SCAM ALERT: Mobile Device Insurance and Extended Warranties - Comments Page 1

These electronic companies and box stores must thin all customers are stupid when they try to sell you a warrantee for whatever number of years and include the first year of the warrantee as the first year that you bought the product even though the manufacturer has included the first year in the original sale.

Bob,

Good article and I'm in agreement with you on this. Essentially, for smaller consumer items like Smartphones, etc. you are financially better off if you 'insure' yourself. By that, I mean that you would be better off if you 'save' the money you would have spent on an extended warranty and replace the device after the manufacturers warranty expires. Obviously, if the device is still working and meeting your needs, then you can keep using it until it fails and you will save more each payment period. Insurance of this kind provides 'peace of mind', but at a high cost.

This is a great article. I'd hate to know how many people fall for the scam. Insurance is as bad as a $159, gold plated HDMI cable.

Bob, I hope you know more about computers than you do about insurance.

Are you really equating health insurance with extended warranties?

Pop quiz: What is the leading cause of bankruptcy in the US? Medical expenses.

You can't get a refurbished body on Ebay if yours fails for lack of medical care. Lack of insurance increases your risk of dying.

Every other industrialized country provides insurance to its citizens at low cost. Is this the way we want to be exceptional? Ten years from now we'll wonder what all the fuss was about and how we ever got along without it. Read the history about the start of Medicare and the scaremongering about that.

Agree 100%. However I find it ironic that as I read your article, you have ads to purchase car warranties!

I am in complete agreement with your take on extended warranties, with one exception. For those who treat their smartphone, tablet, etc. roughly I would consider replacement coverage due to damage or misuse. I use my smartphone for work and if I drop it or hit it with a hammer (I've done both!) it's covered. Just a thought. One would have to weigh the pros and cons to really see if it was worth the cost.

While I agree with most of what you say, in the case of TVs and other high-priced items it can be a lifesaver. Specifically, Squaretrade warranties are worth their cost. I bought a Samsung 32" Widescreen LCD HDTV and got a Squaretrade warranty. Within s weeks of the expiration of the mfrs. warranty it developed a problem in the sound system. It could not be repaired in the window allowed by Squaretrade, so they refunded the purchase price AND let me keep the old TV, which is serving as my main monitor for my PC (I am using it now.). Also, I bought it on sale, for a substantial discount, and they paid me the full retail price, so I effectively made money on the deal.
This is not the only instance of Squaretrade coming to the rescue, because it seems that more and more products are reaching retail outlets without adequate testing. In the last 5 years I have returned more defective items than I had in the previous 20 years.
Granted Squaretrade is only for electronic items, but this seems to be an area where it is needed.
Just bought my first smartphone, for just about $100, and Virgin Mobile wants $5.00/month plus $50 deductible for insurance, so any more than a year of coverage is not cost-effective, and a year or less is questionable anyway.

I usually purchase protection plans for computers (both desktop and laptop) when purchased from Future Shop (owned by Best Buy) or Dell. I come out ahead perhaps half of the time.

Specific examples:

Dell XPS laptop: started randomly shutting down about 2 years after delivery. I had purchased 4 year Next Business Day protection plan. It took the tech two tries to get it right: first he replaced the motherboard, then the video card a couple of weeks later.

Not only did that protection plan more than pay for itself many, many times over, I wound up with the higher-grade video card that was a couple of hundred buck more expensive at the time of purchase.

Another example: I purchased my wife's computer from Future Shop not quite two years ago and purchased a 2-year protection plan. It now appears as if the Ethernet chip on the motherboard has a problem and I'm just about to take the machine in for repair / replacement.

I don't purchase product protection plans for most of my electronic purchases - only the expensive items. And I *always* negotiate the cost downwards - often, the sales person will discount the cost of the product down so as to cover most or all of the cost of the protection plan.

Your points are well taken, Bob. For my business, because I have 5 cell phones out there I save $30/month by not buying insurance. When an event happens where a phone breaks or is lost, I have saved enough to pay for a replacement. I suppose that is self insurance. Some years I break even, in most I am ahead.

On the other hand, my Galaxy S3 dropped about 3 inches onto concrete two days after I bought it. The screen shattered. I took it to the store and asked about fixing it. It was too new and no one had parts or expertise (not the case now.) My salesperson signed me up for insurance retroactively and I got a new phone. I kept the insurance to show my good faith for his efforts (a new phone would have cost $500 at the time.) About a year later my phone was stolen. I had to pay $90, but I had a replacement sent to me overnight. So, there is some value in insurance. I suspect an insurance rider would not result in anything other than replacement cost less similar deductible, it wouldn't guaranty fast turnaround. That being said, I am still a believer in self insuring for the reasons you listed.

Another experience, I bought a Sony Bravia 38 or 39" TV from Best Buy. I bought the extended warranty. Two years later the left side of the screen started to bleed. I called for service. A tech came to my house and said he would order a new screen. Later that day I received a phone call. They would not get a new screen. I could take the TV back to BB and get a FULL refund (not including the warranty.) With that refund I was able to buy a bigger TV, same quality, with 3D. It worked for me.

One point that I think needs to made clearer. When you buy a new gadget generally it is the newest or newer technology. For that reason you pay a high price premium for the newness. By the time you break or lose it the price of the item has dropped to the point where, as you pointed out, the item is available on Ebay or elsewhere for considerably less than a new one from your retailer. Also you are more likely to be able to have the item fixed when it couldn't be fixed when the item first hit the market. Price drops are the icing on the cake of self insuring.

