Olivia Barr, Chapter 7, Question 7

After reading this chapter I have a greater understanding of how people fall victim to preposterous scams that promise high returns on very risky investments. Also, I have a broadened understanding for why things like insurance can justify being so expensive. Car insurance can be very expensive but that is because it is (most often) required by law, and it is also a reasonable and predictable cost to pay to protect yourself from (often unreasonably priced) unpredictable occurrences like when you rear end someone in an intersection going through a green light, and the person who intentionally caused the accident turns around and tries to file suit for damages. Insurance protects you from chance occurrences, that can not be predicted, but the price of protecting yourself is relatively low to the potential cost of the chance occurrence. That actually did happen to me, which is how this chapter relates to me. Because my parents pay for my insurance, we did not have to go through the court system, because our insurance would have settled for the cost of the damages. Although I understood how insurance worked, I never really had a clear description given to me, my understanding was mostly based on deductive reasoning (if I pay every month but nothing happens, then the money I've been paying is used to insure that when something bad does happen, I will be protected.) Before reading this I also didn't know that you could insure things other than health care, homes, vehicles, and kidnappings. Yes, kidnapping insurance is a real thing.