Case Study - Mobile Phone
The Total Addressable Market (TAM) to repair/reuse
damaged mobile phones is incredibly large.
If an insured mobile phone breaks, the insurance company transfers the amount for an equivalent mobile phone to the insurance taker (minus deductible), while the broken mobile phone stays with the insurance taker.
This results in a natural adverse incentive, as damaged mobile phones always have a (small) residual value (due to the materials used in mobile phones such as precious metals), even if they cannot be repaired/reused anymore.
Case Study - Furniture
Similarly to the mobile phone case study, there also exists a natural adverse incentive for furniture (or goods in general), which fall below a certain threshold, where it is more efficient from the insurnace company's perspective to simply pay the amount rather than investigating further on the damage/amount to be paid.
The insurane company then wires the amount for the insured furniture, while leaving the disposal of the damaged (but potentially still (re-)usable good) to the insurance taker.