Auto insurance is not optional in Texas nor most states. It is the state law that an owner of a car prove they can cover damages for accidents they cause. How do they accomplish that? They must purchase liability insurance.
Are auto insurance and all the other insurances burdens we will eventually overcome?
I noticed a sad reality. I pay thousands of dollars every month in insurance. I have home insurance, auto insurance, life insurance, umbrella insurance, disability insurance, home warranty, and health insurance. I am probably forgetting one or two.I am a safe driver. I have no claims against the auto insurance company I have used for over thirty years. The only claim I had on my home was when Hurricane Ike took off part of my roof. I paid much more in home insurance over the years than the cost of the repair.
All my insurances add up to somewhere around $2,000 a month if not a bit more. When one buys insurance, they are betting that they will use it and come out ahead. The companies that sell it to you are betting the opposite. It turns out in my case even with a wife with Lupus the insurance companies won the bet with my family.
I did a little back of the computer screen calculation. I account for inflation by just averaging out my payments at $1,500 per month. Early in my career, it would have been less. Later it is substantially more on a per month basis. I assume an effective 4% interest rate. Many years it would have been higher. Over the last eight years lower.
Anyway if I were banking $1,500 per month for 30 years at 4% compounding monthly, I would have $1,044,544.35 in the bank. Yes. That is one million, forty-four thousand, five hundred forty-four dollars and thirty-five cents. Is there any wonder why selling insurance is so profitable for those who are good salespeople? It is like a corporation just mining cash.
So is insurance a racket? For most people it is. For the few that really get over, it is a wise investment. The problem is you never know if you are one of the few who will win the game. What a system.
I was going to start a rant about why several types of insurances should be outlawed. I will leave that for another time after more research. Suffice it to note that there is a sour taste left after giving away hundreds of thousands just in case.