As long as the volume of insurance related payouts is small enough and the volume of customers purchasing insurance is large enough, then it's a viable business model. In fact, that's how insurance works (and how it stops working when there are major catastrophes that cause the number of claims to spike dramatically).
Usually property insurance works as a percentage of the insured amount. If I were to rent out my house I'd put my treasured heirlooms into storage/safe deposit box.
Apparently there are already websites up to do just that.