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SURVIVAL INSURANCE

Is Survivalism Anti-social or not?

by Jason Ross

Walter thought long-and-hard before calling. He’d been the “Ham radio guy” in a preparedness group for a year. Now, he felt like he needed to bow out. Being prepared for the collapse of society, he had come to believe, was anti-social and a violation of civic-mindedness.

Chris is a ReadyMan and a financial advisor from Florida. Being a man of the world, and even having a chummy relationship with Wall Street, Chris looks at prepping as a normal part of wise financial planning. According to Chris, putting time and money into preparedness is not an investment. It’s insurance.

Insurance depends on two axis of risk: the odds of a negative event (car crash, house fire or the end of the world) and the downside potential of that event (totaling a car, losing your house, or losing your family to starvation.)

For example, if you’re a homeowner, you have homeowner’s insurance, which protects against several negative possible events such as a house fire. The odds of a total loss by fire are around 1 in 3,000 per year. The downside potential of a house fire is significant: you would lose your largest asset, all your possessions and still owe your mortgage.

But what happens if things go so wrong that insurance companies collapse? Can we insure against that?

Nobody knows how likely such a “Catastrophic Failure” might be — where things get so bad that insurance companies go “belly up” en masse. In living memory, we’ve seen one major financial collapse in the United States (Great Depression), one minor collapse (2008) and many financial collapses around the world. Compared to the risk of your home burning down, the odds of Catastrophic Failure in the United States pencils out to fifty times greater than your house burning down (by my calculations.)

Since the founding of this country, we’ve experienced life-altering socio-economic “hits” several times: The Revolutionary War, The Civil War, The Great Depression and World War Two. These were instances of social strife sufficient to cause widespread scarcity and even loss-of-life. Not included are more-localized issues such as earthquakes, floods and hurricanes. Also, there was one close-call during the Cuban Missile Crisis where we almost tipped into a nuclear war. So, in 240 years, we’ve experienced four very disruptive events, plus many “smaller scale” events (World War One, the Recession of 2008, etc..) This pencils out to one VERY disruptive event every 60 years — or about one event per every adult lifespan. That’s one in sixty odds, every year, of a very disruptive event, just going by history.

The downside potential of a Catastrophic Failure, in our highly-leveraged society, could be far worse than previous Catastrophic Failures. In a worst-case scenario — worse than the Great Depression — we could experience a total loss of civilization, which would mean extraordinary loss of life. Many would argue that, today, another Great Depression could result in a complete breakdown of society. We’re far more leveraged now, both morally, logistically and economically. In other words, the “fiscal cliff” we’ve created through digital systems, just-in-time inventory and national and personal debt, could result in a more-explosive breakdown than ever experienced before.

Losing all your personal property and net worth can’t compare to losing even one member of your family.  The downside potential of a Social Collapse cannot really be imagined, it’s so severe.

Still, this doesn’t mean that a Social Collapse will befall our nation. There are fair odds that nothing will happen in our lifetimes. 

But considering the odds, why wouldn’t you spend at least the same amount in “Collapse Insurance” as you do in Homeowners Insurance? 

The average American spends about $900 a year on homeowner’s insurance. Dried food storage, if purchased carefully, can be bought for about $500 per person, per year’s supply. So, within two years, a family of four can just about cover a year’s supply of stored food. A few years later, the family should be able to accumulate basic defense, water and other contingency stores. Each year after that, the family could continue to improve their preparedness. Unlike homeowner’s insurance, a family could probably stop spending within ten years and call their “Collapse Insurance” complete.

Seen as insurance, wouldn’t preparedness be a reasonable purchase, even a civic-minded purchase?

But only an estimated three million Americans are preparing for a very disruptive event — about one percent of us. Additionally, another 19% of Americans live in rural areas and might have a good chance at achieving some state of self-sufficiency in a catastrophe. At best, four in five Americans don’t even want to think about Collapse Insurance, even though they readily buy homeowner’s insurance, renter’s insurance, car insurance, health insurance and life insurance.

Why is that?

Several self-deceptive habits drive people away from the thought of a collapse.

  1. Normalcy Bias. People have an aversion to preparing for an event they’ve never experienced. They assume that, since they’ve never experienced the event, it can’t happen.
  2. Status Quo Bias. People have a strong tendency to think things will remain as they are.
  3. Bandwagon Effect. People tend to think like other people around them, especially popular or “normal” people. Most people don’t worry about a collapse, so it must be “un-cool” to do so.

The American “bandwagon,” especially as we modernize, looks down on self-sufficiency, self-defense and rural living. Eighty percent of Americans live in large cities and that, predictably, turns our nation away from individualism and toward collectivism.

The America of John Wayne has become the America of Barack Obama. Preparing for a socially-destructive event, not surprisingly, feels anti-social to the majority of Americans.

But insurance deals with statistics, not feelings. Even if we don’t like to think that the system has weaknesses, it’s still nonsensical to think that the system has NO weaknesses. 

Even if the odds are minor, like 1 in 3,000, insurance remains a good idea. It’s only crazy if the odds of a collapse are near-zero. One may quibble with my risk calculations, but it would be insane to argue that there is NO chance that another Great Depression or Civil War could take place. It has happened in the past. It has happened here. Why would it be impossible now?

The more concerning question might be, what event haven’t we ever seen before that could cause a catastrophe?

Ultimately, we know that our country is capable of extreme violence. We know that our government does not control the stock market, nor the global economy. We also know that foreign powers, the flu, natural disasters and terrorists act in unpredictable ways and that their actions have unpredictable consequences.

We buy insurance for everything under-the-sun. Why not buy insurance for the unimaginable?

Please share your thoughts, pro or con, on this question. Is it kooky and anti-social to prepare for a collapse?


Jason Ross
Jason Ross

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