Charlie Munger used his decision to drop fire coverage as an example of a broader rule at Daily Journal Corporation’s 2023 meeting: insure for losses a person cannot afford to bear.
He was responding to a question about large companies, including Meta, that choose to self-insure against some business and liability risks. Munger said he and Warren Buffett were “big self-insured.” He then described how his finances led him to stop paying for fire protection on his houses because he could finance a rebuild himself.
He put the standard plainly: “You should insure against things you can't afford to pay for yourself.” As he described it, the choice turns on whether someone can withstand a loss.
Munger said insurance spending can carry costs beyond premiums. He pointed to time spent pursuing claims and commissions, and said fraud contributes to waste. Self-insuring can avoid premium payments, but the person retains the obligation to fund the damage if it occurs.
He said he had generally gone without collision insurance on cars, though he also mentioned an exception without describing it. When moderator Rebecca Quick asked whether the same reasoning covered medical care, Munger answered that it was different.
The examples involved different risks: fire damage to homes, collision damage to cars, and business or liability losses for companies. Munger tied his choice to his own ability to pay. He gave no premium, home value or rebuilding-cost figures, and the meeting remarks offer no dollar threshold for other households.
