Who needs insurance?

Some guy is walking down the street and falls in front of your house. He decides that since it is easy to sue in this country, he will. However, the case never actually goes to court because you settle out of court, yet your insurance premiums still go up. Isn't that weird?

The reason that your premium goes up is because you had a case brought against you, regardless of the outcome. The case could have been dropped, or a judge could have thrown it out of court, your premiums will still go up. The reason is because something is wrong, something happened and the insurance company is afraid it might happen again. So they raise your premiums. Does that make sense to you?

The only reason why people take out insurance is in the event they get sued they will not have to declare bankruptcy. The insurance companies know quite well why people get insurance policies, they weren't conned into covering anyone. The reason why people pay them is so that if/when they're sued they'll be covered, and here the insurance company comes along and starts charging them more. Is that not the exact reason why this person got insurance in the first place?!

If the insurance companies are afraid that he is reckless or negligent with his property and this caused someone to fall on his property, then what will it help by raising his premium? Someone else will fall and sue and the insurance company will have to pay for it, does the extra couple of dollars they're making off someone by raising their premiums really gonna make a difference when he's sued for a few million dollars? Or perhaps they're giving him a fine for being irresponsible/negligent with his property. But what authority do they have to do that?

Here's the catch. Being that people need insurance because they are afraid of being sued, the insurance company can do whatever they like, and people will pay out of fear of losing their coverage. Sort of like blackmail, no? What do you think?