Insurance works like this. You tell the insurer what you want them to cover, and they tell you how much it will cost per month. You then pay the agreed amount each month. If nothing goes wrong, the insurer keeps all your money. If something the policy covers goes wrong, they pay you, as agreed in your policy.
Insurance is a gamble. Unlike a casino, you are not betting on the chance of winning big. You are gambling on the possibility that you might lose big if you do not take out insurance and something goes wrong. Therefore you choose to lose small by paying a set amount each month.
Imagine going into a casino, putting your money on seven red, and the ball lands on seven red. Only instead of paying out, the casino makes excuses. For example:
- They are not going to pay out because there was a tremor, and it affected how the ball fell
- They are too busy to deal with you right now and will get around to it sometime soon
- They are only going to pay some of the amount agreed
- They do not have to pay out because a clause they added after you signed says that the agreed rules do not apply on Saturdays when it is a full moon
Insurance companies must comply with the agreed-to rules
As with the gambling industry, the house, or in this case the insurer, always comes out on top overall. For every person they need to pay, there are many more who they do not. That is fine, provided they do not break the rules of the game to avoid paying when they should. When that happens, you might need to bring a bad faith claim.