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Bobbie Sage

How Do Insurance Companies Pay Out All that Money?

By April 17, 2008

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A common question I often get from my readers is concerning how insurance companies are able to pay out such large sums when disasters strike. Take for instance recent storms in Mississippi. According to the www.clarionledger.com, "Claims from Friday's storms are expected to exceed $50 million."

And we hear about these disaster insurance claims on a regular basis so sometimes is it hard to understand how the insurance companies can pay out all this money. The good news is that insurance companies are so large now, and most cover all areas of the U.S., that the claims are somewhat spread out among all of us. So, yes, we are all paying premiums to pay each others claims. This may seem unfair to some but when it is your turn you may think differently. But, that does not mean that everyone pays equally. In areas that are prone to disaster and have a history of more claims, they do pay proportionately more for their insurance and the areas of Mississippi that were recently hit will more than likely see their rates rise too.

Comments
April 17, 2008 at 9:39 pm
(1) Jon says:

This might be silly question, but do Insurance companies take out there own insurance?

April 22, 2008 at 7:50 am
(2) Angie says:

I know people wonder that about auto insurance, too. Imagine, every car owner in the US is required by law to pay for car insurance – what percentage of that population actually makes a claim each year? A comparitively low number. That’s why the insurance industy is one of the most profitable in the world.

April 23, 2008 at 5:48 am
(3) Robin says:

So much of the insurance business is a freakin’ scam. You never want to make a claim, especially with your home, unless it’s the Big One…a fire, flood, mold and then if you are taken care of, your rates will skyrocket or be dropped like a hot potato, even if you have been paying your premiums for 30yrs.
With auto, you better have a high amount for “unisured/underinsured” driver, because even though it’s the law to have auto ins., sooooo many people out there don’t because it costs so damn much!

March 28, 2011 at 3:25 pm
(4) Marge says:

Robin, you said “even though itís the law to have auto ins., sooooo many people out there donít because it costs so damn much”……but where I live and as far as i know most parts of the US, you can not register a car and obtain plates without auto insurance…So these people you speak of, are they riding around with phony plates? besides liability insurance really does not cost too much at about $500/yr… wonder more about homeowner insurance, it seems to more unfair than anything.

April 2, 2014 at 9:15 pm
(5) online insurance says:

With thanks, A good amount of postings.

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