Some critics also say insurers are inflating the insured value of houses, saying they would cost more to rebuild, thus raising the total bill each year without raising rates.

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This means that people differ in how much they value being insured against bad outcomes, and those who value insurance the most also happen to be those who have low expected costs.

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Some go so far as to say that if a bond is insured and bondholders receive back the par value, no default has taken place, just an unscheduled call.

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Also, keep in mind, 66.7 million consumers are insured by a company that provides the required value for their premium dollars, the government said.

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Art insurers, niche businesses that provide cover for museums, auction houses, private and corporate collections, reckon that they will have to pay out millions of dollars in compensation for lost works a sum well below the true loss, because much of the art in the World Trade Centre was not insured for its full value.

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And when you have a money market mutual fund, it is not FDIC insured, but the companies will do whatever they can to protect the value of their money market mutual fund shares.

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On the one hand, this split separates the toxic assets, whose value is very uncertain, in an institution that has no insured or guaranteed liabilities and poses no systemic risk.

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