Which offers the best value for money?

If the house is an investment property, it may have earning power of $4 000 000 also. In fact, it's earning power may be much more than the earning power of the individual. The question is worded to favour option c.

Hi Glebe

The home I refer to is where you live and does not generate income.

The earning power of an investment property can be substantial but how many investors would have insurance - almost everyone?

However, when it comes to the earning power of an individual, how many people would have insurance - very few?

Cheers

Dear oh dear. To calculate the "best value" requires knowing the probability of a claim for each scenario. Excluding that factor is really just asking people to admire the nice shiny bauble.

In reality, the "value" of each is probably about the same, as you can be damn sure the insurance companies have calculated the probability of various sized claims.

But if the question is which has the most appeal, then for many readers of this website the answer will be "1". Many people can self-insure when it comes to their car, even though prudence will dictate most probably will not self-insure. Self-insuring your house is quite a different matter. And if your income is the result of your investments and not your personal extertion, then insuring it is unnecessary (quick, find some wood to touch!).

This is exactly what I am saying - but why?

The income referred to is not from investments but personal exertion.

Cheers

The "why" is explained in the rest of the paragraph.

A car is self-insurable. A house rarely is. That takes care of "2". Many readers of this forum do not rely on exertion-based income. That takes care of "3". There's your "why" !

Some readers perhaps but most readers would rely on personal exertion for their income requirements.

Therefore, securing your earning power is very important for most people.

What if you side swipe a Ferrari and you have no insurance? Big trouble!

Cheers