Buying insurance (extended warranty or guarantee) on everyday goods / appliances?
"Generally, a polite decline. However, I have dealt with sales people who take first refusal as a ""test"" response, and decide to go into the details anyway. The longer they talk the more robust my responses. See this Telegraph article that discusses why their experts think it's a ripoff, and why you should check your credit cards and home insurance policies as they may already have you covered (possibly UK/Europe only). http://www.telegraph.co.uk/finance/personalfinance/2820644/Extended-warranties-In-our-view-its-a-rip-off.html On a different note, see this list of questions to ask if you are considering going with the extended warranty. The source doesn't rule for or against the idea, leaving it at caveat emptor: http://www.choice.com.au/reviews-and-tests/technology/home-entertainment/accessories/extended-warranties/page/questions%20to%20ask.aspx" "IMO it's usually not worth it and here's why. There's a statistical distribution of how likely a unit may fail depending on its age. Probability is high for a short period after the unit comes into use because there are parts that were not thoroughly tested and manufacturing defects. Then all those defective parts fail and get replaces and the unit likely functions without faults for years. Then it reaches it lifetime end and again probability becomes much higher - parts wear out and start failing one by one. Every unit comes with a manufacturer warranty of one to two years already and that warranty will likely cover any defect causes by materials and manufacturing defects - the period when fault probability is initially high. ""Extended warranty"" only covers the unit for two-to-five years and most units have lifetime of about ten years. This means that the ""extended warranty"" is in effect when it is least useful." On most of the consumer electronics it would not make much sense to get Insurance. Mostly these are not priced right [are typically priced higher]. IE there is no study to arrive at equivalent claim rates as in motor vehicle. Further on most of the items there is adequate manufacturing warranty to take care of initial defects. And on most it would make sense to buy a newer model as in todays world consumer electronics are not only getting cheaper by the day, but are also have more function & features. I politely decline. Insurance is there to protect me against catastrophic financial loss (huge medical bills, owing a mortgage on a house that burned down, etc.) not a way to game the system and pay for routine expenses or repairs. "I decline politely.   The cost of the insurance policy has two components: The actual cost of a likely repair + profit. If I set aside the cost of a likely repair myself, then I get to keep the profit.   If the item doesn't break, I get to keep the ""repair"" money too :)" "Most of the consumer products that you buy at retail these days are commodity priced, and have been for a long time. Margins are thin, so if there are retail salespeople milling about, their compensation isn't coming from the TV or computer with a 6% gross margin. It comes from the extended warranty programs (which are not insurance and do not have regulated underwriting standards), which are typically sold at a 65-95% gross margin. So that $200 warranty most likely costs the retailer $50. The salesman gets $15-25. I paid for my college education working at a CompUSA selling these things, along with other high margin items that paid commission. In most cases, you aren't getting much coverage anyway. Most products carry a 1 year warranty, and using most ""gold"" or ""platinum"" credit cards doubles a manufacturer's warranty by up to 1 year. So with most transactions, you are already walking away with a 2 year warranty.  Warranties or service plans make sense for durable goods that cost alot and are expected to last a long time and/or require regular maintenance. I think they especially make sense if your budget is really tight -- a fixed maintenance cost can be an asset to some people because they can plan around it. Examples of this include: service plans for a furnace, boiler or water heater or a car if you're buying a manufacturer-endorsed service/maintenance plan from a dealer." "I usually say ""no thank you"", but if the salesperson gets pushy I say ""if I need insurance, I guess I won't buy the product because I only want to buy quality that will last a good long while"" I have never actually walked away from a purchase because I generally research these things ahead of time, but I think I mean it when I say it." One important issue that has yet to be covered is the cost (to you) in terms of paperwork, lost time, and phone calls that you have to make to claim the insurance.  Such insurance claims often are very low priority on their customer service queues (for obvious reasons, since they have already made the sale). Therefore, you might have to spend up to a few hours of your time calling or writing emails to claim the warranty, which may often not be much (  Therefore, many people end up not claiming the warranty during the hassle. Much like non-scam mail-in rebates, more often than not you would either forget to or decide it is not worth your time to claim the warranty. Before buying such policies, other than the obvious cost-benefit calculations, you should also take this additional factor into account.   Therefore, many people end up not claiming the warranty during the hassle. Much like non-scam mail-in rebates, more often than not you would either forget to or decide it is not worth your time to claim the warranty. Before buying such policies, other than the obvious cost-benefit calculations, you should also take this additional factor into account.
