Quote:
Originally Posted by Dadhawk
Primarily what it boils down to here is semantics.
I have no argument with folks that want to mitigate risk by purchasing insurance, heck I have my fair share. But at the end of the day, insurance and gambling are similar products.
I know you know all this but....
In insurance the company sets rates based on actuarial tables (figures out the odds) and then charges for the product based on the likelihood of the event they are insuring against occurring within the policy. On top of that they then add the cost of administering the policy (administrative fees, commissions, profits, etc). The consumer purchases the product because they believe they will need the product within the timeframe the insurance company has determined that statistically they will not need it.
In simple terms, the insurance company is betting you won't have a claim, and you are betting your are.
So, as I illustrated in my case above, I choose to "self insure" by assuming the same risk as the insurance company (and I do set aside the money to cover the risk). Others aren't comfortable doing that, and that's OK.
This is another one of this "religious" arguments that most people have to agree to disagree on. The issue is that its a one-sided proof argument. It's easy to find folks that have had the warranty "pay off" but not so easy to find (the majority of) folks going around saying "yep, paid for the warranty, but never used it".
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Yep, I do that too. When you're both the house and the "customer", eventually you're going to lose but as you stated before, in the long run the odds are overwhelming in your favor that you're going to save money. Those insurance companies stay in business because of this very fact so why not take the profit out of their hands and keep it in yours? Obviously the OP was well served with a warranty but until such time as I can see the future to know exactly when I should or should not purchase a warranty, I will continue to save my money and pay up on the rare occasion that something bad happens. Even then, I may be too busy getting rich on sports bets with my Biff almanac to even be bothered with setting up an auto warranty.