How does on-demand insurance company Trov prevent insurance fraud or high prices?
Anything can be insured for the right price... this product is offered for devices at higher risk, which would be logical purpose of owner needing coverage for a specific length of time. Typically this would be a type of adverse selection, but TROV targets customers that typically would not require insurance on their device, but as you said they may be traveling and putting their devices at added risk. Like all insurance companies, their Loss Ratio (Losses/Premiums) will depend on the law of large numbers and spread of risk. As we know, the majority of the time trips are taken, electronics make it back home safely. Like many tech companies, their advantage over conventional insurers is likely low overhead costs. Being on a mobile platform, they likely have a fraction of the claims handling cost of a conventional insurer. Payments are likely automated by linking bank accounts, so there is little transaction cost burden on this company. In short, their operation is likely highly automated with few staff and low expenses, allowing them to take on a higher loss ratio than conventional insurers and still leave room for profit. Without having ever used this service, I can tell you they likely price in anticipated fraud, the same way Walmart prices in inventory loss (shoplifting) into their prices. I personally would share your concern that it'd be difficult to combat fraud on such a platform, especially with no claims adjusters whom are typically the first line of defense. Again, I answer this never having used their service, but I work as an Analyst at a large insurer and these would be my assumptions based on what I know of TROV. For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment.  Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday. There is not necessarily a need to prevent what you describe - 'turning insurance on before high risk situations'. They just need to calculate the premiums accordingly. For example, if an insurance needs to take 50$/year for insuring your house against flood, and a flood happens in average every 10 years, if you just insure the two weeks in the ten years where heavy rain is predicted, you might pay 500$ for the two weeks. The total is the same for the insurance - they get 500$, and you get insurance for the dangerous period. In the contrary; if a flooding (unexpectedly) happens outside your two weeks, they are out. From the home owners view, 500$ for two weeks when heavy rains and floods are expected, and nothing otherwise sounds pretty good, compared to 50$ every year. It is the same of course, but psychology works that way. I am not familiar with the startup you mentioned, but in general there are three approaches to avoid losing money in insurance business: review before policy is issued (underwriting) review before claim is paid (claims handling) setting high enough rates to cover underwriting losses The fact that Trov is customer friendly / lax (make your choice of term) when issuing a policy says nothing about their rates or claims payment. It is even possible they are building a portfolio for sale, and do not really care about the claims performance (policies are sold / customers acquired now, and it takes a time for claims to arrive).
"You have to realize that you're trying to have your cake and eat it too.  You want to do things ""unofficially"" by not reporting the accident (to insurance companies and/or police), but you want to do it ""officially"" in that you want to have legal recourse if they try to hit you up for more money.  The only way to have it both ways is to trust the other person. From a financial perspective, ultimately you need to decide if the monetary cost of your raised insurance premiums, etc., outweighs the cost of whatever money the other party in the accident will try to squeeze out of you (factoring in the likelihood that they will do so).  You also would need to factor in the likelihood that, rather than trying to scam you, they'll pursue legal action against you. In short, from a purely monetary perspective, if the legitimate cost of repairs is $700 and the cost to you of doing it by the book via insurance is $2000, you should be willing to be scammed for up to $1300, because you'll still come out ahead.  Of course, there are psychological considerations, like whether someone unscrupulous enough to scam you will stop at $1300.  But those numbers are the baseline for whatever outcome calculations you want to do. On the more qualitative side of things, it is possible they're trying to scam you, but also possible they're just trying to hustle you into doing everything quickly without thinking about it.  They may not be trying to gouge you monetarily, they just want to pressure you so they get their money.  I agree with other answerers here that the ideal way would be for them to send you an actual bill after repairs are complete.  However, you could ask them to send you a written copy of the repair shop estimate, along with a written letter in which they state that they will consider payment of that amount to resolve the issue and won't pursue you further.  The legal strength of that is dubious, but at least you have some documentation that you didn't just try to stiff them.  If they won't give you some form of written documentation, I would read that as a red flag, bite the bullet, and contact your insurance company." "There are (at least) two problems with the argument suggested in the OP. First, the ability to cover the cost, doesn't mean willingness, ease, or no major side effects of doing so. Second is the mitigation of ""upside risk"". It might be true that the most usual loss is small and manageable, but 10% of incidents could be considerably larger and 1% may be very much larger - without limit.  