It’s almost impossible to purchase a technology item without being offered insurance. Whether it’s in a store, offered by an eager salesperson with an eye on their commission; or online, added on at the checkout where you only notice it at the last minute – the message is clear. Your tech is expensive and you should insure it.
At least, that’s what the people who sell tech insurance would have you believe, anyway. Is it the reality though? Does tech need to be insured, or is it a waste of money that you will never use?
Let’s put the idea to the test.
YES: You Need Insurance Because Tech Is Expensive
The most obvious point of consideration; tech is expensive. It can be really expensive, especially if you have a penchant for always wanting the latest thing.
When you make an investment in any other area of life, you want to protect yourself. The same is true of tech. The main cause for concern is with accidental damage, such as dropping your cell phone or not securing your TV tightly enough to the wall and thus seeing it come crashing down. For everything else – such as breakdowns, faults, or loss of functionality – you’re going to be covered by the manufacturer’s warranty, so it’s mainly accidental damage you need to insure yourself against. Given the fact that people are clumsy and accidents do happen, if you’ve dropped several thousand bucks on a big tech purchase, it makes sense to insure it.
Even if you haven’t and you’re thinking of insuring something relatively inexpensive, it’s still going to protect you against mishaps – so what’s the harm?
NO: You’ll Never Claim On It
That might seem like a pretty bold claim, but it’s one that is probably a reality for many users. It’s especially true if you’re considering insurance on relatively low-value items of a couple of hundred dollars.
Why? The deductible. Let’s say you buy a cell phone for $200 – maybe it’s your second phone, as a stand-by for when your primary phone inevitably loses charge. A year is a reasonable length of time to expect a cell phone to work at its full function, so that works out at $16 per month. Pretty good deal.
Six months in, your drop the phone and it shatters. Not a problem, you’ve got insurance, so you’ll make a claim. It’s at this point you discover the deductible is $75; that’s $75 for a phone that only cost $200.
That might still sound like a win. After all, you’ve only had six months of usage, so that’s $100 you’ve paid for that phone. If a new one would cost you $200 again, then you still stand to be $25 in credit. Or you would, if you’d not paid $8 per month to insure the phone – so you’re actually out of pocket by $23. It’s not a good deal, especially given the fact a basic cell phone repair is likely to come in cheaper than the combined cost of the deductible and the monthly premiums.
YES: High Value Items; The Math Looks Better
This is undeniably true in most cases. The more expensive an item is, the more it’s worth investing in insurance. Of course, you need to be very careful to be sure you know exactly what is being insured and what isn’t. Don’t ever assume what you’re covered for, especially if…
NO: Your Home Insurance Might Cover It
It’s always worth scrutinizing the fine print of your home insurance policy, because there’s a very good chance you’d already be covered. This is definitely the case if you’re looking at coverage in the event of breakdowns, and you can add accidental damage onto most policies too.
YES: Home Insurance Isn’t Going To Cover Everything
Again, undeniably true. Home insurance is only going to cover you for items in your home. You might be able to cover items outside of the home for an extra premium, but that’s just another way of buying tech insurance.
Your cell phone is unlikely to be covered by your home insurance. Your TV, games console, and anything else that is firmly rooted on home soil however… well, they probably don’t need additional insurance.
In conclusion, whether or not you need insurance (or extended warranties, for that matter) for your tech purchases depends on the cost of the item and how it’s used. Be careful to read any fine print, and spend some time crunching the numbers before you buy.