I tend to avoid the insurance and just pile up the money I would have paid to cover the losses. Depending on the type of insurance. But theft insurance tends to be problematic. The fraudulent buy expensive stuff, keep all the receipts, sell the stuff for cash to a friend and then claim on insurance with the proper paperwork. Normal people tend not to keep and file away all paperwork and lose out.
Insurers do notice that small claims (in P&C) are a relatively small part of claims + cost so most don’t offer the high deductibles. As a bonus, with higher deductibles come relatively more lawsuits. So safer to only offer low deductibles. (My experience after 20 years in the sector.)
In my country a family perhaps pays about €5k total a year for two cars, health, house and the assortment of legal and liability insurance. That is quite modest (not for all income classes though), since there are catastrophes possible in nearly any avenue of life. A minimalist insurance scheme would save one about €2k/yr. That just isn’t that worthwhile utility wise.
I’m stunned by the idea of making the pawn shop whole.
As I understand UK law, if you buy stolen goods, the original owner can just claim it back and you take the loss - simply to discourage buying with knowledge it was stolen.
I guess the pawn shop would go out of business but it does seem if you let them act as a fence you are solving for the wrong problem
They're likely trying to prevent the situation where the pawn shops become entirely uncooperative, but there's still a tragedy of the commons situation occurring.
This is a periodic public service announcement that there is not, and never has been "a tragedy of the commons situation". Even the author of the concept, Garret Hardin, has acknowledged that he made mistakes in his understanding and research.
Resources held in common have historically been subject to significant control via social, civic and legalistic processes. What is typically referred to as "a tragedy of the commons situation" never turns out to be what Hardin originally suggested - individuals taking advantage of the lack of controls. Instead it is invariably individuals who first dismantle the control systems in place in order to pursue their own selfish ends.
This matters because the "tragedy of the commons" concept has been used to suggest (successfully) that communities cannot manage commonly held resources, which is false. What is true is that communities frequently cannot manage a sustained attack by selfishness and greed against their own systems of management, and that's a very, very different problem.
> I'm not even sure what the notarization step was accomplishing: the inventory sheets aren't affidavits.
The percentage of people who see the word "notarized" alongside "inventory sheet" and simply give up must be quite high. Notarization accomplishes nothing besides causing a headache. Insurance companies don't make money by paying out claims, you know.
Notarization just proves it was you who signed something, it has nothing to do with the contents of the document.
Unfortunately a lot of people think notarization gives some kind of legitimacy to a document, or likely in this case, it's probably not the hassle of getting it notarized, but used as a scare tactic to prevent some people from committing insurance fraud by listing inflated or made-up items (people might conflate it with perjury).
Illinois did away with notarization requirements for almost everything a few years ago. Now you can just sign things under penalty of perjury and it's done, which is the right way to go about it.
It also makes it feel more serious, deterring insurance fraud. Since it has only upsides, no downsides, for the insurance company (except that they'll get bad ratings from customers which they clearly don't care about in this scenario, as most customers don't shop around for them), of course they demand it.
> Insurance companies don't make money by paying out claims, you know.
This is why if you want actual insurance (not "check the 'you must have insurance' box") you don't pick the cheapest company and check reviews, ignoring any reviews that don't mention a claim.
That, and it would make it harder to claim mistake/accident if the insurance company tried to
Prosecute for insurance fraud.
The number of cases of people adding random expensive things that would be added to insurance inventories during a claim has to approach 90% if there is no potential for consequences.
What a story! Most people probably would just give up. Dealing with storage units is why I try to eliminate all the extra "stuff" in my life... George Carlin had a great bit on stuff: https://youtu.be/MvgN5gCuLac
I used to work security and making rounds in a place like this would give me chills. Running into thieves at 3 in the morning is one of the most terrifying things you will ever experience.
I feel it’s like walking in the woods in the south — you make a lot of noise so you don’t surprise a rattler? Were you walking stealthy so they don’t hear you coming?
I'm not the person you asked, but most people like that - opportunistic burglars, etc - are no more keen to run into the police than you are to run into them. They'll just run.
Granted, the equation changes dramatically when various drugs are involved.
The items he listed have extremely direct impact on YOUR ability to reduce theft. You just suggested something very broad. I might make the point that punishing criminals effectively will potentially reduce overall crime, but has no direct reduction on the crime in the article. It would be very hard to show any law which specifically targets the type of crime OP posted about, but I'm open if you have seen legislation proposed or enacted which targets this crime in a major city.
What laws do you believe would be more effective a catching and punishing criminals?
AFAIK, there is reasonably clear evidence that deterrence has a very low impact on this sort of crime, so laws based on deterring through fear-of-sentence would not seem to be likely to have much effect.
deterrence works. when i moved into my house it wasnt quite finished. i had soent a few years building it. neighborhood is ok but tweakers are walking around all the time. they walk around everywhere because they can, and to case houses. the people here think like you. they just let it happen. tweakers had stolen a lot of materials and a few tools from me at this point. so when i moved in, for some reason they decided it was a good time to try and break in. it was one guy, i caught him trying to get in the window. grabbed my pistol and confronted him. he ran away but i kept after him. he was so scared that he dropped his bag and begged me to confirm for myself he hadnt stolen. so i let him go and my neighbor met up with me outside my house. both openly displaying our guns. the getaway car rolled by, you could tell because it was tweakers and when they saw those guns their jaws dropped. like i said, this hood is ok but infested with tweakers. not after that night. not a single instance. not a single person casing houses.
people like you always cite “evidence.” your evidence is nonsense. studies that are deeply flawed an not applicable.
what do i suggest? first of all, actually enforcing laws that are already on the books. is theft really punished or are these people getting away with it so often that it might as well be legal? and when they do get caught its a slap on the wrist or even a nice little vacation with four hots and a cot because jail and homelessness is literally normal for these people. i suggest punishing people severely and immediately for crimes that arent victimless. i suggest allowing people to defend themselves. and i suggest that people actually take ownership of their communities and drive out scum. the west coast does the least of these things in the country and look at the results. portland has a higher violent crime rate than mexico city… take your bleeding heart nonsense and shove it. and dont reply, if you want to hash this out then give me your twitter handle and we can have a space about it
That tweaker/junkie who steals your bike, breaks into your storage unit, whatever? He's not an organization man. The dude with a standing offer to pay twenty bucks for the bike, or ten if it's shitty? He's with an organization.
What I propose is that we start enforcing the law and treat theft as a crime, not a nuisance or fact of life. Roll up the organizations, toss them in prison, and repeat over and over until the message gets out.
This isn't a problem which can be solved at the tweaker level. What we can do, and simply choose not to, is get every single dude with twenty bucks or a baggie to trade for your bike. All that's lacking is the political will.
An acquaintance of mine was stealing big-ticket items from a storage unit. Campers, boats, etc.
Of course he eventually got caught. The insurance company had already paid the owner of one of the campers, so it went to auction, and he bought it. Kind of funny.
In general isn’t the consensus that storage units are a very bad deal for “storage”. It can be useful for temporary storage for bulky items like furniture when renovating your house or in between houses, but the fees would quickly accumulate and pay for almost any reasonable contents.
