If a retailer offers insurance for a product, does it ever make sense to buy it?

I never buy Maintenance Contracts or Service Agreements for those reasons. The only exception I made was for a portable propane heater since the first one I had barely lasted one season.

I never buy them, but I’d consider one for a can opener here. We seem to have some evil gremlin that kills them as fast as we can replace them. The last two electric ones lasted about 6 months.

Nope. It only makes sense for them. If the product is going to fail it will usually do it very early in its life – and it is covered under the normal warranty.
I never buy them. I keep my money and take my chances.

I’m not much of a gambler, and an extended warranty makes less sense to me that putting an equal amount into a slot machine. A slot machine is going to return at least a portion of your money.

Extended warranty and casino: house wins.

Nah. If I want to toss money away I’ll go to a strip club and at least get some boobs in my face from the transaction.

When I had both boys, I did. Ours cover everything, even if my little autistic man punches the screen, I can bring it back and get a new one. It has paid for itself. A new flat screen TV was required as was free repair on an Android tablet. Unfortunately, it doesn’t cover accidental loss. Little man brought his 3DS out with him and lost it. We think he left it at the movie theater and when we went back to get it, it was gone and no one turned it in. Stolen, I suspect. He still is mourning the loss of that one.

Insurance is never worth it. Period. Think about it: insurance operates to turn a profit. You are essentially gambling against the house. They use their actuarial tables to ensure that they will never pay out more than they take it. This means that it is never worth buying insurance, since the statistics always say you’re more likely to lose money than to gain money.

I don’t. I will either return the item to the store (most stores have liberal return policies) or if it’s years old, I’ll use the warranty.

I decided I wouldeither have to buy it in everything or nothing or you will never remember what I bought it on. I chose nothing because I would probably never remember where I bought it either.

@SmashTheState Nailed it!

I will add a caveat. If you are a consumer and secretly know upfront that the odds are much more likely you will abuse the product somehow,. then maybe it is worth it. Just make sure the marks don’t show.

I hope that @SmashTheState is just talking about service agreement insurance. Car, home and health insurance are definitely “worth it.” I had a car accident in which $1,000,000 was paid in damages – definitely that insurance was worth it. Yes, the companies are making a profit but by pooling the risk you guarantee against catastrophic loss.

In the case of service or maintenance agreements – which are not really insurance – you are usually paying money for something that will likely not happen and if it does, it is generally a cost (repairing or replacing an appliance) that you can absorb.

@LuckyGuy I don’t get it anymore, but honestly, the insurance on the sony tablet SAVED me loads of money in the end. I can only get it from one particular vendor because it covers EVERYTHING, even if a child does something on purpose to it. I bought a pair of headphones for the kiddo with my fingers crossed, but they haven’t made it a year. He chews on the cords and when I told the clerk if their insurance would cover that sort of problem he said no, so I didn’t take it out. A few weeks after purchase, he had chewed the extrernal plastic off portions of the chord, so I put electrical tape around that. At month 4 they were duct taped across the head portion and now at month 9 there is so much bear wire on the chord and it is so twisted, there is nothing to be done. I’m just waiting for them to completely die. They were really nice and a very expensive present from his grandmother. (she sends the money and I shop, she is wheelchair bound). I really really wish those had come with a full-cover insurance offer, but it was a different vendor. He’s getting cheap ones from now on.

According to Consumer Reports, the only exception to the “never buy additional warranty coverage” rule of thumb is for laptop computers.

According to them, statistically speaking, the chances are far greater that you won’t be pouring money down the drain with coverage for laptops because they are just so much more prone to failures and problems of all sorts, not just in the first year but successive years thereafter.

Also, Applecare is very generous in what items they will cover. Several years ago I bought a used Macbook from a guy who was a graphics professional.

I was fortunate to get a used computer several years old but with a brand new battery (he showed me the paperwork) because he had purchased Applecare thus, he didn’t have to pay anything additional for it.

Anyhow, that’s the only exception I would ever make to my normal policy of never paying for extra warranty coverage.

I’ve bought maintenance plans for washing machines, and I’ve been very glad that I’d done so. I don’t know why, but washers just seem to be more prone to breakdowns than other appliances. Every one of my washers has needed R&M at some time; it’s very nice to call for servicing and pay $0. Each plan more than paid for itself.

