Optional locust coverage

In the midst of this pandemic I’ve been reviewing household expenses, including the various types of insurance we carry. Much of it is standard stuff such as homeowner insurance for fire, theft and liability, and auto coverage for our one car; also, some additional umbrella and personal property coverage, plus long-term care insurance we put in place twenty years ago. I’m wondering just how far this insurance thing should go.

Between wildfires and COVID-19, reality is looking pretty shaky at the moment, and hearing about huge swarms of locusts in Africa is not helping me rest any easier. Perhaps I should consider looking into a range of Biblical end-of-days type policies covering, you know, boils, frogs and vermin. 

My impression of the insurance industry is that every policy simply has its price, no matter how unlikely an occurrence may be. In fact, the more unlikely an occurrence, the greater the likelihood that a policy can be obtained.

I confirmed my impression in the 1980s, while I was in the greeting card business. I was approached by a sober-looking gentleman who had developed a line of novelty cards which conferred coverage for precisely the sort of unlikely occurrence  I’m referring to, including a policy that paid the card holder $10,000 if abducted by an alien UFO. Producing paperwork from the Chubb Insurance Company verifying the legitimacy of his idea, he explained that for a mere two dollars, the purchase of one card conferred the benefits described, as long as the card purchaser could prove his or her claim of being abducted.

Therein, as is said, lies the rub; the evidence required by the policy to gain payment was so difficult to produce that the possibility of getting paid by Chubb was all but impossible. Providing a type of metal hitherto unknown to science, for example, would suffice if properly verified; as I said, possible but unlikely. Nonetheless, Chubb’s paperwork checked out, and the alien UFO abduction policy was legit. We took a gamble, printed a run and sent inventory to our customers.

The cards were a flop, of course. Although the policy was legit and was explained on the back of the card, selling it was impractical; the idea was so crazy that there was no way to explain it to each individual card buyer. Ultimately, the value of that lesson was that when it comes to insurance, all things are possible if one is willing to pay the price.

This brings me back to optional locust coverage, or for that matter, boils. These terrible things could happen, but the likelihood is low and the cost of obtaining coverage would be high. It raises other mishaps that might pay off, though, like medical expenses associated with drinking laundry bleach to cure a case of COVID-19, as our imaginative president proposed. If you can conceive it, there’s an insurance company eager to take your money and pay you, or more likely your beneficiaries, if it happens.

Insurance is generally about betting against your self, a sort of personal hedge fund, if you will; it’s all about probabilities. Life insurance is the best example; the older you get the more expensive it becomes as the probability of death increases. The insurance companies calculate probabilities and costs so that the odds are in their favor, just like the Vegas gambling casinos.

I’m wishing I’d bought that “killed by a pandemic” policy. Damn.

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