You missed fundamental concept of gambling, insuring, hedging,...

You missed fundamental concept of gambling, insuring, hedging, option trading etc.
The institutions providing these facilities always win in the long run. They set the premiums using scientific methods.
People are more adverse to losses than attracted to gains, that weeknes is exploited by the insurers and as a result we are over insured. Some insurance is nessesery as you correctly pointed out, just for piece of mind, if you can afford it.
I saw a particular instant of AGO hedging, simply buying of a put and a call. One time you win the next time you loose. In the long run you loose.
I would not abuse CEO of AGO for insufficient or unlucky hedging unless you have a proven formula to do it better.