First insurance claim?

[JimmyTwoTimes]

I have been paying on insurance since I was 16 years old, I am now almost 35 years old. I have never once used my insurance. When do I get my return? The only thing I have ever gotten from it is increases in my premiums.

What do you mean "return"? Insurance isn't an investment. The entire concept behind insurance is that multiple people aggregate financial risk. In order for it to work, most of the people in the insurance pool have to pay more into than they'll ever get out of it -- because some people will get out of it far more than they'll ever pay into it.

If somebody hits you and totals your car and puts you in the hospital, the insurance will pay for it. And the amount that they'll pay will be a whole lot greater than the aggregate of everything you've ever paid into car insurance in your lifetime (unless by some weird circumstance you've paid $100,000 into insurance in 19 years, which, I suppose). That hasn't happened to you yet. Which is a good thing. But it has happened to a lot of people. And for those people, the insurance company paid out to them in benefits far more than it ever received from them in premiums. In order for the insurance company to be able to do that, you have to have a far higher percentage of people who pay money into the system and don't ever take anything out of it, or take out of it only less than they've paid in. Otherwise, the insurance company would go bankrupt immediately.

Risk pooling is very simple stuff. It's like taking out life insurance; if you die at age 90, you'll have paid far more into it than your beneficiaries will get out of it, and they will have lost money. But if you die tomorrow, you'll get out of it far more than you've paid in, and they'll get a lot more than they otherwise would have. People get insurance to mitigate the risk of catastrophic financial loss, not to get any kind of "return" on what they're paying for.

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[spectremotorsports]

I have been paying on insurance since I was 16 years old, I am now almost 35 years old. I have never once used my insurance. When do I get my return? The only thing I have ever gotten from it is increases in my premiums.

As someone who worked in insurance before. This question was my number one pet peeve. Insurance isn't an investment, there is no return. If you've never had a significant claim then yes it seems like money down the drain, but that one time some freak accident happens and some soccer mom decides she want to sue you for $90,000 it all suddenly becomes worth it.

 

[tsunami]

"I have never once used my insurance. When do I get my return?"...
Only Life Insurance gives you a return...The Insurance Company is betting you going to live to 100 and you are betting you are going to kick the bucket in the next few minutes!

 

[S550_Magnetic]

As someone who worked in insurance before. This question was my number one pet peeve. Insurance isn't an investment, there is no return. If you've never had a significant claim then yes it seems like money down the drain, but that one time some freak accident happens and some soccer mom decides she want to sue you for $90,000 it all suddenly becomes worth it.

If that happened, insurance would fight you to the death and would never pay out. I have seen my parents go through it. They had to get lawyers and sue their own insurance company to get them to pay.

So people pay a premium, can't use the insurance cause they are afraid their premium will go up, then something major happens and their insurance company refuses to pay out. Its also the same reason that cap coverage exists, cause the insurance company refuses to pay what the car is worth. People end up having to get insurance for their insurance...

 

[JimmyTwoTimes]

If that happened, insurance would fight you to the death and would never pay out. I have seen my parents go through it. They had to get lawyers and sue their own insurance company to get them to pay.

Which is a pretty normal part of the process. That's what there are lawyers for. You have to drag them kicking and screaming to pay on claims, but if you didn't have them, you'd have to pay all of the money from a judgment out of your pocket. And nobody wants that.

 

[spectremotorsports]

If that happened, insurance would fight you to the death and would never pay out. I have seen my parents go through it. They had to get lawyers and sue their own insurance company to get them to pay.

So people pay a premium, can't use the insurance cause they are afraid their premium will go up, then something major happens and their insurance company refuses to pay out. Its also the same reason that cap coverage exists, cause the insurance company refuses to pay what the car is worth. People end up having to get insurance for their insurance...

I have seen plenty of high dollar claims paid no problem, but i don't doubt that your parents had some sort of trouble, thats not uncommon, there are exceptions to everything. GAP coverage however has nothing to do with insurance not paying what the car is worth, it has to do with foolish people financing more than the car was worth in the first place and have no equity in the loan.

I get that no one wants to pay for insurance, I certainly don't, but even if you have to fight tooth and nail to get the insurance company to pay, its still a better option than writing that check yourself.

 

[JimmyTwoTimes]

GAP coverage however has nothing to do with insurance not paying what the car is worth, it has to do with foolish people financing more than the car was worth in the first place and have no equity in the loan.

Not necessarily. I'm getting gap insurance on my loan, even though I'm going to be far into positive equity when I take delivery, on the chance that something happens to my car that the regular insurance won't cover (say, if I'm speeding and the cops take the car in a civil forfeiture). It's a nice way to rest easy knowing that, no matter what, I'm not going to owe money on an asset I no longer have.

 

[spectremotorsports]

Not necessarily. I'm getting gap insurance on my loan, even though I'm going to be far into positive equity when I take delivery, on the chance that something happens to my car that the regular insurance won't cover (say, if I'm speeding and the cops take the car in a civil forfeiture). It's a nice way to rest easy knowing that, no matter what, I'm not going to owe money on an asset I no longer have.

Yes for that it helps as well, you're correct. I would say 8/10 people that get it aren't getting it for that reason though.

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