How Does Insurance Work?

Insurance, it’s the annoying necessity that we all pay for to make sure we don’t end up in massive amounts of debt if our house burns down, if we crash our car, or if something tragic happens.

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Insurance helps us maintain peace of mind, knowing that even if something bad does happen, someone else is going to pay for what it costs to fix it. Though, to an untrained eye, this can be a little perplexing. I mean, if you pay $200 a month for home insurance and after only 6 months your home burns down, the insurance company will buy you a new home, likely in the manner of hundreds of thousands of dollars. But, you would’ve only given them $1200. Why would they do that? That’s the power of insurance, baby.

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