The Irony of Insurance

How many times have you heard:
"Don't worry, it's insured"

The idea of having insurance is to make sure that you are protected in the case of an accident or disaster, or in case you are sued.

Here are some unintended side-effects of insurance based on my observations:
1) people tend to be less careful
2) the number of lawsuits increase

People tend to be less careful
The prime example - car insurance. Full coverage pays for, well - everything - repair, theft, property damage, injury. If a person knows that they will not pay for repairing a car (not directly anyway), they might be more inclined to get into an accident. I am not suggesting that this is intentional - no sane person would intentionally get into an accident. However, the "peace of mind" that insurance companies like to tout about may actual work to their detriment. The attitude of an insured person might change ever so slightly - from a very cautious driver who is left to fend for himself to a driver that thinks he is being looked after. I would even go as far as saying that there is a sense of entitlement by the insured. They have paid to be looked after and may be lulled into a false sense of security.

The same can be said about health insurance. A person may not look after him/herself as much as they should if they know that insurance is there to pay to make them better. Somebody with property insurance may not feel the need for the extra door locks or the stronger glass or the installation of a fire suppression system - insurance will take care of anything that might happen.

The number of lawsuits increase
Our country is plagued with an outrageous amount of lawsuits. Maybe we have too many lawyers that don't have anything else to do, maybe we just feel entitled to be compensated for everything, or maybe it reflects our frustrations with life. Whatever the case, insurance companies don't help very much.

What I mean is that because insurance companies offer liability coverage, the person suing may have the attitude that the money is coming from the insurance companies and not the individual/organization they are suing. Since insurance have deep pockets, the suing party knows they can get more than from the individual - it makes it more worth their wile. Let's face it, a lawsuit can ruin a person. But if the suing party knows the insurance company will take care of it then they don't feel as bad (in fact may get a sense of revenge against the giant insurance companies).

Conclusion
Insurance can be a wonderful thing - a safety net against the unforeseen. We must not let it influence our life, however. By being aware of the possible side-effects of having insurance, we can avoid being influenced by it. If we all lived like we didn't have insurance, the world might be a little better.