Thanks,

John

To Bart, what Bob was saying in using the example of 0bama(doesn't)care is our society seems to want someone else to take their risks and to not to pay for it in the real world. He was NOT equating device insurance with health insurance.

Actually device insurance is STILL a free enterprise deal, unlike the government's mandates which have taken the choice out of the health insurance marketplace -- the choice for people to bear their own costs, and to possibly buy only catastrophic cost coverage.

Furthermore, "every other industrialised country" giving "insurance" is NOT TRUE. It's SOCIALISED Medicine - you know -- what the current administration is calling "single payer." Until now, people from those countries, including Canada and the UK, have envied us for the accessibility we have as well as the reliability of the system.

I guess that Bart hasn't gotten his cancelation notice, or he's a government employee exempt from the system. If you're in private or local/state employment, wait until the individual mandate goes into effect! You'll probably lose your coverage or have to pay drastically more for less.

I just hope that government, in it's "infinite" (not) wisdom doesn't try to take over the electronics industry. If they do, we'll be back to flip phones and other kludge.

My wife and I have had cell phones for about two and a half decades, since before the days of 'flip' phones. We have never paid 'extra' for insurance from the vendor/carrier. Over all that time, neither of us has had a situation where we would have used insurance if we had it. The money we have saved in premiums we haven't paid is enough to upgrade our phones every few years. It's like we get free phones, compared to our friends who pay insurance. I wonder if perhaps knowing that our phones are not insured somehow prompts us to be more careful about how we handle them.

Hey Bart - Get off your liberal soapbox

I figured out long ago that when a store offered me an extended warranty that it was there way of increasing their profits. So Bob, it's true then that Selena Gomez turned you down. :-)

I agree with you Heather. Your response to Bart is right. If you want to buy extended warranties for your electronics, then do so. If you don't, that is your decision.

The same could be said for having health insurance. It should be up to the individual, if you want to pay for health insurance. I believe in personal responsibility. If you want to have habits that are detrimental to your health, then that is your problem; you are responsible for your own health.

When did this useful newsletter turn into a political soapbox? There are places to spew the hate and misinformation and this is NOT that place. Thank you Bob for all your help with all the information you provide.

While we're at it, why not discuss gun control?

Well, sometimes one can win out...

A couple of years ago, I bought an Epson Printer at Staples. And spare ink, too. Came to something like $300 including the taxes. So they offered me a deluxe ins (promo offer) that covered everything for 2 years. That cost about $30. Well, 1 year and 1 month later, I came to print... and the poor thing made a pitiful noise, and puked all its ink all over my desk. (What a MESS!) It was dead, Jim. They could not replace it as that model was no longer being made! WHY? It was a great machine! So they paid me back every dime, buying even my ink supplies. I got a "store credit card". They were very kind, sympathetic, and polite. There was little argument. I later used the card to buy some laser ink for Lesley, and then later bought a brand new HP printer and spare ink for myself, with the balance. True, the new printer cost less. But it still prints.

Another time, I bought a small rechargeable vacuum at another store. Spent $20 on a replacement policy (also a promo). The silly thing cost only $30. When it died 6 months later, they took it back, and plugged it in to test it. The whip who did not believe me got a nice shock from the shorted out thing, too. Good for him. But they ended giving me a $70 vacuum, that still runs 8 years later, and was at least 3x better than the dead one. They did give me an argument though. Well sure, I was getting $70 for $50. NOT MY FAULT, I said.

That being said, I do not buy them all the time. But those 2 times I won out. I also once spent $2000 in a car warranty. The tranny and some other repairs came to $4000. But on another car, I spent $1400, and got zilch out of that warranty. Although, I figure I'm still ahead by $600.

Another car, I spent another $2000 on a policy. A freak engine malfunction, and $3300 later, I argued it should be warrantied. Oh, I did get a little static. But won. I did have to pay a $110 "service fee" though. But I am still over a grand in the green, there. Plus with the policy I got 2 free oil changes! Not that an oil change is worth that much. Still better than a boot in the ribs, as they say.

On other purchases I eschewed warranties... I am still alive. The world did not end.

Sometimes you win, sometimes you lose, sometimes you break even.

I never buy any insurance unless the law demands it. It never pays, I prefer to keep a rainy day fund to replace anything that gets damaged. However, when buying a Nintendo gaming device for my mentally disabled daughter, I was offered a plan. I explained the certainty that it would be claimed upon withing the 3 year time (my daughter is harsh on such equipment). The salesman said it didnt matter, they would honour the agreement. So far we have had 3 new replacements.

all the stuff that we purchase over 20.00 we want ins on...I have done it like washer,etc. never use any of it..im learning as I get older..how stupid I have been..they try to get u...god help us to b a little smarter..

How about we skip the politics and stick to the subject.

I personally rarely get any type of "extended" coverage over and above that the manufacturer provides plus whatever "extended" coverage I get by paying with a credit card (which yes, I pay off every month much to the annoyance of the issuer...). Like Bob said, and supported by Consumer Reports and others, things usually go wrong right off the bat when the manufacturer's coverage is still in effect. I can't recall a time when I would have benefited from any "extended" coverage. Besides, by the time something wears out or breaks, the replacements are usually better and cheaper anyway, and often made by someone other than the company of the item that broke, so I may find an even better deal. If I bought an extended warranty on an HP printer and it breaks, I may not want a newer relacement HP that could be a proven turkey, but maybe a Brother or Dell that is far better, and for about the same dollars that I paid for the coverage in the first place.

My opinions.