Before we get started on what appears to be an objective discussion of extended warranties and insurance for gadgets, I admit I hate insurance and insurance companies. To me, insurance is a form of Bizarro World legalized gambling or a protection racket – I bet the insurance company the cost of my premiums that nothing will happen to me and mine. If I lose the bet it's because nothing bad happened to me or mine, which I'd consider winning – but I've lost my premium payment bet. If I win the bet it means something bad has happened to me or mine. It seems to me either way I lose something. The only person I know who defines something bad happening to you as "winning" is Charlie Sheen.
And there is a distinction between a "warranty," which covers things that can go wrong with gear, and "insurance," which covers external factors such as accident or theft. And never the twain shall meet – nor need it.
Now that that's out of the way, let's proceed to the question at hand: is it worth buying some sort of extended warranty and/or insurance for your gadgets?
No and yes.
Just say 'no' to extended warranties
Never ever EVER buy an extended warranty for any gadget, with one exception.
Most brand-name HDTVs carry a one-year warranty. If anything goes wrong with one, it'll likely happen within the first few months. Other expensive home-based gadgets such as AV receivers and speakers have minimal mechanical parts that can break.
And DVD/Blu-ray players, printers, keyboards, et al – are so cheap their replacement value isn't much higher than the cost of the often bloated extended warranty, and you'll likely replace this cheap item long before the extended warranty expires.
Ditto standard flip cell phones, MP3 players, game players and ebook readers, which also aren't worth an extended warranty to cover things that can go wrong with them since so little can go wrong with them.
If you're worried, though, see if your credit card affords extra coverage. American Express, for example, provides an automatic extended warranty, no separate registration required, no extra fee. If the manufacturer's warranty is 90 days, Amex extends the warranty for another 90 days. Any original warranty between one and five years and American Express adds an extra year.
Ergo, ignore salesperson exhortations for an extended warranty – except on computers. But make sure the extended warranty term kicks in AFTER the manufacturer warranty ends – and even after your credit card's extension. Often, a two- or three-year extended warranty bought at the time of your PC purchase includes the first year, which is already covered by the manufacturer. No sense paying for a year or two you don't need.
Warranty bad. Insurance good.
However, you might want to insure your expensive portable gadget (i.e. laptops, tablets, smart phones) against your own clumsiness and the avarice of others – including God or nature, depending on your spiritual outlook.
The impetus for this story came from an email pitch I received from a company called Worth Ave. Group, based in Stillwater, Oklahoma. I did a little research and found two other U.S.-based gadget insurers (there are a whole bunch in the U.K. – those British Islanders must be a clumsy lot) who indemnify your gadget against damage and theft – Safeware and SquareTrade.
How do the three stack up? I got online quotes for a three-year policy on a new $600 laptop to be used in New York City with no deductible:
Worth Ave. Group: $126.50
Best Buy Black Tie: $224.99.
Caveats: SquareTrade, more of a warranty company, didn't offer a two-year plan and doesn't cover theft; the quote includes an extra $50 for accidents and drops. (The company also charges a $50 deductible for cell phones.)
Worth lets you add accessories and other gadgets for additional nominal fees.
Safeware charges extra for international coverage, which adds $33 to the quote above.
Best Buy's Black Tie is actually an extended warranty that adds "accident" coverage but not theft (the plain $199.99 extended warranty doesn't even cover accidents, but the exorbitant price gives you another reason for foregoing any extended warranty).
And none of these plans cover simple "loss" – "Oh, it fell out of my pocket at the mall." To prevent fraud (i.e. you decided to get paid twice by claiming you "lost" it but are actually selling it on eBay), you have to file a police report.
Who's the most accident prone?
Two demographics should consider gadget accident insurance – women and kids.
Before I'm accused of rampant sexism, let me quote some numbers. According to Aaron Cooper, marketing director of Worth Ave. Group, 61 percent of all Worth's iPhone claims are broken screens and water damage, and 90 percent of women's water damage claims are phones dropped into the toilet. I'll resist further comment.
Maybe you think you can be careful with your expensive portable gear, but we all know your kids think money (and gadgets) grow on trees. Your prodigy's school may supply a laptop, but in most cases you'll be responsible for it, making an insurance policy almost mandatory.
Worth Ave. and Safeware each offer special K-12 coverage. A one-year policy from Worth is worth $52 but includes a $25 deductible; a one-year plan from Safeware is $74.80 with a $100 deductible.
Home is where the insurance is
Then there's your existing home owner's policy, which may be your cheapest gadget insurance alternative.
According to Eric Hunt, an agent at the Texas-based SIG Insurance Professionals, a growing number of insurers now offer the oddly-named "inland marine policy," also referred to as a "personal articles floater."
How cheap is cheap? Hunt told me he "recently wrote a policy for a client for two iPhone 4s, an iPad and digital camera, and the cost of the policy was around $40 a year for coverage on around $4,000 worth of electronics." Beware of deductibles which might increase your outlay, however.
Hmmm. Maybe these insurance blokes aren't quite the gonifs I thought they were.