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It’s happened a few times now were I was more or less forced into an insurance policy. Not at gunpoint, but regardless it wasn’t really an option for me to decline coverage. Both times it was about liability insurance for one of my art events. Both times my questions to help me understand this better were promptly ignored. I’m in Canada after all, not the USA were people allegedly sue each other over the fact their coffee was hot, as coffee is supposed to be in this coffee lovers opinion. At the lack of a response of the parties trying to force a policy down my throat I did my own research and formulated an opinion.
While I’m not lawyer, from a legal perspective insurance is the transfer of risk to another party (the insurance company). Doing so is recommended when the risk is unacceptable (putting a pedestrian in a wheelchair after you ran them over with your minivan is a risk you shouldn’t take on yourself, period). You could also take out insurance for something that’s unavoidable and very likely to happen. Some lotteries operate this way. The take out insurance for the “risk” that someone might win the jackpot. Life insurance is another example, everyone is going to die, and therefore life insurance is a great thing to have as it’s bound to pay out at some point, and usually the premiums are low (insurance companies bank on you not dying too soon, so you’ll pay their premium for the rest of your life). I claimed a travel vaccine on my health insurance, twice. A few months later the premium I pay promptly went up. On an annual basis it would have been cheaper to just pay for the vaccine myself. Two things I’d like to say – one: insurance is a transfer of risk, not a cost sharing model. Two: there’s no need to transfer all risk as it’s simply too expensive to do so. It’s ok to think about that long and hard, and it might even be a good idea to get some solid legal advice on the matter, especially when you’re running a business. But we should really get out of the mindset that a piece of paper will provide unlimited protection. It won’t. Not even an insurance policy. After all, insurance companies exist to make money – very few are “not for profit”. So the first thing they do with any claim is try to get out of having to pay by declining coverage. For some insurers that’s the first order of business when a claim comes in. Think about that next time you transfer a risk. Good luck, and stay safe.
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