Even most insurance agents incorrectly think that insurance is a way to transfer risk to someone else (namely, an insurance company). Not true.
Insurance is instead merely a way to finance risk. If you cause a really bad accident, you still bear the risk of the lawsuit and the judgment, you just use insurance to help you pay for it. If you don't have enough insurance, guess who makes up the difference...you! That's why the risk is not actually transferred through insurance, only financed.
The point of this clarification is to help you choose what coverages you want and how much you want. If I want to be prepared to pay for $1,000,000 worth of my mistakes, for example, I could try and get a line of credit through a bank, get 4 jobs, or buy an umbrella for $200.
Conversely, there are lots of examples where using insurance dollars to pay for certain losses would be a terrible financial deal for you. If you want to talk about why insurance should often be your last option, I'll be happy to do so.
So keep in mind that insurance is a financing tool and nothing else. It fits great in some places and terribly in others. Your insurance portfolio should take this into consideration as it gets designed specifically for you.
