Unpacking Insurance: Necessity, Choice, and Resentment (2 of 2)
Published Date: 05/07/2024
Unpacking Insurance: Why We Resent What We Need Most
When it comes to money, few topics trigger more frustration than insurance. We don’t like paying for it, we don’t like being told we have to buy it, and we especially don’t like seeing our premiums rise year after year.
Yet, when disaster strikes—a car accident, a fire, or an unexpected illness—insurance becomes the one thing that can save us from financial ruin.
So why do we resent something that protects us? And how can we reframe that frustration into smarter financial thinking?
Insurance expert Karl Susman, host of The Insurance Hour, takes on this emotional tug-of-war head-on, explaining why our resentment toward mandatory coverage is both understandable—and misplaced.
The Psychology of Being “Forced”
At its core, resentment toward insurance comes down to a simple human truth: no one likes being forced to do anything.
Susman puts it bluntly:
“Being forced to do something is probably on my top ten list of least favorite things. It doesn’t matter if it’s good for me—I don’t want it forced on me.”
And yet, much of modern life involves mandatory insurance:
- Homeowners insurance is required if you have a mortgage.
- Auto insurance is required by law to drive.
- Health insurance is practically unavoidable unless you’re willing to risk six-figure medical bills.
These requirements aren’t arbitrary—they exist because lenders, governments, and society at large have a vested interest in minimizing financial chaos. But psychologically, the experience of being told “you must” triggers resistance.
We equate freedom with choice. And when choice is removed, even a smart decision feels like a loss of autonomy.
Insurance as a Condition of Borrowing
Take the example of buying a home.
When a lender loans you hundreds of thousands of dollars to buy property, they want to be sure their collateral—your house—is protected.
If the home burns down and there’s no insurance, they lose their investment. So they require you to carry fire insurance (and in some cases, flood insurance) for as long as you owe money on the loan.
From the homeowner’s perspective, it feels like coercion: “I have to buy this policy just because the bank says so.”
But from the lender’s view, it’s simple prudence: they’re protecting their money.
The same logic applies to car loans. When you finance a vehicle, the bank technically owns it until you pay it off. If you wreck it, they still want their balance paid—so you’re required to maintain comprehensive and collision coverage.
Sometimes, they’ll even dictate deductible limits, ensuring your financial exposure doesn’t exceed what they consider safe.
It’s not personal—it’s structural. Insurance is the price of borrowing.
Health Insurance: A Soft Mandate with Hard Consequences
Health insurance is trickier because, technically, you don’t have to buy it. But as Susman points out, not having it can be ruinous.
“If you get sick or injured, you can go to the hospital—insured or not. But that bill? You’ll still have to pay it.”
Without coverage, medical costs can spiral into bankruptcy-level debt. A single hospital stay or surgery can run tens or hundreds of thousands of dollars, especially for uninsured patients who don’t benefit from negotiated rates.
Even if you’re not legally forced to buy a policy, reality creates its own form of pressure. You either pay a premium upfront or face unpredictable, potentially devastating costs later.
Earthquake and Flood Insurance: Optional, Until It’s Not
Then there’s catastrophic insurance—coverages that aren’t required but may be essential, depending on where you live.
In California, earthquake insurance is optional, but given the state’s seismic risk, it’s one of those “you’ll wish you had it” policies. After major quakes, many homeowners without coverage find themselves turning to government assistance or low-interest disaster loans to rebuild.
Susman offers a simple thought experiment:
“Would you rather pay a few thousand dollars a year for coverage, or borrow hundreds of thousands after a loss—and pay interest on it for decades?”
The same logic applies to flood insurance. In federally designated flood zones, lenders require it. Outside those zones, it’s optional—but floods don’t respect maps.
Many California homeowners discovered this during storms and “atmospheric rivers” in recent years, when water damage devastated areas that weren’t considered high-risk.
Optional coverage can quickly become essential in hindsight.
When “Can’t Afford It” Becomes “Can’t Recover”
One of the harshest realities in insurance is that those least able to afford coverage are also least able to recover without it.
