Is Insurance a Bad Deal if I don't place a claim?

I have paid a lot of money to insurance companies over the years. I have not received that much back because I haven't had any major claims. Is insurance a bad deal?

Insurance works by spreading the cost of claims for a group of people out over the group. If, on average, three out of every thousand households have a major claim such as a house fire each year, the insurance company needs to collect the insurance premiums from those thousand households in order to pay out for the three of them that have a fire. The other 997 households paid insurance premiums while receiving nothing in return except for the peace of mind of knowing they won't lose everything if they are one of the three unlucky ones.

In this situation, three households were saved from what could have been an even bigger tragedy. It's hard enough as it is to recover from a major event like this. Insurance helps people in a big way when they find themselves in this situation.

The numbers sometimes come out with the insurer profiting, and sometimes the insurer loses money. The fact that many insurers are available to compete in the marketplace is an advantage to consumers because the insurers are incentivized to set rates competitively to have an attractive offer. Of couse, in reality, there are many more types of claims that can occur besides a fire, and the policies are designed to offer consumers a variety of choices when it comes to what coverages are included and the amounts of protection.