Why People Don’t Buy Insurance


It’s often a puzzle to me, as an insurance agent for many years. Why don’t people buy sensible protection? Why not “self-insure” large risks instead of purchasing affordable protection? Here are my top 10 reasons people don’t purchase insurance.

1. It is not necessary.

Although you may be required to purchase insurance by a bank loan, business contract or state auto liability requirement, most people have the option of choosing whether they want it. You don’t have to purchase higher auto liability limits than the minimum requirements. Also, you can protect your assets beyond what is required by the bank lien requirement or protect your family with Life Insurance. Many people aren’t comfortable buying anything they don’t need, regardless of its value.

2. Some don’t believe in insurance

Sometimes, a client will only purchase the coverage they need and only then begrudgingly. They don’t believe that insurance is worth anything and view any money spent on it as a waste. They will not be able to discuss their risks and how insurance can help them.

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3. Insurance does not value cultural heritage

There is a cultural component to purchasing insurance, which I have seen. Insurance is a product that comes from the capitalist, sophisticated economies of North America and Europe. If you’re not part of this group, insurance will be less valuable to you. I have found that those of Asian descent are more focused on purchasing coverage. My office serves many Mexican-Americans of first, second, and third generation in Austin, Texas. We can see how each generation changes their insurance attitudes.

My experience shows that the reverse is true. People with English heritage or English education tend to be more focused on potential lawsuit risks. They often purchase greater protection, including increased liability coverage, than the average client. Because of the long history insurance in England, this makes sense.

4. Uninformed on Financial Risk

Many people who purchase insurance don’t understand their financial risks or have no experience in the process. One-third of Texas residents who are not insured for healthcare expenses do not have sufficient income to purchase insurance, but they choose to stay uncovered. An injury or illness that is severe can result in a significant financial loss. Their decision to not buy at least a catastrophe health plan demonstrates a lack of awareness of the potential risks.

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5. Neglecting known risks

This is the self-insurance plan that won’t happen. It’s something I see all the time. There are clearly understood risks that can economically be insured. But the risk is often ignored.

6. Misunderstands Risks

Everyday, people buy coverage “backwards”. A low deductible for auto collision can be purchased, but it is not important to consider higher liability limits. Understanding your risk will help you to understand the financial consequences of a lawsuit following a bad accident. It is negligible to pay a couple hundred dollars more for your collision deductible.

Another example is purchasing Accident Protection instead of Life Insurance. The reality is that you are four times as likely to die from an illness than an accident. Many people mistakenly believe that accidents are more common.

7. Intangible Product

Insurance is more than a policy document. Insurance is not an automobile or a box of chocolates, but a conditional contract that promises future financial benefits.

8. Confused About Insurance Choices

This is a problem that’s all too common. This is a common problem. There are too many options and not enough information. Uncertain people won’t be able to afford the protection they need.

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9. Unfavorable attitude toward insurance companies

People sometimes don’t know they need protection but aren’t sure if the insurance company will pay all claims. Perhaps they’ve had a bad experience with insurance or don’t know how to handle a claim.

10. Mangel of funds

Everyone would have wonderful insurance if it was free. It is a fact that insurance does not come cheap and you must choose the coverage you want.

Ross Gray Insurance Agency, David W. Crump

I am a specialist in the sales and service of personal, business and health insurance. My career began in the retail of Toys, Hobbies, and Games. I graduated from Texas Tech University (BBA Marketing). After selling my stake in a Dallas-area Game Store Chain, thirteen years ago, I switched careers to insurance. My hobbies include gardening, music (bass vocal) and stock investing.