Real estate investors risk?

Question

Why don’t real estate investors eliminate insurable risk by diversifying their assets rather than paying an insurance company to handle the risk?

Answer 1

Simply put, the opportunity cost of investments is much higher than the premiums paid on insurance policies to cover the non-diversified risk of real estate investing.  In addition, real estate can yield much higher returns in a shorter period of time when compared to traditional investments such as securities.

Answer 2

You can't diverisify away the risk the building will burn down, or that you will be sued due to someone being injured on your premises.

Answer 3

They don't have enough assets to self insure, for the most part - when you weigh risk vs. premiums, the premiums are cheaper.

Also, most investors don't invest with cash - they leverage, and the mortgagees require real insurance.