re: Does insurance violate the basic laws of economics?

quote:

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No, “owning” things people can’t afford is what creates the need for insurance.

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that's overly simplistic and not necessarily a blanket truth.

I own my house (or will own it outright in a little over a year from now).
my house took significant damage from Hurricane Ida.

If I pay for all of those damages out of pocket (which I ended up doing thanks to my homeowner's insurance company filing bankruptcy in Ida's wake), then you have to tack that $70k on to what I paid for the house.

but the value of my house doesn't increase by $70k despite me spending that on it.

meaning I just added $70k to the cost of my house while the value remained stagnant.

So if I sell it, I take a $70k hit (with some movement due to market at time of sale obviously).

Had I sold it "as is" prior to repairs, then the value is nowhere near what I paid for it and I lose big there.

I can afford the house.
I paid to fix it.

throwing away $70,000 isn't a very wise financial decision whether you can afford it or not.