There is a paper out there that says that to overcome poverty you need twenty years with almost nothing going wrong. In practice, that's hard and takes a lot of luck. Someone in my middle class to upper middle class shoes can weather these storms. But, the large percentage of people who can't handle a $400 emergency can't.
What do those little earthquakes look like? Consider a few that I've experienced reasonably recently.
* My son was in a skiing accident. This entailed an ambulance ride to the hospital, an ER visit with CT scans and lab tests, a night of observation at the hospital. No surgery or prescriptions were required to treat it, just refraining from serious exertion for a couple of weeks and a missed half season of contact sports (like lacrosse, for which he was a team captain and having his best year ever). It sucked, but it was hardly a catastrophic injury, although no one questioned that it was essential for him to be promptly evaluated as the symptoms he had could have indicated something far more serious. We have a "gold" class HMO style insurance plan from Kaiser and didn't go to any out of network providers at any time that network services were available. The Kaiser card says an ER visit is $500 on the card. But, the reality is that essentially every more than trivial ER visit involves additional services that are also added to the bill like CT scans (four each), and other charges. The price tag? A little less than $7,500. It would have been more, but he hit his per person, per year out of pocket expense cap.
* A few months earlier, he was driving the used car he'd had for the last two and a half years. Suddenly, without warning, on his way to visit his girlfriend on Thanksgiving evening, the car died and came to a dead stop in a middle lane of I-25. A 911 call led to a prompt (and free) Denver fire department response that pushed him to the side of the road. We called AAA for a tow. A tow truck came and took the car to a nearby AAA approved mechanic. But, upon arrival we learned that the tow truck was not the one that AAA had ordered for us (which had taken ages) but one that a responding policeman had called which didn't accept AAA. So, we were out a hundred of two dollars there. The mechanic's estimate was that the engine was entirely shot and would have to be replaced. So, we had to pay another tow truck to get the car from the shop to our house. It turns out that there is a vigorous market for Mazda Miatas without working engines in Denver, so we were able to swiftly sell it (it was worth less than $1,500 when we bought it) for more than the cost of the two tows.
But, he needed a car to get to school and other activities at time I couldn't take him there. Our only other car was mine which I needed for work, and the Denver Public Schools don't provide high school students with transportation if they are attending a school of choice. So, we needed to buy a new car, ultimately we bought a used Subaru Legacy for a price greatly reduced because it had a lot of hail damage. But, again, it was a several thousand dollar uninsured bump in the road.
* This month, the screen on my daughter's computer, which she needs for college, stopped working. At first glance, it looked like it might require only a replacement backlight bulb, a tolerably expensive repair. But, the repair guys called, and it turns out that the logic board has something wrong with it and needs to be replaced. Between student discounts on new computers and some trade in value, the end result is going to be that we need to buy a new computer. It was under a service plan for a couple of years when we bought it, but that was four or five years ago.
* Recently, we noticed water damage in a corner of our living room, months of trying to figure out what was going on eventually revealed that there were gaps in the mortar in the 1925 brick wall that needed tuck pointing, followed by plaster and paint to repair the damage. It wasn't a huge repair, but it was an unexpected, uninsurable one.
* A couple of months later we noticed water damage in the ceilings of our two upstairs bedrooms and an adjacent hallway. It took a few months to figure out what was going on here as well, and this time, it was caulking around our nineteen year old swamp cooler that had been compromised with wear and tear over the time causing a leak. Once we figured out what was wrong with this, this too wan't a huge repair, but it took months of inconvenience and was unexpected and uninsurable.
* A few years ago, I was robbed at gun point. They took about $50 in cash from my wallet, my credit cards and driver's license, my phone, and my laptop. With my assistant's help, the credit cards were canceled, the phone service was deactivated, and all of my passwords including the one for the laptop itself were changed within an hour or two and almost everything had been backed up in the cloud. They never caught the guys. It was inconvenient for about a month and I now look like a drunk bum in my replacement driver's license photo. But, I had to pay for a replacement driver's license, a new phone and a new computer (the one I'm using now). All told, it cost me perhaps $500 out of pocket. Not huge, but a big problem for many people.
* Over the years, we've had several incidents of fraud. The credit card fraud incidents could generally be undone, but we've lost more than a $1,000 over the years in cases where there was no viable remedy.
* There have been several times where I've gotten a couple hundred dollars of traffic tickets. And, there have been a couple of time when I've needed to fix a broken side view mirror for a few hundred dollars that wasn't big enough to exceed the insurance deductible.
None of these things we individually catastrophic, and we've always been able to pay what we need to pay to resolve them. But, if we hadn't had those reserves, they would have been disaster.