There should be two kinds of insurance.

There should be two kinds of insurance: insurance that covers random acts of god and insurance that covers the expense of protection money.

If you own a car and it’s parked in your driveway, and there’s a storm, the wind blows, and knocks the tree onto your car and damages it, this is a random act of kindness on god’s part, as you probably wanted a new car anyway, or at least an excuse to buy a new car.

This kind of loss should be covered by one kind of insurance, it would insure against accidents where there was no intentional effort on anybody’s part to cause the loss, it was just a random sequence of occurrences that ended in your losing out.

The other kind of insurance would be for protection money. Consider the guy who, instead of wrecking your car by having a tree fall on it, steals your car.

In this case, with traditional insurance, you would be compensated (poorly) for the loss of your car. But unlike an accident, somebody is profiting from the loss. When a tree falls on your car, I suppose there’s some satisfaction god gets by laughing at your loss because he knocked a tree on your car, but there’s really not much you can do about it, and god can’t spend that. There’s no financial gain on anybody’s part.

But when somebody steals your car, you are out the car, the insurance company is out the lesser of the fair market value of your car, or whatever they can get away with paying you, whichever is less. But the guy who stole your car gets a free car out of it.

If you remove all the middle layers of the transaction what’s actually going on is that people who pay insurance premiums are giving the thief a pile of money.

Okay so this isn’t exactly protection money, but it’s close. God can’t be stopped from knocking down trees unexpectedly, but people don’t have to steal cars and cause this loss.

It seems to me these are two very different problems that should be treated differently.

The cost of theft insurance (the random acts of paying thieves) should be separated from the cost of random acts of damage. So if you have a strong belief in the wonderfulness of humanity, and don’t think your car will ever be stolen, you shouldn’t have to pay the theft insurance. And indeed, you don’t have to get theft insurance on your car, but because all insurance companies lump them together, it seems to me people who don’t want to pay for theft insurance are paying via the rest of
their premium.

There are obviously grey areas. If a hurricane blows down a house that’s on beach-front property, and you rebuild, and then another hurricane blows that one down, and then you build AGAIN, it’s hard to say you had no intention of collecting insurance money.

I don’t think that would fall under act of god. That would more be an act of stupidity or an act of selfishness, because you’re building the house again at other insurance-premium-paying-people’s expense.

But it seems to me, there’s something unfair about the way all kinds of loss, whatever their cause is lumped together under the same insurance umbrella, when in fact some types of loss are man made and possibly can be prevented.


Leave a Reply