If the fees wouldn’t cover replacement of the contents within 6 months, they are too valuable to store in a storage unit.
If you don't have space in your apartment or home for items you want to keep, then where else are you supposed to store things?
Obviously it's up to you to figure out if it makes financial sense. But for people in urban areas with small apartments, it can be a heckuva lot cheaper than upgrading to an apartment with another bedroom.
> If you don't have space in your apartment or home for items you want to keep, then where else are you supposed to store things?
On ebay? Sell the stuff now, buy it again if you need it. Doesn't work for everything, of course, and I don't practice it, I've got tons of space and tons of clutter.
I believe other people are using any such storage as a cache, trading space for time, since even if you instantly found the exact replacements, you'd still pay not only monetarily for shipping but wall-clock for both shipping and the drudgery of searching for said items
Interestingly, I read a blog post where someone was using "fulfilled by amazon" as off-site storage, but I think it was a pseudo thought experiment more than an actual storage solution, similar to those folks who use data-as-video on YouTube as infinite backup storage
its almost as if people really shouldnt live inside glorified cubicles… as if they should in something larger. and maybe have a space with grass and also a little accessory structure with a door large enough to fit a vehicle. such a thing doesnt exist unfortunately
so you dont have to rub against a homeless man who smells like piss on the train, dont have to be screamed at by a crazy homeless person on the train, and so that you dont have to rely on tweaker infested, crooked ass storage companies for one of the most basic aspects of existing in the world.
You could apply the same logic to the stuff inside your house, which is just a glorified storage unit. Why are you paying premium to store that stuff, when you could downgrade to a studio apartment or a tent?
The bottom line is, if you want to own stuff, then you must store it. You know what is more expensive than storage? Buying stuff you need or want and reselling it, again and again. Or leasing it in general. Some stuff has poor resale value, takes a lot of energy to choose and accumulate, and is not easy to replace.
Well, when you are writing an apartment, people do generally go for the cheapest smallest place they can afford.
But when you’re buying a place, you’re looking to have isolation from shared walls, and generally a larger property will appreciate more in value than a smaller property With some limits in both directions up and down in size.
I imagine it'd be a lot cheaper and legally-viable to store your collection of electronic burglar alarms. Especially if they dial a human when triggered.
There are some neat videos out there where people make their own with Arduinos etc.
Where I live the "accidental" part doesn't really get you off the hook. Negligence is better than intention but still.
If it kills someone or causes grievous bodily harm, it's still on you. Yes, even if it's a burglar. You also have to think about the fully legal situations when it's firefighter or a cop with a warrant. Or an edge case like a stupid kid.
It's a fun fantasy. Work a few more elements into it:
- you're hit by a bus, and your family is clearing out the storage locker.
- management is alerted to a bad smell coming out of several units, and they have to enter yours to verify that you're not accidentally storing dead raccoons.
- the police are serving a warrant on a unit, and accidentally open yours due to a typo.
- a homeless teenager just needs a place to sleep for the night.
id put a bank of ultra bright white LED lights facing the door and a speaker with a recording saying this footage has been sent to a remote location. thank you for closing the door behind you.
Having to pay the fence to get your stuff back is so California. In the more civilized states pawnbrokers are expected to know the risks of buying potentially stolen property, and if they do they get to eat it.
Maybe that's why property crimes short of grand theft aren't really enforced in California?
That is the most surprising part to me. If the pawnbroker doesn’t bear the risks of buying stolen goods they are not disincentivized from buying stolen goods, which creates a larger market for selling stolen goods which in the end increases the market for property crime.
Yeah I was surprised about that one ‘Handling stolen goods’ is a criminal offence in Britain and if you can prove ownership of something you get it back. If you’re an innocent intermediary and you bought a stolen item without knowing you have to make a civil claim against the person you bought the item from to get the money back.
Same here. I believe in most U.S. states, knowlingly possessing stolen property is a crime. If you didn't know, you just have to forfiet it to the lawful owner.
The indifference of this by everyone involved is infuriating. This criminal activity is treated as natural as rain, just something us 98% of people have to endure.
It's important to remember that accepting crime, especially low level crime like this is a policy choice. It's the same people doing the same crimes over and over. They have run ins with the law and they just get let go to continue terrorizing the rest of us.
For instance, the number of state prisoners that have had 15 or more prior arrests is over 26%. You can cut crime. You can just prosecute these people and take them out of society for their most destructive years (18-40) and we can end this madness.
Even a 15 strikes and you're out policy would make a huge impact on the quality of life for the rest of us
The US already incarcerates vastly more people than most comparable nations. And yet this level of incarceration does not seem to have had the effect you want.
It seems that you imagine that the crime is somehow intrinsic to the current group of people committing it, and that by removing them from society, their behavior would not recur.
While there are arguments for this sort of thing, it is also based on a wilfull misreading (or no-reading) of what we know about the reasons why people commit crime at all.
Explain to me why someone that's been arrested 15 times should be let go to terrorize others.
That person that has been arrest 15 times before cannot continue to commit crime if he's behind bars. You don't need to "read" the data to come to this conclusion.
People commit crime in large part because they can get away with it.
That's not really the issue though (and for the record, I agree that a person found guilty of what they were arrested for 15 times should be incarcerated).
The problem is: why is this person doing this, because there are at least two outcomes:
1. we lock them up, and a part of the problem is gone
2. we lock them up, and someone else steps in to do the same thing
From my perspective, there's ample evidence to suggest that #2 is more likely, and thus even if locking them up has some moral weight behind it, it isn't likely to be a solution to crime in general.
There's only so many people that are criminally predisposed. The org doing bike thefts will stop if the penalty is high enough. Singapore has low crime because they prosecute aggressively. No one seemed to fill in for arrested gang members in El Salvador (extreme example)
Then there are the crazy person punching an Asian lady on the subway crimes and these fall squarely in 1
>and for the record, I agree that a person found guilty of what they were arrested for 15 times should be incarcerated
but you know damned well that most of the time it doesn't even go to trial. they're arrested, released, arrested, released, charges pressed, charges dropped; an endless merry-go-round. eventually people stop even reporting crime, why should they bother when the criminals don't get put away?
>From my perspective, there's ample evidence to suggest that #2 is more likely
why? this is like the "lump of labour" fallacy but for crime.
and yes, getting rid of just a few career criminals does disproportionately reduce crime. here's a funny natural experiment from ireland:
You don't have to commit a crime to be arrested. You just have to do something the police don't like - like holding up certain signs in a public space.
american style incarceration breeds criminals. it isnt a form of punishment for the vast majority of people who end up in prison or jail. its details like these that bleeding heart people gloss over.
>The US already incarcerates vastly more people than most comparable nations
because it has vastly more crime than comparable nations. you have to look at what happens to crime in the US over time, when you are more or less stringent about jailing criminals; predictably as you fill the jails, crime goes down, and when you empty them, crimes goes up.
