If you wear underwear, you should buy insurance.

I lost a bag with my camera inside over this past weekend. I left it on the seat in the train as Clar and I were getting off it with all our luggage and fumbling to get to the airport on time. Thank God my passport wasn't inside! But sadly I lost my camera with tons of awesome photos (and a couple of videos) in it. The moment I realised I didn't have it I ran back to the light rail at full speed (ok I slowed down at the end cuz I was tired) but it was gone from the train and the security guy hadn't seen anything... I take it someone just took the bag. Sad. :(

Well. Whoever it was also got a bag of baguette with butter in it so I hope they were hungry.

The small saving grace is that I'd bought travel insurance in SIngapore before I came on this trip. I've never bought travel insurance before, but the subject naturally came up when I talked to colleagues about my trip given that a) I'm travelling and b) I work in insurance regulation. The natural part of my brain would normally think, ok I'm paying the insurance company like $100, and most likely I'll get nothing out of it. I could make a really big claim, but most likely nothing will go wrong and I would have wasted $100.

And now that I'm about to make a claim with Aviva, I see the folly of that reasoning in a way that I hadn't before.

The theory to explain it is that you do get something out of it even if you don't make a claim. You're covering uncertainty. You're giving the insurance company money in exchange for the promise that if anything does go wrong, the insurance company will cover it (or most of it). And they really will...

But still, the concept often eludes us. And now I'm discovering there's another side to the argument. Many people (like me before I bought this travel insurance) view insurance as a gamble. I'm paying, say, $80, and there's a small chance that I make a lot of money out of it (like if I make a $5000 claim); else I lose the $80 and just make my trip more expensive, and why would I want to do that? I was already fretting over the $50 difference in airfare between Cathay Pacific and ANA! The reason why that argument doesn't work is that any time you get to make a $5000 claim, it's because something bad has happened (ie. you lost something worth $5000... or probably more like $4500 since people tend to exaggerate the value of their lost items when making claims). So you never actually earn anything. You just... lose less. (And there's also the things that are irreplaceable, like the photos in my camera or the pain or grief (however momentary or dramatic) of losing something you liked.)

I think we tend to forget that part of it, or at least I do; that any 'gain' you make from insurance is directly linked to a loss event, so you're not actually gaining anything at all. If you forget that, insurance becomes a stressful decision of risking "wasting your money" if you don't make a claim and really makes no sense at all, because if you're like most people you'd rather avoid the uncertainty of 'wasting your money' (unless you like the lottery... in which case you'd probably just go buy the lottery). The truth is, though, even if you make a claim, you're not really going to be happy that you're earning something... Like in my case, I don't feel like i'm earning however much I'll get to claim from Aviva (maybe $400-$500 or so?). I already lost a camera; I'm just marginally glad I don't have to fork out another $500 or so to replace it.

Some people call it 'peace of mind'. I don't really like that term, because most people obtain 'peace of mind' by just not thinking about the risk in the first place. Which, I suspect, is why people tend to hate insurance agents - because they claim to be selling you peace of mind but they do it by making you more worried about something you weren't worried about in the first place, and then make you feel bad for not worrying about it earlier. If your goal is peace, then you're better off never thinking about risk or insurance. Instead, I think insurance a little more like covering your ass... like wearing underwear. If you notice it, you feel more comfortable at best. If you don't, then you just forget its there, and that's fine. But either way, when something bad happens that makes you need it, it sure doesn't stop the situation from being unpleasant... but it helps to make things a little better.

As long as it fits.