What is insurance and how does it work?
Here's a wild idea: a thousand people each put twenty dollars into a hat. One of them gets hit by a meteor (okay, maybe just a really bad hailstorm that wrecks their car). Instead of paying $20,000 to fix it alone, they pull $20,000 out of the hat. Everyone else? They're only out twenty bucks. That's insurance — the art of turning "financially devastating" into "mildly annoying."
Insurance is a deal between you and a company: you pay a little bit regularly (called a premium — think of it as membership dues for the Disaster Protection Club), and if something expensive and terrible happens, the company pays to fix it. You're betting something bad will happen. They're betting it won't. Statistically, they win more often, which is how they stay in business.