>It seems that you imagine that the crime is somehow intrinsic to the current group of people committing it, and that by removing them from society, their behavior would not recur.
people try to smuggle this false premise into discussions about law and order all the time. the primary purpose of jail is not rehabilitation, it is to protect the public from criminals. you put them in jail so that they can't commit crimes. if they commit crimes when they leave, put them in jail again. jails mostly don't rehabilitate criminals, but that's a failure of the idea of mass rehabilitation, not a failure of jails. crime is a choice.
This is heartbreaking. The storage facility insurance scam is one that needs to be investigated by the government. It's a tremendous rip off and covers nothing.
The famous Lloyds of London started as a gambling coffee house. Gambling and insurance are closely related, and offer the same bargain: the house always wins.
I wonder if an insurance company operated as a co-op would be a better arrangement. Interested parties pooling money to pay out to the one unfortunate one who has a disaster. Could potentially invest the pool in super low risk investments as well for a little upside.
Mutual insurance companies have been a thing for hundreds of years. Some well known US mutual insurance companies are State Farm, Amica, Mutual of Omaha, and most non Elevance Blue Cross Blue Shield affiliated insurance companies.
No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.
1. Know your insurance contract, know what's actually covered and what not (sometimes describing the same facts in two different yet truthful ways will result in your claim being accepted or denied) and have a non-shit insurance company (check reviews that talk about how they handle claims or ask friends that had claims).
2. "Self-insure" risks where the variance won't hurt you. In other words, if you can grudgingly eat the loss if it happened, don't get insurance and eat the loss if it happens. If you have a lot of disposable income, you don't need insurance for something that won't noticeably shift your budget. Likewise, pick high deductibles. What would you rather do: Eat a $300 loss, or have paid $200 in additional premiums and spend two hours of filling out their paperwork?
3a. An exception is if you just really want the peace of mind, are willing to pay for that, and think you can find an insurance company that will actually pay.
3b. Another exception is if you think they miscalculated the premiums. I know that this is unlikely, but it ties into the "peace of mind" criteria - if you think a risk is more likely than it actually is, just insuring it might be an easy way out. The premium might also be accurate for the average, but you might also think or know that you are at a significantly higher risk than average.
For the latter two points, I like to consider insurance cost "per decade" or "per lifetime".
> No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.
No, premiums don't need to cover payouts. You have to pay the premiums before you get any payouts, so the company invests them and makes money that way.
Off-topic, I find people have a similar misunderstanding of FAANG compensation. Functionally, the salary + RSU + bonus + refresh structure is equivalent to a larger salary (enough to cover fees for the following procedure) where you take out 4-yr loans every year to invest in the company stock. With that in mind, listing the realized stock growth when describing total compensation always felt a bit disingenuous.
It's not their job. It would be easy to adopt laws requiring insurance companies to separate insurance pool money (used to pay out insurance) and operational money (used to pay employees and profits), and have these separated when showing the price of insurance. That would reduce the moral hazard of insurance companies paying profit out of the pool.
It can actually make it worse, and creates different Hazards.
When it does work is when insurance has no influence on the price of goods, and is a minor consumer. For example, when fire insurance pays to replace your goods that burnt up.
When it doesnt work is when insurance is the predominant purchaser of those goods. A good example would be US health insurance, which has an 80/20 rule just like your proposal. Health insurers by law (ACA) must pay out 80%, with 20% allowed for opex and shareholder returns. The Hazard is that as an industry, to increase returns, you want the cost of care as high as possible, thereby maximizing your allowable profit.
It is a similar problem to how power is regulated in California, which has a mandated profit cap as a percent of costs. As a result, these regulated companies have the highest opex and cost of power in the nation of approximately $0.50/kwh
What you're talking about is a market failure, basically admitting that markets don't decrease prices in many cases. Which is a much deeper rabbit hole.
My proposal even doesn't say what the ratio should be. If there wasn't legally defined maximal price margin (say 20%), I don't see what it would change in your argument - the companies would be free to ask for even more. Conversely, there is nothing that prevents the companies from lowering the margin as a result of competitive pressure from consumers.
I've always wondered how expensive a good insurance policy is. One that is actually good for you the policy holder and enforced by contract. Like no haggling over market value because the items are insured for specific amounts.
homeowner's insurance approaches this if you know your agent (as in you've physically seen them) and the two of you have an understanding that you're going to be recording the purchase price (or market price, whichever is lower), date of purchase, serial numbers, and any other identification of all objects you want insured. If you do this, my understanding is that they cannot then do "replace toaster: $8; replace TV, Onn brand 42inch $170;" and so on. If your item's market price goes up in the meantime, the policy will have verbiage as to how that gets resolved. For example if i have a policy on something that is no longer being made, i can either be reimbursed for the price or a suitable replacement.
Generic, cookie-cutter, boilerplate policies probably net the insurance companies a fair amount of profit. People who actually care about the actual items they are insuring are possibly the highest risk, and as such, the premiums are also the highest. In my state, an umbrella policy that would cover my home, land, frontage, vehicles, farm equipment, well pump, etc is ~$500/month, with limits of around $1mm (this was 8 years ago or so, they probably went up in premiums). a half million on two vehicles is only about $200/month and homeowners varies but is ~<$100/month. The issue is how i'd get the rest of the stuff i said insured, because in my state, the homeowner's policy doesn't cover anything but the home (and contents to a limited extent) and whatever you call a tree on your property falling down and causing injury or damage not due to negligence.
The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives, the result is our current society.
> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives
Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?
If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.
Even in the legit cases the insurance companies have to account for the "don't worry, it's insured" mindset. Keeping the ceiling on the insurance value is intended to leave at least some of the incentive to prevent the damage with the owner.
The insurance companies cannot rely solely on the "don't be careless" contract clause.
> If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.
So what, though? Can't they just adjust the premium to account for that? It's not like they can't do their own modeling of what the item is likely worth -- if they see it's 1% of what you stated, then they can just as well cite you a ridiculous premium so that you wouldn't feel it's worth it. What's wrong with that?
In theory nothing, in practice it's just not worth it. Mind that the bad effects would also spread broader than a voluntary contract between two parties.
We'd have to fund the courts to resolve the inevitable insurance fraud accusations, not to mention the additional firefighting crews to put out the additional fires that consume the $1 pillows.
The difference between gambling and insurance, is whether you have an insurable interest.
It makes the market for insurance much better if everyone actually has insurance. Because it reduces cost. It also keeps the industry legitimate, preventing gambling legislation from applying, and anti-gambling activists from targeting insurers.
You'll have to go to a bookie if you want to gamble.
Because premiums will rise across the board, so people with an insurable interest pay premiums set for people who intend to gamble or manipulate their insurance.
By demanding an insurable interest, insurance companies keep out gamblers and frauds. It also helps strengthen the idea that insurance shouldn't be abused or manipulated for a payout.
I don't see why this is true. The insurer still knows the item and its market value. So if the insured amount is higher than the market value then it only needs to increase the premium in those cases, not for everyone else.
You're definitely right -- it's interesting, but it's not making me any more sympathetic, because I fail to see why the lack of insurable interest is something the premium can't account for, and they fail to provide any explanation of that.