Watch this super late post to a 2009 thread.  Thread Necromancy in action! Yes, it's absolutely worth it to get an extended warranty because electronics just don't last as long as they used to. This is ever more prevalent in the year 2013. Is it a ripoff?  Future Shop (in Canada) and Best Buy (U.S. & Canada) offer warranties that are typically 25% of the cost of the product.  That's a huge mark-up, massive! Yet, to my knowledge they are one of the only retailers that you can walk into the store and just drop it off for exchange.  As opposed to, buying a 3rd party extended warranty that is considerably less expensive, yet it puts the burden on you to mail the product in, wait for god knows how long to receive a refurbished, repaired, or new (their choice) product.   It's a gamble, an expensive one. Yet, if you're spending top dollar on a product, wouldn't you like to have some peace of mind that it will last you at least 2-3 years. Unfortunately as I mentioned earlier, electronics (or anything for that matter) just aren't as reliable as you'd hope. The Xbox 360 gaming console was notorious for being poorly made.  In fact, many people not only had to take advantage of the extended warranty, but had to do so, more than 2-3 times. So make sure you do your homework on a product, before you even think about buying it.  What do I do? I buy at Future Shop, Best Buy or Staples for the convenience of dropping off the product in the event of an issue.  I really don't want to bother with the hassle of applying for warranty service and long mail-in / return wait period.  If the product is $100 or so, forget it..and just buy it whoever has it cheapest and cross your fingers. You didn't buy it. Your mother did. You can try to cancel it if it was purchased in your name; if your mother purchased it she would have to cancel it. Either way, the company has done it's part by carrying you until that cancellation and you have no grounds for demanding a refund for time already covered. If your mother was spending your money, that is something you need to take up with her unless you want to bring charges against her for theft/fraud. If she was spending her own money, then you may want to talk to a lawyer about getting her declared incompetent so someone else can control her spending. But the money paid is probably gone. It isn't the insurance company's fault that you didn't want it doesn't, and if you don't bring charges you can't complain about their having accepted stolen money. Even if you do bring charges and win, it isn't clear you can get a refund. If you really want to pursue any of this, your next step is to talk to a lawyer. (Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell.  Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down.  Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take.  Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term. "Also talk to your bank(s) or credit union(s); first one of mine I looked at offers an unsecured loan at 7% variable, and a signature loan at 7.5% fixed, no hidden costs on either. You might do better. Also check store credit. Sears used to offer 1-year-0% financing on appliances if you signed up for the store's card at the time of purchase, and if you have the discipline to reliably pay it off before interest hits that's a hard deal to best. Other stores have offered something similar for major purchases of this sort; do some homework to find out who. (I bought my fridge that way, paying it in month 10.) The ""catch""  is that many people get distracted and do wind up paying interest, and the store hopes that having an account with them will encourage you to shop there more often.)" "If your meaning of ""asset protection"" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an ""umbrella"" liability policy. This type of insurance is cheap. If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy. If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests." Generically, like farnsy noted in the other answer, you will only come ahead in dollar terms when you are significantly riskier than the average insuree. Otherwise the insurance company would have higher rates to make a profit. In the case of Apple Care there can arguably be other factors involved. If you did not insure your $2000 laptop and it broke (unfixably) just after the warranty period, would you replace it with a new Apple product? Maybe not, so Apple could lose a customer. That means they have an incentive to keep you happy. If your product breaks but insurance replaces it, you are a happier customer and more likely to buy other Apple products. This is not an incentive for traditional insurance companies that only do business in insurance. Now, with the profit margins Apple likes in general, I don't know if they've underpriced their insurance. I sort of doubt it even. But their margins on it are probably not high, meaning it's a closer call even if you are only averagely risky. There seems to be a contradiction here: Home warranties not worth paper they're written on and: What struck us is that the HWC [...] immediately had the unit replaced. There is a huge difference when you buy the insurance yourself and when a bank forces you to buy one. Because in the latter case, the insurance is not for you, it's for the bank to protect their collateral (which is your asset as well). It becomes obvious when a claim comes up, because the insurer is not negotiating with you, it's negotiating with another large financial institution. And as far as the stereotype of banks being ruthless behemoths goes, in this case you happen to benefit from being on the behemoth's side and the insurer simply can't brush off a bank as much as it can brush off a person like you. As you've put it, a house in Phoenix without AC is not worth much, so the bank could not let that happen. Because in case of another foreclosure they would have to fix the AC anyway. "According to US News, renter's insurance does cover liability as well as your own belongings.  They list this as one of four ""myths"" often promulgated about renter's insurance.  This is backed up by esurance.com, which explicitly mentions ""Property damage to others"" as covered.  Nationwide Insurance says that renter's insurance covers ""Personal liability insurance for renters"" and ""Personal umbrella liability insurance"".  Those were the first three working links for ""what does renters insurance cover"" on Google.   In short, while it is possible that you currently have a different kind of coverage, this is not a limitation of renter's insurance per se.  It could be a limitation in your current coverage.  