As Ron White Says: You Can't Fix Stupid. You Can't Insure It Either

One of comedian Ron White's funny punch lines is:

You can't fix stupid!

Insurance can help people recover from many things including some things that involved poor choices. But insurance doesn't cover everything and stupidity isn't one of them.

There are specialty insurance companies out there that will write coverage for things I wouldn't even imagine possible. But stupidity isn't one of them. 

One of the fundamentals of insurance is Risks Must Be Insurable. Stupidity isn't one of them.

To help determine if a Risk is Insurable use this mnemonic:

CANHAM

 Calculable - Someone must be able to Calculate the risk involved

Affordable - The premium must be Affordable, especially compared to the potential loss

Non Catastrophic - This is from the insurance company perspective. Losses that could result in billions of dollars of loss from a single incident or is too difficult to predict. For example War is considered Catastrophic and therefore is not insurable (from an insurance company).

Homogenous Exposure Units - read those words carefully. What that means is there must be a sufficiently large enough group of similar risks to be able to determine what the likely hood of a loss is to any particular unit. Another way of thinking about this is called the Law of Large Numbers or the Mathematical Principle of Probability

Accidental - The loss must be Accidental in nature. Intentional acts are excluded.

Measurable - the actual loss must be Measurable, usually in dollars.

 Now that we have this list we can see for ourselves that stupidity just isn't one of the categories.

Mr. White, you are absolutely correct. Insurance Can't Fix Stupid.

Have a great holiday weekend but don't get to close to the squirrel; you might catch it's stupid.

Rick Trowe