drive it. We don't have crazy medical bills so this is usually quite cheap (I pay €120/year). This covers everything, so if you hit a brand new Rolls Royce which ends up being totalled you aren't on the line to pay anything extra. Of course you will need to pay to fix your car.

There is also comprehensive insurance that covers damages to your own vehicle. This takes into account your driving experience and value of your car, so can range from a few hundred to thousands (I pay €600/year for a 12yo Toyota). If I decide one day I feel like driving into a tree, I just need to pay a €100 access fee and the insurance company will fix my car.

The €1500 is the equivalent of that access fee. Paying for the extra rental insurance reduces how much of that €1500 you need to pay (well, I think you still need to pay, but can claim it back). There is also third party car rental insurance providing the same cover, which last time I took it, was something like €50/year.

You can buy car rental excess insurance from another insurer, much more reasonably priced than the rental companies' extra insurance.

My perception is that the rental companies are incredibly vigilant about minuscule scratches - my concern would be being charged €hundreds for a tiny scratch caused by a chipped-up stone. I wonder if the companies providing excess insurance are able to negotiate more robustly with the rental companies than the typical private individual?

Probably yes. It's the same issue as class-action suits. If they want $200 for a scratch in the paint that I don't think is my fault, I can either just pay them, or I can hire a lawyer to bicker about $200. It's not worth it as an individual.

As an insurance company, I might handle thousands of cases like that a year. It makes financial sense to set up a way to efficiently get rid of those, and once I have that set up, it stops making sense for the car rental place to try to get me to pay. They know I'm just going to sue them. They probably still try, and then voluntarily drop it as soon as they see a response from another insurance company.

Plus I strongly suspect part of the reason they're so stringent about scratches is to push people into paying for the insurance. If someone is already using another insurance company, they're going to be harder to convince to use your insurance than someone who simply has no rental insurance.

Even if they charge you €200 for a scratch that didn't do, insurance is usually at least €50 a day, so you'd need a scratch every 4 days or more to justify it.

Conversely I usually get the insurance when I rent U-Hauls. It's pretty cheap and I feel like it's pretty tough driving a big, bulky truck with poor visibility and a heavy load. A Camry? No thanks, I'll just use my personal auto insurance / credit card insurance.

> Another place is where you really just don’t care about the marginal extra cost for the peace of mind you get

Of course, there’s no peace of mind unless you think the insurance is likely to be a better deal for you than just saving the premiums yourself, right?

Not at all.

Peace of mind is about no longer fearing. If my phone were insured, I would dare walk around with it outside of a case. That would give me peace of mind.

Insurance makes people less worried. Both because of financial risk, aswell as some insurance companies also handling the fallout.

Besides that, insurance is paying for risk reduction. Lower risk, in and off itself, gives peace of mind. Not everyone has the same risk tolerance.

If only that was true all the time. Especially with car insurance a lot of people expect the insurance company to try to weasel out of damage payment.

This was an important consideration in deciding to purchase pet insurance for my British Shorthair. As far as insurance goes it probably falls under the category of "not necessary." I added up the cost of the premiums over my cat's lifetime and realized I would probably break even at best. But in this one instance the peace of mind is worth it.

For everything else I almost never purchase insurance because I know I will get out ahead. I especially am always surprised that people buy the $20 travel insurance airlines sell at checkout. But for someone who flies once or twice a year, maybe the peace of mind is worth it.

People often purchases based on emotion and insurance is no different.

> you know something about yourself that they don’t

Don’t most insurance T&Cs require you to disclose known risks like having “butter fingers”? I was going to say I was playing the devil’s advocate, but really I’m not, since I’m personally on the hook for other people’s undisclosed risk through my own insurance.

Surely not? I’ve never heard of anything like that for consumer insurance plans like AppleCare.

I’m no expert but AppleCare seems priced highly enough that they cover butterfingers too. I’d expect regular insurances to charge much less for a similar service (except definitely not as convenient)

How many regular insurances offer just phone insurance?

I don’t know. My bank offers smartphone accidental damage, theft, liquid damage insurance at about €100/year.

AppleCare+ costs the same per year but requires an additional €230 for the base AppleCare coverage.

If I wanted one I’m sure I could find for less too. Smartphone insurance is not something new or rare.

Yes. IIRC AppleCare+ for my Macbook for 3 years costs about 1/3 of the original price.

I’ve parted out my last 2 MacBook Airs for ~2/3rds of their retail value, after 4 years of use.

From that, all I can say is don’t break your LCD or logic board. Coffee on your keyboard or touchpad aren’t so bad.

Will your AppleCare rate change if you answer the question "Would you like to buy AppleCare+ with your new iPhone?" with "Yeah, I'm very clumsy"?

You might have to disclose: I broke X phones in the last 12 months, but most likely the insurance already knows really well how often a phone screen breaks and you're not that special. I think those kinds of insurance calculate with "when" instead of "if". So if I pay $10 a month for phone-screen insurance, it costs $100 to replace it (after X months) and the screen breaks on average after 20 months, the insurance has a nice profit.

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