Your own attitude to risk and loss will determine how much these are seen as unlikely+ignore, or worst case situation+avoid." My dad runs an AV labor company (trade show setups etc) and his insurance company called him as they were finalizing his workers comp. They asked when he was submitting all of his employees drug screenings. My dad laughed at them and said he would not be submitting any. They told him his premium would be higher to which my dad replied that if he drug tested, he would have 4 people working for him and thus wouldn't even have a business - just send the bill. "The PMI premium you pay is dependent on a very large number of variables in the finance market. Mortgage insurance, at the higher inter-bank levels, is handled with credit default swaps (the ones you've been hearing about on the news for the past 4 years), where the lender bundles a block of mortgages, takes them to a guarantor like AIG or Freddie Mac, and says ""We bet you that these mortgages will default this month, because the homeowners have little or no equity to deter them; if we win, you agree to swap these debts for their current face value"". The lender examines the mortgages, calculates the odds of a default severe enough that the bank would come to collect, using complex environmental heuristics, multiplies by the value of the potential payout, adds a little for their trouble, and says ""well, we'll take that bet if you pay us $X"". The bank takes the deal, then divvies up that cost among the mortgages and bills the homeowner for their share. The amount you pay for PMI can therefore depend on pretty much anything in this entire process; the exact outstanding amount and equity status of your loan, the similar status of other mortgages your loan will be bundled with for assessment, who the guarantor is, what exact heuristic they use to come up with an amount, the weighting the bank uses to divvy it up, and how much they actually pass on to you.  Most of these same variables are at play when you shop for actual insurance for your car or home, which is why your premiums will go up or down with the same insurer and why someone else always seems to have a better deal (pretty much every insurer can say that ""drivers who switched saved an average of $X""; of course they did, otherwise they wouldn't have switched). Thinking of it in those terms, it's easy to see how this number can vary widely based on numbers you can't see. You're free to say no, and it will cost you nothing right up until you sign something that says you agree to be penalized for saying no. While the overall amount of the payments does decrease, the PMI has gone up, and that's money you'll never see again just like interest (except you can deduct interest; not PMI). I would do the tax math; find out how much you could deduct over the next year in interest on your current loan, then on their proposed terms, and what the resulting tax bills will be from both. You may save monthly only to pay more than you saved to Uncle Sam at the end of the year. You're also free to negotiate. The worst they can do is stay firm on their offer, but they may take a second look and say ""you're right, that PMI is rather high, we'll try again and see if we can do better"". They can either negotiate with their insurer, or they can eat some of the PMI cost that they're currently passing on to you." As someone who has worked for both an insurance carrier and an insurance agent, the reason people buy insurance is two fold: to spread risk out, and to get the benefits (when applicable) of approaching risk as a group. What you are really doing when you buy insurance is you are buying in to a large group of people who are sharing risk.  You put money in that will help people when they take a loss, and in exchange get a promise of having your losses covered.  There is an administrative fee taken by the company that runs the group in order to cover their costs of doing business and their profits that they get for running the group well (or losses they take if they run it poorly.) Some insurances are for profit, some are non-profit; all work on the principle of spreading risk around though and taking risk as a larger group. So let's take a closer look at each of the advantages you get from participating in insurance.  The biggest and most obvious is the protection from catastrophic loss.  Yes, you could self-insure with a group size of one, by saving your money and having no overhead (other than your time and the time value of your money) but that has a cost in itself and also doesn't cover you against risk up front if you aren't already independently wealthy.  A run of bad luck could wipe you out entirely since you don't have a large group to spread the risk around.  The same thing can still happen to insurance companies as well when the group as a whole takes major losses, but it's less likely to occur because there are more rare things that have to go wrong.  You pay an administrative overhead for the group to be run for you, but you have less exposure to your own risks in exchange for a small premium. Another significant but less visible advantage is the benefit of being part of a large group.  Insurance companies represent a large group of people and lots of business, so they can get better rates on dealing with recovering from losses.  They can negotiate for better health care rates or better repair rates or cheaper replacement parts.  This can potentially save more than the administrative overhead and profit that they take off the top, even when compared to self-insuring. There is an element of gambling to it, but there are also very real financial benefits to having predictable costs.  The value of that predictability (and the lesser need for liquid assets) is what makes insurance worth it for many people.  The value of this group benefit does decrease a lot as the value of the insurance coverage (the amount it pays out) decreases.  Insurance for minor losses has a much smaller impact on liquidity and is much easier to self insure.  Cheaper items that have insurance also tend to be high risk items, so the costs tend to be very high relative to the amount of protection.  If you are financially able, it may make more sense to self-insure in these cases, particularly if you tend to be more cautious.  It may make sense for those who are more prone to accidents with their devices to buy insurance, but this selection bias also drives the cost up further.  Generally, the reason to buy insurance on something like a cellphone is because you expect you will break it.  You are going to end up paying for an entire additional phone over time anyway and most such policies stop paying out after the first replacement anyway. The reason why people buy the coverage anyway, even when it really isn't in their best interest is due to two factors: being risk averse, as base64 pointed out, and also being generally bad at dealing with large numbers.  On the risk averse side, they think of how much they are spending on the item (even if it is less compared to large items like cars or houses) and don't want to lose that.  