Your mother-in-law might consider a home-repair policy that covers all of the major systems (HVAC, Water heater, plumbing, garage doors, perhaps even appliances). She would buy this policy to reduce the risk of a large expense not handled by monthly cash-flow. She might do this because she has a fixed income, and does not have an emergency fund, in the same way a landlord at a single family home might want to avoid cash-flow risks.
The cost of the policy is certain to be higher than the actuarial cost (cost of claim x probability of claim during insured time period) of repair/replacement of a failed system, as the insurer would need to cover sales costs, operating expenses and profit in addition to the direct policy cost of system replacement. The value to the insured is the predictability of the premium payment.
Insurance only makes sense for large and unpredictable expenses (unexpected, major medical bills, death or debilitating injury, other unforseen and large loss). You would not insure for elective/cosmetic surgery (large, predictable), haircuts (small, predictable), or lost keys (small, unpredictable)
Note: some people use AAA to insure against the inconveniences of lost keys, flat tires, and dead batteries
Note: some people buy extended auto repair warranties, cell phone warranties, and extended warranties on consumer goods, to mitigate the inconveniences of these unpredictable events.
Insurance is based upon information advantage. An insurer uses actuarial knowledge (claims history, statistical models) to predict claims, and then prices the policy to ensure premiums exceed risk plus costs and profit.
Should an insured to have better knowledge of claim probability, they would only buy coverage near to their needed claim instance. Thus, an insurer constructs their policy to prevent purchasing a policy only when the protection is needed. This is why many economists believe insurance is a flawed product, demanding unequal information.
