"You know darling, we don’t need to buy insurance for our air conditioner repairs. We should buy insurance only for truly catastrophic events, such as might bankrupt us. Look at it this way. The insurance company has to make money, and of course they have overhead and processing expenses. So the company must offer, in dollar terms, negative expected value on this insurance. Of course we are not rich, but having to fix the air conditioner again would be a small expenditure relative to our budgets. For all practical purposes, our marginal utility of money curve is flat across that range. We should not waste our money insuring against such small events."
Here is a previous installment in the series.