‘Even Though It’s Bad for Berkshire’ Billionaire Charlie Munger Said to Skip Insurance Because ‘You’re Paying for the Other Fellow’s Frauds’
In 2023, billionaire investor Charlie Munger, known for his time as vice chairman of Berkshire Hathaway, suggested skipping insurance coverage for certain assets. Speaking at the annual meeting of Daily Journal Corporation, Munger stated that he had never carried collision insurance on a car and stopped insuring his house after becoming wealthy.
He advocated for self-insuring when one could afford to cover potential losses. Munger argued that paying insurance premiums was essentially funding the insurance company's losses and frauds. While his advice might seem financially sound, it goes against Berkshire Hathaway's insurance underwriting practices, which contributed to an underwriting loss in 2022.
Despite the potential financial benefits, Munger's stance on insurance coverage is not a universally applicable recommendation.
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