When you’ve been paying for insurance for a long time, you might start to wonder why you’ve been paying so much when there hasn’t been a claim.
When there hasn’t been a claim, some people may even believe they should get their money back. This is not how things work.
Your money is saved by insurance companies so that they can pay out claims.
“Shared risk” is the idea behind this. It is anticipated that claims payouts will eventually be lower than premiums collected.
If you don’t file a claim, you might think you’re wasting money, but knowing you’re covered if you do experience a significant loss can be priceless.
Take a look at this illustration to see how premium and claims payments differ.