As far as insurance gambling goes, it feels fundamentally different? In gambling, the "house" that sells you the ticket sets the rules and introduces the element of chance. In insurance, the entity selling the financial product here is in no way in control of the outcome, which is the exact opposite of gambling.
The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.
> The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.
This doesn't pass the smell test, though. The premium would take care of that. You've told them you have a pillow, and that you want it insured for $1M. They could easily look at it and go "hm, this is worth $10", and give you a absurd premium of $999,900 in exchange for your absurd valuation. So happy accidents won't be worth it anymore. What's wrong with just letting the premium take care of it?
You have simply rephrased the actuarial rule "don't insure item for more than its actual value". The "premium" you describe just inflated the value of the item.
> Offering a deal that nobody honest would take is a waste of time for everyone involved.
I'm not suggesting any insurer should be forced to offer a deal. They're welcome to just shrug and tell you to pound sand. What I don't see is the logic behind having an international code prohibiting the offering of such deals. Is the international code trying to dictate to the insurance company what is worth their time?
> why should it matter what others are willing to pay for it?
Because the actual value of the item determines your incentive to commit fraud.
If you insure a $10 pillow for $10, when you damage your pillow, you personally will definitely be out $10's value in goods in the hope you'll recover that $10 later. Since your only outcome is mildly negative, you don't have any incentive to file a false claim.
If you insure your $10 pillow for $1 million, as soon as the insurance is in hand, will have a strong incentive to destroy the pillow and try to collect a million dollars, since $1 million - $10 = $999,990.
This incentive exists regardless of what premium you had paid for the insurance (since it was a prior cost), and can't really be perfectly mitigated. Yes, you can criminalize fraud, ask for evidence, etc. but courts aren't perfect and it's always possible to be clever and fool people.
Also, some people are honest, and others are dishonest. An insurance company can't perfectly tell ahead of time who is who. Let's say I quote you $500k premium to insure your pillow for $1mm. A fraudster will see this as an opportunity to profit by $500k - $10. An honest person would see this as a terrible deal. Therefore only fraudsters would take this deal. If you continue to work backwards, as an insurance company you know there's no premium that you could quote that would end up in honest people taking this deal—there's no stable equilibrium where the premium charged ends up outweighing the (potentially fraudulent) claims.
Btw, this situation is famously described in George Akerlof's paper The Market for Lemons (he called it "market collapse"):
Another way to see this: rationally as an insurance company, if you ask me for a policy for $1mm on a pillow, due to the risk of fraud I will likely be quoting you close to $1mm as the premium. You (as an honest person) rationally would never take this policy. Therefore, I shouldn't even bother offering it, to save everyone involved time and energy.
What depends on the premium? In my mind, you state the item and the value, they tell you the premium they would cover it at. Where's the perverse incentive, and why is it relevant what anybody else would pay for it?
Surely there's some middle ground between the sibling thread where it's insured for 1000x and the situation I and many others find ourselves in with insurance dealings where the insurance company digs up some sale in a private database by a wholesaler in Szechuan, calls that the "market price" and then cuts you a check that doesn't even come close to replacing the item, usually a car.
I would love a clause in the contract where for non-rare goods you have the option to have the insurance company make you whole by buying you a same model, same trim or higher, same miles or lower, same year or newer car. Like you claimed the market price was less then half of what I can buy it for, use whatever contacts you clearly have and buy it for that.
If you use the disc lock the storage facility sells, you'll likely
pay an additional markup on it, but it's also guaranteed to be
acceptable to their partner insurance company.
I'm surprised - I'd have expected the facility's locks to be guaranteed to be unacceptable so as to minimize the insurance company's payouts. Insurance agencies already do worse on a daily basis, this level of consumer-hostile bullshit would barely even register.
If they are deemed unacceptable, I now get to make the argument of negligence on the part of the storage facility, as they are the ones who sold it to me and I can reasonably assume that since they suggested it, and the insurance policy, that it is fit for purpose. I might then be able to make the case of fraud.
Don’t buy insurance from the same company giving you the service.
Insurance is for you and you should pick it from your own choice of company and you should tailor the policy for your own needs.
Same with financing.
In my case, I get a lot of my insurance from a guy in my town and he has an office that I can walk into if I need help.
I tend to avoid the insurance and just pile up the money I would have paid to cover the losses. Depending on the type of insurance. But theft insurance tends to be problematic. The fraudulent buy expensive stuff, keep all the receipts, sell the stuff for cash to a friend and then claim on insurance with the proper paperwork. Normal people tend not to keep and file away all paperwork and lose out.
Although it’s a little more complicated, generally if you can cover a loss out of pocket, then you don’t need insurance.
Insurance is for losses that will have a major impact on you. It’s putting a price on risk.
Insurers do notice that small claims (in P&C) are a relatively small part of claims + cost so most don’t offer the high deductibles. As a bonus, with higher deductibles come relatively more lawsuits. So safer to only offer low deductibles. (My experience after 20 years in the sector.)
In my country a family perhaps pays about €5k total a year for two cars, health, house and the assortment of legal and liability insurance. That is quite modest (not for all income classes though), since there are catastrophes possible in nearly any avenue of life. A minimalist insurance scheme would save one about €2k/yr. That just isn’t that worthwhile utility wise.
I’m stunned by the idea of making the pawn shop whole.
As I understand UK law, if you buy stolen goods, the original owner can just claim it back and you take the loss - simply to discourage buying with knowledge it was stolen.
I guess the pawn shop would go out of business but it does seem if you let them act as a fence you are solving for the wrong problem
They're likely trying to prevent the situation where the pawn shops become entirely uncooperative, but there's still a tragedy of the commons situation occurring.
This is a periodic public service announcement that there is not, and never has been "a tragedy of the commons situation". Even the author of the concept, Garret Hardin, has acknowledged that he made mistakes in his understanding and research.
Resources held in common have historically been subject to significant control via social, civic and legalistic processes. What is typically referred to as "a tragedy of the commons situation" never turns out to be what Hardin originally suggested - individuals taking advantage of the lack of controls. Instead it is invariably individuals who first dismantle the control systems in place in order to pursue their own selfish ends.
This matters because the "tragedy of the commons" concept has been used to suggest (successfully) that communities cannot manage commonly held resources, which is false. What is true is that communities frequently cannot manage a sustained attack by selfishness and greed against their own systems of management, and that's a very, very different problem.
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Laws against fraud, like 18 U.S. Code Chapter 47 and others in each state?
Id say your friend being put behind bars would do the trick.
They would just arrest the person who pawned the items.
> I'm not even sure what the notarization step was accomplishing: the inventory sheets aren't affidavits.
The percentage of people who see the word "notarized" alongside "inventory sheet" and simply give up must be quite high. Notarization accomplishes nothing besides causing a headache. Insurance companies don't make money by paying out claims, you know.
Notarization just proves it was you who signed something, it has nothing to do with the contents of the document.
Unfortunately a lot of people think notarization gives some kind of legitimacy to a document, or likely in this case, it's probably not the hassle of getting it notarized, but used as a scare tactic to prevent some people from committing insurance fraud by listing inflated or made-up items (people might conflate it with perjury).
