You can buy insurance for practically anything these days. Planning a vacation to France? Your airline, travel agent or even hotel will likely offer trip insurance in case you need to change your dates or cancel. Going to the casino? You can insure your blackjack hand in case it’s not your lucky day.
Recently, I was even asked if I wanted to pay US$20 to insure a pair of $80 ice skates beyond the three-month warranty or $12 to protect a $40 television cable for a “lifetime” of protection – a quarter of each product’s price in exchange for extra “peace of mind.” But is it really worth paying the extra money? Here’s how an economist like me would answer that question. Continue reading