Insurance companies are businesses and their goal is to make money. It follows that if you are neither lucky nor unlucky, you will end up in the long run losing money by stipulating an insurance. I think this is a very simple concept that cannot be disputed, even though every time I try to explain this the other person starts saying how their mom/friend/aunt/etc saved a lot of money by buying insurance.
Now, it seems to me that insurance makes sense only if you cannot recover from a loss without it; for example, if you are a taxi driver with little to no savings it would make sense insuring your taxi against theft, because if you lose your taxi then you are pretty much screwed.
But why do rich people do it too? For example, a friend of mine who has tons of money saved up, insured his car for $1400, 4% of the value of the car, each year. According to a website I found much less than 0.25% of new vehicles are stolen during their lifetime, and in almost all occurrences the thief had access to the original key.
This person could buy another car at any moment without any money problems, so I don’t really see any point in insuring, especially with such a ridiculously high price compared to the extremely low risk.
Why do people do it? It’s just like gambling, but reversed. If you go to the casino long enough you’ll lose money; if you insure long enough, you also lose money.