It proves not just who, but when. This can be pretty relevant in a number of situations.
Illinois did away with notarization requirements for almost everything a few years ago. Now you can just sign things under penalty of perjury and it's done, which is the right way to go about it.
It also makes it feel more serious, deterring insurance fraud. Since it has only upsides, no downsides, for the insurance company (except that they'll get bad ratings from customers which they clearly don't care about in this scenario, as most customers don't shop around for them), of course they demand it.
> Insurance companies don't make money by paying out claims, you know.
This is why if you want actual insurance (not "check the 'you must have insurance' box") you don't pick the cheapest company and check reviews, ignoring any reviews that don't mention a claim.
That, and it would make it harder to claim mistake/accident if the insurance company tried to Prosecute for insurance fraud.
The number of cases of people adding random expensive things that would be added to insurance inventories during a claim has to approach 90% if there is no potential for consequences.
What a story! Most people probably would just give up. Dealing with storage units is why I try to eliminate all the extra "stuff" in my life... George Carlin had a great bit on stuff: https://youtu.be/MvgN5gCuLac
I used to work security and making rounds in a place like this would give me chills. Running into thieves at 3 in the morning is one of the most terrifying things you will ever experience.
I feel it’s like walking in the woods in the south — you make a lot of noise so you don’t surprise a rattler? Were you walking stealthy so they don’t hear you coming?
How did you deal with such terrifying situations?
I'm not the person you asked, but most people like that - opportunistic burglars, etc - are no more keen to run into the police than you are to run into them. They'll just run.
Granted, the equation changes dramatically when various drugs are involved.
Thankfully they always ran away.
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he gives a list of things to do or consider. supporting laws and politicians that catch and punish criminals effectively is somehow not on that list…
The items he listed have extremely direct impact on YOUR ability to reduce theft. You just suggested something very broad. I might make the point that punishing criminals effectively will potentially reduce overall crime, but has no direct reduction on the crime in the article. It would be very hard to show any law which specifically targets the type of crime OP posted about, but I'm open if you have seen legislation proposed or enacted which targets this crime in a major city.
What laws do you believe would be more effective a catching and punishing criminals?
AFAIK, there is reasonably clear evidence that deterrence has a very low impact on this sort of crime, so laws based on deterring through fear-of-sentence would not seem to be likely to have much effect.
What is it that you're proposing/desiring?
> AFAIK, there is reasonably clear evidence that deterrence has a very low impact on this sort of crime,
Could you share some of this evidence?
deterrence works. when i moved into my house it wasnt quite finished. i had soent a few years building it. neighborhood is ok but tweakers are walking around all the time. they walk around everywhere because they can, and to case houses. the people here think like you. they just let it happen. tweakers had stolen a lot of materials and a few tools from me at this point. so when i moved in, for some reason they decided it was a good time to try and break in. it was one guy, i caught him trying to get in the window. grabbed my pistol and confronted him. he ran away but i kept after him. he was so scared that he dropped his bag and begged me to confirm for myself he hadnt stolen. so i let him go and my neighbor met up with me outside my house. both openly displaying our guns. the getaway car rolled by, you could tell because it was tweakers and when they saw those guns their jaws dropped. like i said, this hood is ok but infested with tweakers. not after that night. not a single instance. not a single person casing houses.
people like you always cite “evidence.” your evidence is nonsense. studies that are deeply flawed an not applicable.
what do i suggest? first of all, actually enforcing laws that are already on the books. is theft really punished or are these people getting away with it so often that it might as well be legal? and when they do get caught its a slap on the wrist or even a nice little vacation with four hots and a cot because jail and homelessness is literally normal for these people. i suggest punishing people severely and immediately for crimes that arent victimless. i suggest allowing people to defend themselves. and i suggest that people actually take ownership of their communities and drive out scum. the west coast does the least of these things in the country and look at the results. portland has a higher violent crime rate than mexico city… take your bleeding heart nonsense and shove it. and dont reply, if you want to hash this out then give me your twitter handle and we can have a space about it
I see. So a few anecdotes, handwaving dismissals of a century or more or crime and sociological research, and a suggestion to move to Twitter.
Theft is an organized crime.
That tweaker/junkie who steals your bike, breaks into your storage unit, whatever? He's not an organization man. The dude with a standing offer to pay twenty bucks for the bike, or ten if it's shitty? He's with an organization.
What I propose is that we start enforcing the law and treat theft as a crime, not a nuisance or fact of life. Roll up the organizations, toss them in prison, and repeat over and over until the message gets out.
This isn't a problem which can be solved at the tweaker level. What we can do, and simply choose not to, is get every single dude with twenty bucks or a baggie to trade for your bike. All that's lacking is the political will.
What's also lacking is any evidence of any kind that this would have the effect you desire.
Really? You want to make it illegal to buy a bike for $20? Ask the Soviet Union how well price controls work.
Please provide a list. Keep in mind you yourself added “effectively” as a criteria.
Politicians who claim to be tough on crime are usually just tough on black people and drug users, which helps nobody.
An acquaintance of mine was stealing big-ticket items from a storage unit. Campers, boats, etc.
Of course he eventually got caught. The insurance company had already paid the owner of one of the campers, so it went to auction, and he bought it. Kind of funny.
What is annoying to me is that in this internet-connected age, the storage units I see still don't have better per-unit security.
Just a phone alert to say "door to unit #xyz has been opened" would be a huge improvement. Wire up a cheap webcam for extra credit.
In general isn’t the consensus that storage units are a very bad deal for “storage”. It can be useful for temporary storage for bulky items like furniture when renovating your house or in between houses, but the fees would quickly accumulate and pay for almost any reasonable contents.
If the fees wouldn’t cover replacement of the contents within 6 months, they are too valuable to store in a storage unit.
If you don't have space in your apartment or home for items you want to keep, then where else are you supposed to store things?
Obviously it's up to you to figure out if it makes financial sense. But for people in urban areas with small apartments, it can be a heckuva lot cheaper than upgrading to an apartment with another bedroom.
> If you don't have space in your apartment or home for items you want to keep, then where else are you supposed to store things?
On ebay? Sell the stuff now, buy it again if you need it. Doesn't work for everything, of course, and I don't practice it, I've got tons of space and tons of clutter.
I believe other people are using any such storage as a cache, trading space for time, since even if you instantly found the exact replacements, you'd still pay not only monetarily for shipping but wall-clock for both shipping and the drudgery of searching for said items
Interestingly, I read a blog post where someone was using "fulfilled by amazon" as off-site storage, but I think it was a pseudo thought experiment more than an actual storage solution, similar to those folks who use data-as-video on YouTube as infinite backup storage
its almost as if people really shouldnt live inside glorified cubicles… as if they should in something larger. and maybe have a space with grass and also a little accessory structure with a door large enough to fit a vehicle. such a thing doesnt exist unfortunately
My nearby park has tons of space with grass.