On the bad at dealing with large numbers side, they don't think about the overall cost of the coverage and don't read the fine print as to what they are actually getting coverage for.  (This is the same reason that you always see prices one cent under the dollar.)   People often don't really subconsciously get that they are paying more even if they would be able to eat the loss, so they pay what feels like a small amount to offset a large risk.  The risk of loss is a higher fear than the known small, easy payment that keeps the risk away and the overall value proposition isn't even considered. That is exactly how the insurance companies work. What you described here falls under P/L. If you are buying insurances you are betting that you might get sick. Same as when insurance companies sells you insurance they are betting that you won't get sick. No one will sell you insurance if you are oreads sick. That's why you have government to take of you. Of course there are pools of healthy and unhealthy people. The healthier the better for the company. No one is in it to loose money. Answer all of their questions honestly and as accurately as you can, but don't stress too much about it.  If you don't know the answer to something, ask the insurance agent what it means; that's what they're there for.  (If you're doing this online, email the support, or the 'live chat' feature many of them have.  Or, don't do it online, if you feel better having an agent in person; nowadays, most of the major insurers are similar on price so it's not a massive savings to skip the agent.) As far as whether it's important to pick a specific insurer - that's really your call.  Read reviews, understanding that folks with bad experiences are more likely to write reviews than the 90% of folks who get no benefit from homeowner's insurance. You need to make the decision as to how important reputation and ease of claims process is versus price. That's why there are multiple insurers, after all - you can decide how important it is to you. It sounds like you would prefer a simpler claims process, so perhaps you should go with someone who is known for an easier claims process (understanding that no insurer is always going to agree with every claimant 100%). This argument appears to assume that premiums will remain the same.    You have to ask:  If autonomy reduces the frequency of accidents, why would you consider to pay the same insurance premium for the product?  If Geico was selling a product that had a $1000 premium with a 50% margin, but is now selling a $200 product with a 75% margin, it's making a heck of a lot less in aggregate.  Can't say that's a good thing. This depends on the jurisdiction, but such companies are typically subject to regulations (and audits) that require them to keep the customers' accumulated premiums very strictly separated from the company's own assets, liabilities and expenses. Additionally, they are typically only allowed to invest the capital in very safe things like government bonds. So, unless something truly catastrophic happens (like the US government defaulting on its bonds) or people in the company break the regulations (which would invovle all kinds of serious crimes and require complicity or complete failure of the auditors), your premiums and the contractual obligation to you would still be there, and would be absorbed by a different insurance company that takes over the defunct company's business.  Realistically, what all this means is that insurance companies never go bankrupt; if they do badly, they are typically bought up by a competitor long before things get that bad. This greatly depends on the local laws and the insurance contract terms. If I remember correctly, my own life insurance policy does also have special terms in case I die within a year of applying, so it doesn't sound totally bogus. For car loan insurance, the amount of coverage and premiums were probably low enough for the insurer not to want to spend the money upfront on the thorough investigation, but they probably do have a clause that covers them in case the insured passes away unreasonably quickly (unreasonably for a healthy person of the given age, that is). The cost of insurance very well may swing the opposite direction.  Last year premiums jumped 50% across the board because there were so many drivers on the road that accident rates increased.  So autonomous vehicles may have lower (or zero) premiums while human driven vehicles might see triple digit increases in premiums. Protect competition, not protect competitors.  In a lot of cases in the tech world no one knows who the competitors is a few quarters/years down the road.     Also, enforce regulations against regulation-arbitrage companies like Uber/Lyft, AirBnB, or reg-arb tech like ICO, all of which relied on regulatory leeways allowing them to crush existing companies that's been saddled w/ regulations.     In countries where regulatory arbitrage doesnt exist these 'innovators' fail, e.g., Uber in South Korea. @Jeremy Using CVV doesn't decrease the transaction cost. I know this because I have quotes for CC transactions and the cost/transaction doesn't depend on using CVV. That said we don't plan to use CVV because we sell insurance and the likelihood that someone who steals CC will buy insurance is very low. "Some people are better drivers than others.  A collision can happen to anybody, even good drivers. The collision might not be your fault at all; it might be entirely the fault of the other party. However, the best drivers do a better job of avoiding collisions in situations where the other drivers on the road are doing the wrong things.  The ""no claims discount"" is a way to identify and reward those good drivers, as they have a lower likelihood of claims in the future." If you can qualify for two mortgages, this is certainly possible.  For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route.  They make offers on a new home with a contingency to sell the existing home.  A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers.  This is how cash buyers can get a better deal (no contingencies and a very fast close).  Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home.  On the other hand, they may see your contingency as low risk as the market is so hot.   This is why you probably need a really good agent.  They can frame the contingency in a very positive light.