Hi Maurice,
Lets tackle one thing at a time. My brain hurts.
<I drive my car without insurance>
There are two types of insurance-ones you can do without and ones where the odds are against you. Since I don't work, I am not part of a company plan for Dental insurance because-as you rightly point out, Dental premiums contain huge overheads and over time, as long as you are not totally careless with your teeth (and this is something quite within one's control) you can avoid huge bills. Some major issues will even be considered Medical, not Dental, and thus be covered by Medical insurance.
So, we save money into a fund that goes to Dental work and we're ahead a little.
Car insurance is the 'catastrophic' type of coverage you need as, although the odds favor you, the size of the event, in financial terms, is not insignificant. Types of catastrophic insurance in this area are homeowners insurance (required by the mortagage company if you have a mortgage), disability insurance, life insurance and car insurance (required by lease companies).
While you may be an excellent driver all that separates you from oncoming traffic is a painted line in the road in many cases, and all it takes is a wasp to fly in in the window of an oncoming car, or another event like a heart attack, to put the oncoming car on a course of unavoidable impact.
You could be the driver (god forbid) with an event that pushes your car across that line into oncoming traffic. In the US, if you cause a person to be paraplegic, the bill would be in the millions. So today, as I was watching the news on Hurricane Jeanne, I ran some numbers for you.
We pay $1800 p.a. for a insurance on a newish minivan and an older sedan with maximum ($500k) coverage and minimum ($100) deductibles. I think that is cheap. Above, say, $500k homeowners insurance ($800 p.a.) kicks in for the next $500k then our umbrella insurance ($300 p.a.) for $5m.
That catastrophic insurance bill is $2900 p.a. and would pay out on claims by a paraplegic. Lets make it $5000, and say you invest at 30% return net of tax for 50 years (ie you drive from age 20 to 70 with no insurance, and somehow find a superb investment that sustains a high return for 50 years). My TI BAII-Plus gives me a FV of $487k.
I don't like those numbers Maurice. It is not worth it, and I'm happy I have uninsured motorist coverage so we would not be wiped out in a nasty accident. The other party, if they were uninsured, could be wiped out.
If, instead of saying "I invest the savings" you said "I have millions and can afford this risk", I'd nickname you Maurice Buffet, Warren's long lost son, and would agree with you.
That does not appear to be the case.
David |