And why would I want space for a vehicle when I have public transportation that is much faster?
so you dont have to rub against a homeless man who smells like piss on the train, dont have to be screamed at by a crazy homeless person on the train, and so that you dont have to rely on tweaker infested, crooked ass storage companies for one of the most basic aspects of existing in the world.
Sounds like trains in your area need to have better security and ticket checkers.
True, but it's just another one of those illogical things people do.
You could apply the same logic to the stuff inside your house, which is just a glorified storage unit. Why are you paying premium to store that stuff, when you could downgrade to a studio apartment or a tent?
The bottom line is, if you want to own stuff, then you must store it. You know what is more expensive than storage? Buying stuff you need or want and reselling it, again and again. Or leasing it in general. Some stuff has poor resale value, takes a lot of energy to choose and accumulate, and is not easy to replace.
Well, when you are writing an apartment, people do generally go for the cheapest smallest place they can afford.
But when you’re buying a place, you’re looking to have isolation from shared walls, and generally a larger property will appreciate more in value than a smaller property With some limits in both directions up and down in size.
It would be illegal to live in a tent.
Even if it was legal, most people wouldn't like that.
There are a million reasons why you should never do this, but I would be tempted to use storage unit #3 as the place to keep my land mine collection.
Edit: “You have a land mine collection?”
No, but after storage unit #2, I’d daydream about starting one.
I imagine it'd be a lot cheaper and legally-viable to store your collection of electronic burglar alarms. Especially if they dial a human when triggered.
There are some neat videos out there where people make their own with Arduinos etc.
> There are some neat videos out there where people make their own
The "glitter bomb" series is pretty funny: https://www.youtube.com/watch?v=xoxhDk-hwuo&list=PLgeXOVaJo_...
Make them play sounds of approaching footsteps and gunfire.
Merry Christmas, ya filthy animals.
How about (accidentally) still charged high voltage capacitors?
Where I live the "accidental" part doesn't really get you off the hook. Negligence is better than intention but still.
If it kills someone or causes grievous bodily harm, it's still on you. Yes, even if it's a burglar. You also have to think about the fully legal situations when it's firefighter or a cop with a warrant. Or an edge case like a stupid kid.
Where I grew up, problem thieves would just go missing, to be found years later dead at the bottom of a mine shaft.
Well this at least doesn't kill a random person who has to empty your storage for legit reasons and sets off a land mine.
I’m not saying I condone it…
…but I understand.
Do they typically stay charged for only a few days at most?
Well, you might need to stop by frequently to visit them.
It's a fun fantasy. Work a few more elements into it:
- you're hit by a bus, and your family is clearing out the storage locker.
- management is alerted to a bad smell coming out of several units, and they have to enter yours to verify that you're not accidentally storing dead raccoons.
- the police are serving a warrant on a unit, and accidentally open yours due to a typo.
- a homeless teenager just needs a place to sleep for the night.
I’m not sure you grok the concept of “fun fantasy”.
Booby-trapping your property is illegal even in the reddest of red states.
That would be one of the million reasons why I wouldn’t do it.
I didn’t say I’d actually do it. I’d surely daydream of it.
id put a bank of ultra bright white LED lights facing the door and a speaker with a recording saying this footage has been sent to a remote location. thank you for closing the door behind you.
Easy to say "never use a storage unit" when you have a long-term home.
It’s outrageous that pawn shops don’t have to eat the loss in California. They have no incentive to check for stolen items.
Agree. Around here bike theft is a huge problem and none of the pawn shops will deal with bicycles at all, it’s too risky for them.
Having to pay the fence to get your stuff back is so California. In the more civilized states pawnbrokers are expected to know the risks of buying potentially stolen property, and if they do they get to eat it.
Maybe that's why property crimes short of grand theft aren't really enforced in California?
That is the most surprising part to me. If the pawnbroker doesn’t bear the risks of buying stolen goods they are not disincentivized from buying stolen goods, which creates a larger market for selling stolen goods which in the end increases the market for property crime.
> property crimes short of grand theft aren't really enforced in California
There is a hope we will undo this soon.
Yeah I was surprised about that one ‘Handling stolen goods’ is a criminal offence in Britain and if you can prove ownership of something you get it back. If you’re an innocent intermediary and you bought a stolen item without knowing you have to make a civil claim against the person you bought the item from to get the money back.
Same here. I believe in most U.S. states, knowlingly possessing stolen property is a crime. If you didn't know, you just have to forfiet it to the lawful owner.
The indifference of this by everyone involved is infuriating. This criminal activity is treated as natural as rain, just something us 98% of people have to endure.
It's important to remember that accepting crime, especially low level crime like this is a policy choice. It's the same people doing the same crimes over and over. They have run ins with the law and they just get let go to continue terrorizing the rest of us.
For instance, the number of state prisoners that have had 15 or more prior arrests is over 26%. You can cut crime. You can just prosecute these people and take them out of society for their most destructive years (18-40) and we can end this madness.
Even a 15 strikes and you're out policy would make a huge impact on the quality of life for the rest of us
https://mleverything.substack.com/p/acceptance-of-crime-is-a...
The US already incarcerates vastly more people than most comparable nations. And yet this level of incarceration does not seem to have had the effect you want.
It seems that you imagine that the crime is somehow intrinsic to the current group of people committing it, and that by removing them from society, their behavior would not recur.
While there are arguments for this sort of thing, it is also based on a wilfull misreading (or no-reading) of what we know about the reasons why people commit crime at all.
Explain to me why someone that's been arrested 15 times should be let go to terrorize others.
That person that has been arrest 15 times before cannot continue to commit crime if he's behind bars. You don't need to "read" the data to come to this conclusion.
People commit crime in large part because they can get away with it.
It's not complicated.
That's not really the issue though (and for the record, I agree that a person found guilty of what they were arrested for 15 times should be incarcerated).
The problem is: why is this person doing this, because there are at least two outcomes:
1. we lock them up, and a part of the problem is gone
2. we lock them up, and someone else steps in to do the same thing
From my perspective, there's ample evidence to suggest that #2 is more likely, and thus even if locking them up has some moral weight behind it, it isn't likely to be a solution to crime in general.
There's only so many people that are criminally predisposed. The org doing bike thefts will stop if the penalty is high enough. Singapore has low crime because they prosecute aggressively. No one seemed to fill in for arrested gang members in El Salvador (extreme example)
Then there are the crazy person punching an Asian lady on the subway crimes and these fall squarely in 1
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>and for the record, I agree that a person found guilty of what they were arrested for 15 times should be incarcerated
but you know damned well that most of the time it doesn't even go to trial. they're arrested, released, arrested, released, charges pressed, charges dropped; an endless merry-go-round. eventually people stop even reporting crime, why should they bother when the criminals don't get put away?
>From my perspective, there's ample evidence to suggest that #2 is more likely
why? this is like the "lump of labour" fallacy but for crime.
and yes, getting rid of just a few career criminals does disproportionately reduce crime. here's a funny natural experiment from ireland:
https://www.independent.ie/irish-news/crime/number-of-burgla...
You don't have to commit a crime to be arrested. You just have to do something the police don't like - like holding up certain signs in a public space.