For refrigerators, stoves, etc., I’d never buy the coverage. Such appliances are durable goods that aren’t likely to need R&M during the policy term. As for electronics, who repairs them?

The only insurance of that type I buy is for my cell phone, and probably I shouldn’t.

I decided 20 years ago to never buy extended insurance for appliances and similar, thinking the one time I need to fix something I will have saved so much never having bought insurance I’ll still be ahead. Still, once in a blue moon we buy a service contract, but it’s extremely rare.

I never buy warranties. I also feel it is a gamble that I’m sure to lose.
I bought a remote mouse for my computer for 9.99 at Radio Shack last year. The clerk asked me no less than four times if I wanted to buy the warranty for 4.99. No, no, no, no.

@chyna

I understand the clerks are under pressure by management (who are in turn under pressure from corporate) to upsell, but goddamn…..have they not figured out that that kind of aggressive pushing of products the customer clearly does not actually turns people off from shopping there. Radio Shack were atrocious at this. Might be one of the reasons they’re virtually out of business now (with the few remaining stores being propped up by Sprint).

Gamestop is another company that’s especially bad about this. I went to my local Gamestop once to trade some games I didn’t particular care for or was tired off. While there I decided to pick up The Last of Us. I made it very clear that I wanted a new copy. Instead of simply handing me the new copy (which they had plenty of in stock), he kept trying to sell me a used copy (they make more profit on used copies). Finally after the 4th time of me saying no he responded with “so, your used games are good enough for other people, but their used games aren’t good enough for you?”. That went beyond mere annoyance, that pissed me off. I told him to ether hand me the new copy, hand me cash or void the transaction and hand me my games back. Worst thing is this dude was actually the store manager. I haven’t set foot in a Gamestop since (and I won’t, that company has lost my patronage for good).

A friend of mine just bought a refrigerator from Sears and she bought the insurance. I asked her why, because I know her to be a savvy shopper and also frugal. She said because Sears will give you $500 for the food itself in addition to fixing the appliance. Per incident. So for her, it’s worth it, over other plans. She just bought a Sears refrigerator (Kenmore) and sure enough, something happened. I’m sure she got at least one time her $500.

@jca How long does the extra insurance last? 2–3 years? I hope no ones fridge is breaking down that fast. Plus, I wonder if home insurance covers food lost? I know mine did when I lost electricity from hurricane Wilma, but maybe it needs to be something like a hurricane? I have no idea if my insurance would cover a badly made refrigerator.

@JLeslie

I highly doubt your home owner’s insurance would cover a defective refrigerator. I imagine it would have to due to an “act of god” or such.

I’ll find out about the policy later. She has two young adult boys living at home plus her and hubby, so appliances get a lot of hard wear in her house. She bought a big, beautiful side-by-side refrigerator and within a few months there was some fan issue where it was getting frosted up.

When we had power outage due to a hurricane, I contacted my insurance company. They said they’d cover the food but my deductible was $500, so that was that.

@darth_algar “I understand the clerks are under pressure by management (who are in turn under pressure from corporate) to upsell…aggressive pushing of products…”

Yes, the salesclerks and cashiers are simply reading from scripts and, most likely, uncomfortable throughout. I do find, though, that a very firm “No, thank you” usually puts the matter to rest. The employees usually don’t have enough incentive to continue with a hard-sell.

Staples is big on this. Earlier this year, I bought a $19 adding machine, and the cashier offered a maintenance plan! I got a few seconds of a good laugh before I politely, but adamantly, declined.

Terms of Sears Insurance, @JLeslie: http://www.sears.com/en_us/dap/national-mpa-rpa-termsandconditions-20150.html

@LuckyGuy Even then, there’s no reason you’ll ever need anything except the warranty mandated by law. What I do is, if an item breaks down after the warranty, I buy a second identical item then return the first item using the second item’s warranty. I still have to pay for a replacement, but this way I now have two of the original item for the price of one.

@Smash

That’s a really good idea. Wish I had thought of that.

I am such a weenie…
I have two folders for warranties; Inside items and outdoor items. AND I write the end date of the warranty on the item using a black Sharpie.
The only thing I had to return was a rifle and Henry repeating Arms does not have written warranties. Why? They don’t need it. Their products are warrantied for life! The fix or replace for free!

If you are curious, here is a link to the Henry Warranty .

I wish other products had that kind of warranty.