When Using a Product Makes It Cost More
Some stuff costs more after you use it. I’m talking about insurance. Think about it. Car 
insurance and homeowners insurance are the only two products I can think of that cost more when you use them. Actually, come to think of it, it’s a good example of a product where your price increases as others use it, too.
What’s the take-away? Only file a claim if absolutely necessary. And only insure what you cannot afford to replace yourself (Money and Such has a nice post about insuring properly).
A personal story.
Twice now we’ve had a flood since we finished our basement. Once was rain-induced; once was because of a split pipe. Neither time did we file an insurance claim. Why? For two reasons. One, with our $1,000 deductible, insurance would have only paid out about $1,500 of the bill. Two, because it’s very likely they would have either raised our rates considerably or dropped us altogether. Using our homeowners insurance would have made our homeowners insurance cost more.
Now consider what many homeowners like my parents are facing in Florida. Because of the several storms they’ve suffered through in the last year or two, my parents’ insurance company is dropping their coverage. Lots of Floridians are facing the same thing. The crappy part is, my parents weren’t hit particularly hard and never filed a claim. But lots of other people did.
All this is putting lots of strain on so-called ‘insurers of last resort.’ These quasi-governmental organizations are where people go when no one else will offer them insurance. That spreads the risk to all the citizens of the state.
Seems fair, huh?
You get to live on the beach and I pay for part of your insurance.
insurance