Read the study
> 73% of the prior offenses are violent and 80% are property related (obviously non-exclusive)
american style incarceration breeds criminals. it isnt a form of punishment for the vast majority of people who end up in prison or jail. its details like these that bleeding heart people gloss over.
>The US already incarcerates vastly more people than most comparable nations
because it has vastly more crime than comparable nations. you have to look at what happens to crime in the US over time, when you are more or less stringent about jailing criminals; predictably as you fill the jails, crime goes down, and when you empty them, crimes goes up.
>It seems that you imagine that the crime is somehow intrinsic to the current group of people committing it, and that by removing them from society, their behavior would not recur.
people try to smuggle this false premise into discussions about law and order all the time. the primary purpose of jail is not rehabilitation, it is to protect the public from criminals. you put them in jail so that they can't commit crimes. if they commit crimes when they leave, put them in jail again. jails mostly don't rehabilitate criminals, but that's a failure of the idea of mass rehabilitation, not a failure of jails. crime is a choice.
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At this stage I'd probably thank thieves for clearing out my garage.
Last time I cleared out my old stuff there was nothing I could do to get people to take most of the crap at zero cost.
This is heartbreaking. The storage facility insurance scam is one that needs to be investigated by the government. It's a tremendous rip off and covers nothing.
Most insurance in most industries is a racket.
The famous Lloyds of London started as a gambling coffee house. Gambling and insurance are closely related, and offer the same bargain: the house always wins.
I wonder if an insurance company operated as a co-op would be a better arrangement. Interested parties pooling money to pay out to the one unfortunate one who has a disaster. Could potentially invest the pool in super low risk investments as well for a little upside.
Mutual insurance companies have been a thing for hundreds of years. Some well known US mutual insurance companies are State Farm, Amica, Mutual of Omaha, and most non Elevance Blue Cross Blue Shield affiliated insurance companies.
https://en.wikipedia.org/wiki/Mutual_insurance
If thieves had emptied my storage unit before I married my wife and she made the decision for me, they would have been doing me a favour.
I don’t think any advanced security storage solution is likely to get many clients since they usually choose based on pricing.
Good old insurance companies, always looking for ways to get out of having to pay out for claims.
I mean, I guess it is their job, so can't really fault them for that.
No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.
1. Know your insurance contract, know what's actually covered and what not (sometimes describing the same facts in two different yet truthful ways will result in your claim being accepted or denied) and have a non-shit insurance company (check reviews that talk about how they handle claims or ask friends that had claims).
2. "Self-insure" risks where the variance won't hurt you. In other words, if you can grudgingly eat the loss if it happened, don't get insurance and eat the loss if it happens. If you have a lot of disposable income, you don't need insurance for something that won't noticeably shift your budget. Likewise, pick high deductibles. What would you rather do: Eat a $300 loss, or have paid $200 in additional premiums and spend two hours of filling out their paperwork?
3a. An exception is if you just really want the peace of mind, are willing to pay for that, and think you can find an insurance company that will actually pay.
3b. Another exception is if you think they miscalculated the premiums. I know that this is unlikely, but it ties into the "peace of mind" criteria - if you think a risk is more likely than it actually is, just insuring it might be an easy way out. The premium might also be accurate for the average, but you might also think or know that you are at a significantly higher risk than average.
For the latter two points, I like to consider insurance cost "per decade" or "per lifetime".
But they can offer a lower price than competitors or collect more profits (to taste) by having a lower expected value of losses by screwing you over
> No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.
No, premiums don't need to cover payouts. You have to pay the premiums before you get any payouts, so the company invests them and makes money that way.
That's still basically the same thing if you take into account the opportunity cost of the premiums rather than the raw dollar value.
Off-topic, I find people have a similar misunderstanding of FAANG compensation. Functionally, the salary + RSU + bonus + refresh structure is equivalent to a larger salary (enough to cover fees for the following procedure) where you take out 4-yr loans every year to invest in the company stock. With that in mind, listing the realized stock growth when describing total compensation always felt a bit disingenuous.
Nobody will give you an unsecured loan for 100 percent of your salary, but tech companies will happily grant you rsus for that much.
It's not their job. It would be easy to adopt laws requiring insurance companies to separate insurance pool money (used to pay out insurance) and operational money (used to pay employees and profits), and have these separated when showing the price of insurance. That would reduce the moral hazard of insurance companies paying profit out of the pool.
It can actually make it worse, and creates different Hazards.
When it does work is when insurance has no influence on the price of goods, and is a minor consumer. For example, when fire insurance pays to replace your goods that burnt up.
When it doesnt work is when insurance is the predominant purchaser of those goods. A good example would be US health insurance, which has an 80/20 rule just like your proposal. Health insurers by law (ACA) must pay out 80%, with 20% allowed for opex and shareholder returns. The Hazard is that as an industry, to increase returns, you want the cost of care as high as possible, thereby maximizing your allowable profit.
It is a similar problem to how power is regulated in California, which has a mandated profit cap as a percent of costs. As a result, these regulated companies have the highest opex and cost of power in the nation of approximately $0.50/kwh
What you're talking about is a market failure, basically admitting that markets don't decrease prices in many cases. Which is a much deeper rabbit hole.
My proposal even doesn't say what the ratio should be. If there wasn't legally defined maximal price margin (say 20%), I don't see what it would change in your argument - the companies would be free to ask for even more. Conversely, there is nothing that prevents the companies from lowering the margin as a result of competitive pressure from consumers.
I've always wondered how expensive a good insurance policy is. One that is actually good for you the policy holder and enforced by contract. Like no haggling over market value because the items are insured for specific amounts.
homeowner's insurance approaches this if you know your agent (as in you've physically seen them) and the two of you have an understanding that you're going to be recording the purchase price (or market price, whichever is lower), date of purchase, serial numbers, and any other identification of all objects you want insured. If you do this, my understanding is that they cannot then do "replace toaster: $8; replace TV, Onn brand 42inch $170;" and so on. If your item's market price goes up in the meantime, the policy will have verbiage as to how that gets resolved. For example if i have a policy on something that is no longer being made, i can either be reimbursed for the price or a suitable replacement.
Generic, cookie-cutter, boilerplate policies probably net the insurance companies a fair amount of profit. People who actually care about the actual items they are insuring are possibly the highest risk, and as such, the premiums are also the highest. In my state, an umbrella policy that would cover my home, land, frontage, vehicles, farm equipment, well pump, etc is ~$500/month, with limits of around $1mm (this was 8 years ago or so, they probably went up in premiums). a half million on two vehicles is only about $200/month and homeowners varies but is ~<$100/month. The issue is how i'd get the rest of the stuff i said insured, because in my state, the homeowner's policy doesn't cover anything but the home (and contents to a limited extent) and whatever you call a tree on your property falling down and causing injury or damage not due to negligence.
The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives, the result is our current society.
> The international code of insurances says goods cannot be insured for more than their worth. The intent was to avoid perverse incentives
Would you mind explaining what the perverse incentive is here? If I want to insure a pillow that I claim is worth $1 million, why should it matter what others are willing to pay for it?
