I break things infrequently enough that it's cheaper to keep the money I would have spent on protection plans in my bank account, and then just pay out of pocket when I do.
Paying protection to the mob is a good idea in general. Even if you're generally careful, you never know when a leg will break because of something that was your fault.
You should insure things you can't afford to self insure for. Life, Home, maybe car.
You should not pay insurance for all the tech crap we buy. You're just losing money on average. Only way to win with this type of insurance is to be unlucky.
But this is exactly it. Insurance is about relative luck and hedging against being unlucky. It’s all a matter of risk/reward. It’s an ex ante cost.
Much history of costs/return in various domains show the power of ex ante investments vs ex post restitution.
If I spend $1200 on a high end phone, and it costs $300 to replace a screen, or $30 with insurance, after a $200 one time premium for 2 years… it depends how often you break your screen on average. If it’s at least once every 2 years, then yes, it’s worth it. And then that’s not even counting other things that may go wrong.
Same logic for extended car warranties. Sometimes they pay for themselves quickly, sometimes not.
Which is nonsense, the whole point of insurance (and why most people should purchase insurance) is to pool risk so to cover high costs that most can’t afford for themselves.
GP is saying that insurance makes sense for things too expensive to replace on your own, like houses and cars, but not cheaper things like consumer electronics.
“Insurance is never a good idea in general” is a bit too extreme. Not all hedges have to be about protecting you from a wipeout. It’s about opportunity cost for the premium vs the risk (magnitude x probability).