Are product protection plans worth it?

[IronWing]

must have been....he told you they break all the time and still got you to buy it...i'm selling you a shit product and you're still gonna buy it cuz I'm just that good...on top of that you're going to help me get paid more by purchasing this warranty where I get 20+% commission

Pretty much. But he had a point, they all is crap now. Once you accept the premise the rest makes sense. When major appliances went from being durable goods to being disposable crap, warranties became more important.

 

[GagHalfrunt]

So, car insurance is a bad idea? How about health insurance? You're paying a company in case some shit happens. In the event that shit don't happen, they make 100% profit. And, since that shit don't happen the majority of the time, they can afford to pay out when that shit does happen.

Sure, you don't need to have health insurance, but have fun paying $100k for that heart transplant you got.

1) Car insurance is a bad idea. It's legally mandated, but the average customer pays far more than they get in payouts. That's how the industry makes money. Care to dispute that?

2) Yes, health insurance is a bad idea. While medical bills can be crippling the chances of being one of those people is pretty slim. The average person pays far more for coverage than they get in return. That's how insurance companies make money. Care to dispute that?

The average person has to carry some sort of insurance. Despite the small risk of a fire you need fire insurance for a home because most people can't afford to write off their house and buy a new one in the event of a calamity. Despite the fact that it's a giant money loser in the long run the risk is too high. Bad deal, but necessary. Can the same be said of a product protection plan for a TV or an iPod? Utter nonsense. Same bad deal, but on such a small scale completely unnecessary and any person with a brain should be able to recognize that.

See, the entire insurance industry, and for that matter the extended warranty and product protection industries are founded on the assumption and transfer of risk. You cannot afford to have your house burn down or to lose a million dollar personal injury case in an auto accident, so you pay someone to take on the risk for you. They face the financial burden of a big settlement and you pay them for assuming that burden on your behalf. And since they would be unwilling to assume that burden if they stood to lose money on the deal, you pay them more than the risk is worth. When you break it down to the simplest terms, that's why the word "premium" is used for insurance payments. You're paying 30-40% more than the statistical value of the risk in order for them to carry it for you. Most people have to carry fire insurance on their home, they have to carry personal injury and property damage on a car and most carry health insurance not because they're good deals, but simply because the worst case scenario is too great a cost. And that's why an intelligent person looks at insurance or product protection and asks "can I afford the worse case scenario?" If the answer is no, you buy the insurance for your house, your car, your health and you get protection in exchange for paying a PREMIUM for that peace of mind. If the answer to "can I afford the worse case scenario?" is yes, like "Can I afford to replace this phone if the screen cracks?" or "Can I afford a new TV if this one croaks?" then you don't because it's silly to pay someone extra to carry that risk if it's not really a risk.

 

[Gooberlx2]

Depends. I'll buy plans for items that might be subjected to abusive environments. I buy them for cell phones and cameras. I'll skip them on mostly everything else.

 

[steppinthrax]

Yes and no. Most PPP through the providers also come with a deductible. After 2 years with her Galaxy S4, my wife's screen cracked and was non-reparable. She'd been paying the monthly fee ($6 or $7 dollars a month). So the price of the plan for the phone was $168, and then there would be a $150 deductible on top of that. $368 total, for a product that cost us out of pocket........ zero dollars. Plus, every two years you can sign a new contract and get a newer free phone.

So, as you said, sometimes it's worth it, sometimes it isn't. I never wanted the plan on her phone, but she was terrified that she was going to damage it in some way. I don't have it on mine.

That sounds like a plan through your carrier. Plus the plan that I got on her phone has no deductible. I think some plans are worth it while some are not. 6 to 7 a month doesn't sound good to began with. I would never had picked up something like that.

 

[steppinthrax]

The entire protection plan is to mitigate the risk, for a price. When you buy an item, there is a risk it will fail. A protection plan extends the period upon which a failure is acceptable. Does that always happen? No.


I look at it this way: does my pattern of usage for said product increase the risk of this item breaking by an amount enough to justify the protection plan? On certain products, yes. I have little expectation to break my skillsaw using it 3 or 4 times a year at most, so the extra money isn't worth it.

Correct,

Items that justify the risk would be cell phones and expensive electronics you give your kids. I wouldn't put a PPP on everything.

 

[steppinthrax]

1) Car insurance is a bad idea. It's legally mandated, but the average customer pays far more than they get in payouts. That's how the industry makes money. Care to dispute that?

2) Yes, health insurance is a bad idea. While medical bills can be crippling the chances of being one of those people is pretty slim. The average person pays far more for coverage than they get in return. That's how insurance companies make money. Care to dispute that?