You may be able to simply change your coverage with your current provider.  Or switch providers.  Or you may already be covered.   Note that renter's insurance does not cover the building against general damage, e.g. tornado or a fire spreading from an adjacent building.  It is specific to covering things that you caused.  This may be the cause of the confusion, as some sources say that it doesn't cover anything in the building.  That's generally not true.  It usually covers all your liability except for specific exceptions (e.g. waterbed insurance is often extra)." If you're really strapped for cash, you can get one on the off-chance the furnace or air conditioner goes.  But if you do have the cash to self-insure against these kinds of things, I wouldn't bother with the home warranty. Here was our experience.  Our daughter was only a few months old, and the air conditioner went in June, in Virginia.  We called in the warranty.  They came out, tried the cheapest fix they could to fix the leak.  It didn't work again in two days.  Two weeks later, they try again with the next cheapest fix.  (By this point, we had gotten a window unit for our bedroom.)  It didn't work again in two days.  Two more weeks later, they finally got authorization to replace the unit.  They replaced it with the cheapest one they could, and wanted to charge me $75 to haul the old one away.  When I said no thanks to that extra service (I was calling from work at the time), the guy ended the conversation in a huff, walked away from the phone and drove off.  I later found out (when I called a reputable HVAC guy) that they didn't even hook the thing up correctly! What happens is the contractors get squeezed by the warranty company at every turn.  These calls get low priority, and the quality of service is as low as they can get away with without violating the terms of their contract with the warranty company. For the big stuff, it's better than nothing, but not much better.  Check to see that the big stuff is still covered before buying it at all, and drop it after getting a payout (like we did). For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment.  Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday. Insurance is for events that are both and Unexpected and, for many people, catastrophic events are, for example, sickness, disability, death, car accidents, house fires, and burglaries, for which you may buy health, disability, life, auto, home, and renter's insurance.  It may be catastrophic for a family relying on a very old earner for that earner to die, and you can buy life insurance up to a very old age, but the premiums will reflect the likelihood of someone of that age dying within the covered period.  The more expected an event is, the more anything referred to as insurance is actually forced savings. Health insurance with no copays on regular checkups expects the insured to use them, so the cost of those checkups plus a profit for the insurance company is factored into the premiums ahead of time.  A wooden pencil breaking may be unexpected. Regardless of foreseeability, no one buys insurance on wooden pencils, as the loss of a pencil is not catastrophic. What is catastrophic can be context dependent. Health-care needs are typically unforeseeable, as you don't know when you'll get sick. For a billionaire, needing health-care, while unforeseeable, the situation would not be catastrophic, and the billionaire can easily self-insure his or her health to the same extent as most caps offered by health insurance companies. If you're on a fixed budget buying a laptop, if it unexpectedly failed, that would be catastrophic to you, so budgeting in the cost of insurance or an extended warranty while buying your laptop would probably make sense. Especially if you need that $2000 laptop, spending an extra 17.5% would safeguard against you having to come out of pocket and depleting your savings to replace it, even though that brings you to a grand total of $2350 before taxes. However, if you're in that tight of a situation, I would strongly recommend you to find a less expensive option that would allow you to self-insure. If you found a used laptop for much less (I can even see Apple selling refurbished Macs for less than $1000) you might decide that your budget allows you to self-insure, and you could profit from being careful with your hardware and resolving to cover any issues with it yourself. Kate Gregory has already covered maintenance and tools. As a one-off, there's furniture and soft furnishings for the home. Cable/satellite TV if you want it. You listed car insurance, but not fuel, servicing, repairs and depreciation/leasing (as applicable). And, there's also food. Insurance is mostly for covering against catastrophic events, it's not something that must be helpful to you every day. Sounds like you health is okay and you don't mind paying some cash in case of minor events. You could try to find a policy where coverage kicks in only once an incident is big enough (high deductible) - in such cases you payments will be significantly lower because you'll be unable to apply with minor incidents and that saves money to the insurance company and you're still covered against catastrophic events. Stocks go down and go back up, that's their nature... Why would you sell on a low point? Stocks are a long term investment. If the company is still healthy, it's very likely you'll be able to sell them with a profit if you wait long enough. how do they turn shares into cash that they can then use to grow their business? Once a Company issues an IPO or Follow-On Public Offer, the company gets the Money. Going over the list of question tagged IPO would help you with basics. Specifically the below questions; How does a company get money by going public in an IPO? Why would a company care about the price of its own shares in the stock market? Why would a stock opening price differ from the offering price?  From what I've read so far, it seems that pre-IPO an investment bank essentially buys the companies public shares, and that bank then sells them on the open market. Is the investment bank buying 100% of the newly issued public shares? And then depositing the cash equivalent into the companies bank account? Additionally, as the stock price rises and falls over the lifetime of the company how does that actually impact the companies bank balance? Quite a bit on above is incorrect. Please read the answers to the question tagged IPO. Once an IPO is over, the company does not gain anything directly from the change in shareprice. There is indirect gain / loss.