[compiler-guy]

Insurance doesn't exactly cancel that. Maybe in a theoretical world, perhaps.

For example, I have a decently-sized life-insurance policy. If buying insurance "exactly covered that", I would be indifferent to whether I lived or died. But I'm not. And I can't think of a policy-size that would make me so. Money is an imperfect substitute.

Less dramatically, I have really good auto coverage. The car itself is nothing special, and the coverage I have would make me whole (minus a very small deductible) But I am very much not indifferent to replacing the car with money, and it would take way more than the deductible to change my mind on that.

The hassle-value alone would go way over. And hassle-value is usually not insurable.

Insurance fraud is absolutely a thing--but the insurance company still wants you to prefer that the event doesn't happen. That it doesn't work perfectly doesn't really invalidate the point.