The average person has to carry some sort of insurance. Despite the small risk of a fire you need fire insurance for a home because most people can't afford to write off their house and buy a new one in the event of a calamity. Despite the fact that it's a giant money loser in the long run the risk is too high. Bad deal, but necessary. Can the same be said of a product protection plan for a TV or an iPod? Utter nonsense. Same bad deal, but on such a small scale completely unnecessary and any person with a brain should be able to recognize that.

Car insurance is mandatory because the amount of damage you can do with a motor vehicle can be astronomical and while that was not the operator's intention. Most are not able to foot the cost. As a result both lose and one person is sued to bankruptcy.

Although I don't agree with mandatory Health Insurance, the same thinking can be applied. Based on billions of variables that you can't control (other than eating right and exercise) you can come down with a form of cancer/disease etc. that will cost millions of dollars to treat.

 

[BurnItDwn]

Ehh, I would think about a warranty on a $150 or $200 item if the warranty was for like 5 years or more, but most of those warranties only protect an item for the first or second year.

 

[who?]

Most manufacturing defects show up during the factory warranty period but when you add accidental damage that adds another factor. Would you rather spend less cash for the insurance or more cash whenever something gets broken? It's a predictability issue.

 

[who?]

Since health insurance is a risk pool making it mandatory for everyone lowers the per person cost.

 

[OverVolt]

The warranties are a scam AFAIK and they basically just use the manufacturers warranty or try and weasel out of it.

 

[Jeff7]

Pretty much. But he had a point, they all is crap now. Once you accept the premise the rest makes sense. When major appliances went from being durable goods to being disposable crap, warranties became more important.

Couple that with improvements in statistical analysis, data collection, and manufacturing process control, and you find that we're trending toward the dickweed manufacturer's dream of a product that has a 99.99% chance of failing three days after the warranty expires.

 

[rockyct]

Car insurance is mandatory because the amount of damage you can do with a motor vehicle can be astronomical and while that was not the operator's intention. Most are not able to foot the cost. As a result both lose and one person is sued to bankruptcy.

Although I don't agree with mandatory Health Insurance, the same thinking can be applied. Based on billions of variables that you can't control (other than eating right and exercise) you can come down with a form of cancer/disease etc. that will cost millions of dollars to treat.

Exactly, there is basically no maximum amount of damage you can do with a car or the amount of health care you may end up needing. Car insurance has to be mandatory because the people who most often crash into another car (aka, young people) probably don't have the money in the bank to fix your car let alone pay for injuries. Car insurance is for the other cars around you as much as it is for you. The damage isn't limited to just the value of your vehicle like it is with breaking your cell phone.

Health insurance is similar but at least if you don't have it, it won't kill other people. However, no one has to replace your totaled car, but hospitals do have to keep you from dying if you are injured and that's partly why medical costs are so high.

 

[FelixDeCat]

Subrogation is just profit protection for your insurance company and a scam against consumers.

 

[Sho'Nuff]

I only buy protection plans for refrigerators. In the past 10 years or so I've purchased 5 new refrigerators. And every single one of them needed major service after 1-2 years.

 

[TurtleCrusher]

Seems like any time I've put the money for a protection plan, I babied it and didn't let it get broken.

 

[who?]

Johnny Knoxville bought the insurance on that rental car he raced, smart thinking.

 

[OverVolt]

Car insurance is mandatory because the amount of damage you can do with a motor vehicle can be astronomical and while that was not the operator's intention. Most are not able to foot the cost. As a result both lose and one person is sued to bankruptcy.

Although I don't agree with mandatory Health Insurance, the same thinking can be applied. Based on billions of variables that you can't control (other than eating right and exercise) you can come down with a form of cancer/disease etc. that will cost millions of dollars to treat.

Nope health insurance is not car insurance. Nor is it life insurance or flood insurance.

And insurance also isn't supposed to be used for redistribution as its all based on statistics, or at least it used to be. Its not really your fault, the schools failed us I guess. We calculated mock policies in community college statistics, but university statistics was retarded. Depends on the teacher I guess.

 

[Muse]

I don't think I've ever bought an extended warranty. They're for suckers, for the most part, is my take. Now, if you think you have a substantially higher chance than the average customer of experiencing product failure for some reason then yes, maybe it would make sense for you. But I don't remember thinking that for myself. I tend to take good care of the things I buy, know what to do to insure that, so buying insurance is just stupid for me. Car insurance is mandated by law, but I don't have comprehensive. I don't get in accidents. Could I, sure.

 

[MongGrel]

There's usually a reason that someone's pushing to sell you a warranty extension plan, and it's probably not because they're thinking of what's best for you.

+1

 

[Muse]

My dad has his working Craftsman drill, that has been through heck and back, purchased new in 1976.

It looks butt ugly but it has never broken.

I have a working corded Craftsman drill I bought just about that time. I may have replaced the chuck, don't remember.