« on: July 11, 2014, 06:06:43 PM »
First, I agree, you should only insure what you absolutely have to. I insure my 5D III and EF 600/4 L II. That's it. All the rest, I can cover myself. The payouts from the insurance company would top out at maybe a grand anyway, and if you do a lot of little claims like that (especially when using a home insurance rider or schedule), it ultimately results in larger premium increases. Only insure things that cost at least a few thousand dollars. In the case of the 600mm lens, it's $12,800 new...I pay something like an extra $300 a year to insure my two things on my home insurance scheduled property rider...a very small price to pay in case my lens was damaged and had to be replaced.
Insurance companies may "win" on a personal basis, but in the big picture, they have been getting slammed over the past good number of years now. Maybe since Katrina, the insurance payouts have been pretty significant in large regions of our country. My parents house (they also live here in Colorado, up in the mountains of the Front Range, just above Jamestown) was damaged by the September rains we had here in Colorado last year.
They are just one of many thousands of people at least, if not millions of people, who have had to file insurance claims. The payout just for the Colorado disaster is going to end up in the hundreds of millions at least, and it's all still on-going. Stuff is still totally damaged, and it will take years to fully repair (for example, the main road up to my parents house is half-washed out in a couple dozen places...there is not enough room for more than one car to pass at a time). The work to shore up whole entire valleys in that area, bring in massive amounts of earth, rebuild roads, build giant culverts and other water management systems to handle the kind of deluge we had, etc. is all ongoing, probably will be for another year or so. Massive insurance payouts and other expenses going on there.
The town of Jamestown itself was pretty much destroyed, only one side of main street (and anything that was up in the mountains) survived, and a lot was damaged there as well. Many homes were completely washed away and have had to be rebuilt from scratch (that's several hundred grand a home right there in insurance payouts.)
People all over the front range and the plains just in front of it had flood and mud damage. Many thousands more, all the way out to my house (which is in the Aurora South area, fairly well east of the mountains themselves) had significant hail damage (thousands upon thousands of roofs have been replaced around here, some have had multiple claims).
My roof could probably stand to be replaced, but I'm holding out as long as I can to maintain my "claims free" status, as it's a moderately significant discount, and my insurance has gone up enough already as insurance companies around here scramble to cover all their costs. (Ah, gotta love subsidies in the face of countless natural disasters year after year.)
Anyway...I wouldn't say that insurance companies just plain and simply "always" win. They win...for a while...until the claims start piling up. Then their profit margins tank significantly, their costs just to handle all the claims flowing in increases, they eventually react by jacking up everyone's premiums...until the next natural disaster occurs, costing hundreds of millions to billions, and the payouts start again. Before Katrina, it was pretty common for insurance companies (mainly the broad insurance providers, Farmers, American Family, All State, etc.) to have profit margins in the double digits (which, truly, is very high...but when you think about what insurance is, in the good years, it NEEDS to be high). I think 8% was relatively "low". After Katrina, profit margins for insurance companies tanked down to around the -20% range for a while. They topped 10% again for a little while, and have been declining since. In recent years, big insurance company profit margins are down in the 2-6% range, however there have been spans in recent years where their profit margins were -7-10%. Average it out, and profit margins for insurance companies are at best a third of what they were, at worst a fifth, and shrinking. And the payouts continue...
So, don't be surprised if you have to pay to protect your investments. Insurance payouts are very high in recent years, and look to remain relatively high in the future.