If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.
Even in the legit cases the insurance companies have to account for the "don't worry, it's insured" mindset. Keeping the ceiling on the insurance value is intended to leave at least some of the incentive to prevent the damage with the owner.
The insurance companies cannot rely solely on the "don't be careless" contract clause.
> If they let me insure my stuff for 100x of what it's worth, I lose all the incentive to prevent damage.
So what, though? Can't they just adjust the premium to account for that? It's not like they can't do their own modeling of what the item is likely worth -- if they see it's 1% of what you stated, then they can just as well cite you a ridiculous premium so that you wouldn't feel it's worth it. What's wrong with that?
In theory nothing, in practice it's just not worth it. Mind that the bad effects would also spread broader than a voluntary contract between two parties.
We'd have to fund the courts to resolve the inevitable insurance fraud accusations, not to mention the additional firefighting crews to put out the additional fires that consume the $1 pillows.
The difference between gambling and insurance, is whether you have an insurable interest.
It makes the market for insurance much better if everyone actually has insurance. Because it reduces cost. It also keeps the industry legitimate, preventing gambling legislation from applying, and anti-gambling activists from targeting insurers.
You'll have to go to a bookie if you want to gamble.
I don't follow the logic? How does above-market-value insurance discourage people from having insurance?
I don't get the comparison to gambling either, that reads more like an appeal to emotion than actual reasoning.
Because premiums will rise across the board, so people with an insurable interest pay premiums set for people who intend to gamble or manipulate their insurance.
By demanding an insurable interest, insurance companies keep out gamblers and frauds. It also helps strengthen the idea that insurance shouldn't be abused or manipulated for a payout.
> Because premiums will rise across the board
I don't see why this is true. The insurer still knows the item and its market value. So if the insured amount is higher than the market value then it only needs to increase the premium in those cases, not for everyone else.
As for gambling. The point isn't gambling is evil, but that others think gambling is evil, so being associated with gambling is bad for business.
You can read about it at
https://en.wikipedia.org/wiki/Insurable_interest
(I don't know if that will make you more sympathetic to the legal rule or not.)
You're definitely right -- it's interesting, but it's not making me any more sympathetic, because I fail to see why the lack of insurable interest is something the premium can't account for, and they fail to provide any explanation of that.
As far as insurance gambling goes, it feels fundamentally different? In gambling, the "house" that sells you the ticket sets the rules and introduces the element of chance. In insurance, the entity selling the financial product here is in no way in control of the outcome, which is the exact opposite of gambling.
The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.
> The incentive would be for you to have a "happy pillow accident" in which you get $1M. Of course, you might think that's good for you but the rules have to apply for everybody, by definition.
This doesn't pass the smell test, though. The premium would take care of that. You've told them you have a pillow, and that you want it insured for $1M. They could easily look at it and go "hm, this is worth $10", and give you a absurd premium of $999,900 in exchange for your absurd valuation. So happy accidents won't be worth it anymore. What's wrong with just letting the premium take care of it?
You have simply rephrased the actuarial rule "don't insure item for more than its actual value". The "premium" you describe just inflated the value of the item.
I don't see how this answers my question.
> What's wrong with just letting the premium take care of it?
Offering a deal that nobody honest would take is a waste of time for everyone involved.
> Offering a deal that nobody honest would take is a waste of time for everyone involved.
I'm not suggesting any insurer should be forced to offer a deal. They're welcome to just shrug and tell you to pound sand. What I don't see is the logic behind having an international code prohibiting the offering of such deals. Is the international code trying to dictate to the insurance company what is worth their time?
The international code is also defining the key distinguishing factor of insurance: it makes the insured whole against a risk that they actually have.
There are ways to bet on things where you don’t have that underlying risk: gambling, derivatives markets, prediction markets, etc.
These aren’t insurance and aren’t regulated as such.
The premium would be 1M. Maybe .99M if they have reason to assume not everyone will be fraudulent.
Sure, whatever. The exact value of the premium has no bearing on the point I'm trying to make.
> why should it matter what others are willing to pay for it?
Because the actual value of the item determines your incentive to commit fraud.
If you insure a $10 pillow for $10, when you damage your pillow, you personally will definitely be out $10's value in goods in the hope you'll recover that $10 later. Since your only outcome is mildly negative, you don't have any incentive to file a false claim.
If you insure your $10 pillow for $1 million, as soon as the insurance is in hand, will have a strong incentive to destroy the pillow and try to collect a million dollars, since $1 million - $10 = $999,990.
This incentive exists regardless of what premium you had paid for the insurance (since it was a prior cost), and can't really be perfectly mitigated. Yes, you can criminalize fraud, ask for evidence, etc. but courts aren't perfect and it's always possible to be clever and fool people.
Also, some people are honest, and others are dishonest. An insurance company can't perfectly tell ahead of time who is who. Let's say I quote you $500k premium to insure your pillow for $1mm. A fraudster will see this as an opportunity to profit by $500k - $10. An honest person would see this as a terrible deal. Therefore only fraudsters would take this deal. If you continue to work backwards, as an insurance company you know there's no premium that you could quote that would end up in honest people taking this deal—there's no stable equilibrium where the premium charged ends up outweighing the (potentially fraudulent) claims.
Btw, this situation is famously described in George Akerlof's paper The Market for Lemons (he called it "market collapse"):
https://en.wikipedia.org/wiki/The_Market_for_Lemons#Conditio...
Another way to see this: rationally as an insurance company, if you ask me for a policy for $1mm on a pillow, due to the risk of fraud I will likely be quoting you close to $1mm as the premium. You (as an honest person) rationally would never take this policy. Therefore, I shouldn't even bother offering it, to save everyone involved time and energy.
depends on the premium, obviously
What depends on the premium? In my mind, you state the item and the value, they tell you the premium they would cover it at. Where's the perverse incentive, and why is it relevant what anybody else would pay for it?
If you intend to insure a pillow for $1 million, expect the premium to cost about $999,950.
I wrote as much in https://news.ycombinator.com/item?id=41755211
Then why did you object to zabzonk's comment?
Because I don't see what the perverse incentive is?
burning your house down?
Have you seen the other threads?
Surely there's some middle ground between the sibling thread where it's insured for 1000x and the situation I and many others find ourselves in with insurance dealings where the insurance company digs up some sale in a private database by a wholesaler in Szechuan, calls that the "market price" and then cuts you a check that doesn't even come close to replacing the item, usually a car.
I would love a clause in the contract where for non-rare goods you have the option to have the insurance company make you whole by buying you a same model, same trim or higher, same miles or lower, same year or newer car. Like you claimed the market price was less then half of what I can buy it for, use whatever contacts you clearly have and buy it for that.
Suggestion to authors: be pithy
It’s 3rd on HN right now, I’m not sure they need to change their approach much.
Observation: no one asked
If they are deemed unacceptable, I now get to make the argument of negligence on the part of the storage facility, as they are the ones who sold it to me and I can reasonably assume that since they suggested it, and the insurance policy, that it is fit for purpose. I might then be able to make the case of fraud.