Another Insurance Question..............

[mattobrien]

I may well have 'missed the point' again, but as far as I can tell from @confusedcyclist post, the only responsible way to own things is to save up to buy them, but to only buy them once you have twice the amount they cost saved up. That way you can afford to replace it out of pocket. That would mean that you would have the exact amount of cash in the bank as the items that you own, in case of catastrophic loss of multiple or all things. After all contents insurance of one's items in the home would mean that you would have spent more than you could afford on those items in the first place.

On the other hand it might be possible to mitigate one's risk so that insurance premiums are not exorbitant and that it would make financial sense and prudence to insure the items.

Having checked back the additional insurance premium for the last bicycle that I bought, was 0.367% of the cost on the bicycle. If I put that amount aside each month instead of insuring the item, I would be able to afford to replace the bicycle (using the saving in insurance premium) in only 272 years. I appreciate that I may be reckless and may have bought something that despite having the cash to pay for, couldn't really afford, but I decided that in this instance insurance was worth it for me. I understand that other may have differing opinions.

 

[Profpointy]

I may well have 'missed the point' again, but as far as I can tell from @confusedcyclist post, the only responsible way to own things is to save up to buy them, but to only buy them once you have twice the amount they cost saved up. That way you can afford to replace it out of pocket. That would mean that you would have the exact amount of cash in the bank as the items that you own, in case of catastrophic loss of multiple or all things. After all contents insurance of one's items in the home would mean that you would have spent more than you could afford on those items in the first place.

On the other hand it might be possible to mitigate one's risk so that insurance premiums are not exorbitant and that it would make financial sense and prudence to insure the items.

Having checked back the additional insurance premium for the last bicycle that I bought, was 0.367% of the cost on the bicycle. If I put that amount aside each month instead of insuring the item, I would be able to afford to replace the bicycle (using the saving in insurance premium) in only 272 years. I appreciate that I may be reckless and may have bought something that despite having the cash to pay for, couldn't really afford, but I decided that in this instance insurance was worth it for me. I understand that other may have differing opinions.

In fairness a regular cyclist can sometimes buy ridiculously underpriced insurance as part of house insurance. Essentially this is a cross-subsidy from those householders whose bike never leave the safety of their sheds. This is then quite literally a good bet and insurance companies are losing money on this, but are unable to distinguish between regular cyclists and non- or former-vyclists who still own bikes . Most insurance is of course, again literally, a bad bet, but one it's wise to pay this premium to avoid the catastrophe of total loss.

An amusing tale a friend told was someone in Curry's trying to sell an extended warrant. "um, it's a toaster". "but it might break down". "It's £15, I'll buy another one"

I do agree with much of @confused's point, specifically that it's a mistake to insure something you could replace, even if the loss would hurt a little eg a nice bike. Not buying too many costly things when money is tight is also good advice but avoiding owning anythjng you couldn't readily replace is going a bit far I think, and could lead you to needlessly eschewing nicer quality and costlier items.