If you skip coverage to save money and disaster strikes, the financial double hit can be devastating:
- You couldn’t afford the premium,
- Now you can’t afford the loss, either.
Susman calls this the “forced twice” effect:
“You can’t afford the insurance, so you skip it. Then a loss happens, and you can’t afford to rebuild. You’re hit twice—once for the premium you didn’t pay, and again for the loss you can’t cover.”
That’s when people often turn to public disaster aid or loans—but those are limited and rarely replace what’s lost.
Insurance, by contrast, is designed to restore what you had. It’s not punishment—it’s protection against the financial cliff that follows catastrophe.
The Emotional Cost of Premium Hikes
Even when we understand the logic of insurance, the resentment doesn’t go away—especially when rates rise.
California homeowners and drivers know this all too well. Premiums have doubled or tripled in recent years, and it’s tempting to believe it’s pure greed. But in most cases, rising costs reflect higher underlying risks.
Susman explains it simply:
“If your premium goes up, that means the insurance company’s data shows your risk has gone up too. Higher risk equals higher premium—it’s not arbitrary.”
Those “big brains” (actuaries) analyze vast amounts of data—fire frequency, construction costs, weather trends, accident rates—to determine the likelihood of future losses. When risk increases across the board, rates must follow.
Still, knowing that doesn’t make the check easier to write.
The key, Susman says, is to separate emotion from economics.
Yes, the premium increase hurts. But it also signals that your property or area has become more vulnerable—information that can help you make proactive choices to reduce risk or seek mitigation discounts.
When the Loan Is Gone, the Risk Isn’t
One of the most counterintuitive insights from Susman’s discussion is this: the time people most often drop insurance is the moment they finally own their home outright.
After 30 years of paying premiums, the homeowner celebrates that the mortgage is gone—and with it, the lender’s requirement for insurance.
Their instinct is to stop paying for coverage, reasoning that since no one is “forcing” them anymore, they can finally pocket the savings.
“That’s exactly backwards,” Susman cautions. “Now that your home is 100% yours, every dollar of its value is your asset. Why stop protecting it now?”
When the home was mortgaged, losing it was partly the bank’s problem. Now, it’s entirely yours. Without insurance, a single fire or flood could erase decades of equity.
The emotional satisfaction of shedding a “forced” obligation can cloud financial judgment. The smarter move is to view insurance not as a requirement—but as a tool for asset preservation.
Resentment vs. Reality: The Rational Reframe
Insurance resentment isn’t irrational—it’s human. It’s the friction between emotion (I don’t want to be told what to do) and logic (I need to protect what I have).
Susman suggests reframing how we think about the transaction:
- Don’t see insurance as a tax or penalty.
- See it as a membership fee in a financial safety network.
- Recognize that high premiums often reflect high risk, not unfair pricing.
- Understand that being “forced” to buy insurance often aligns with your own long-term financial interest.
“Just because something is forced doesn’t mean it’s bad,” Susman emphasizes. “Sometimes the smartest choices are the ones that also happen to be required.”
Key Takeaways
- Mandatory doesn’t mean unnecessary.
Lenders and regulators require coverage because it protects both them and you. - Optional insurance often makes sense.
Earthquake, flood, or umbrella policies may feel like overkill—until you need them. - Premium increases are data-driven.
Rising rates often reflect real-world risk changes, not just corporate greed. - Don’t drop coverage when you pay off your loan.
That’s when your asset value—and exposure—are at their highest. - Separate emotion from logic.
Feeling “forced” is unpleasant, but it doesn’t make the underlying decision wrong.
Final Thoughts: Freedom Through Protection
Insurance may feel like an imposed burden, but in truth, it’s a tool of financial freedom. It gives you the ability to recover, rebuild, and move forward—without relying on loans, charity, or luck.
So, the next time you grumble about being “forced” to buy insurance, remember: it’s not just about compliance. It’s about control—control over your future, your assets, and your peace of mind.
“The minute you stop being forced,” Susman says, “that’s when you should want it most.”
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