“The whole world’s in a terrible state o’ chassis” – Captain Boyle from the play Juno and the Paycock.

As Jean-Jacques Rousseau rightly said, “Everything, including life is in constant flux on this earth” and in this world of uncertainty, perhaps insurance alone offers an oasis of certainty.

But what is this certainty?

An individual who buys fire insurance on a house they own is accepting the certainty of loss of a small amount (the insurance premium) to get rid of the combination of a slight risk of a much larger loss (the value of the house) and a large chance of no loss.

That is, he choosing certainty over uncertainty.

An individual who buys a lottery ticket or who places a bet on a horse is subjecting themself to a large risk of losing a small sum (the price of the lottery ticket or the amount of the bet) plus a small chance of winning a large amount (a prize) in preference to avoiding both contingencies.

He is choosing uncertainty in preference to certainty.

Insurance is like an umbrella on a rainy day. You’d rather have it and not need it, rather than not have it when you need it.

Choose certainty.