Oneupweb : Protection Plans and Extended Warranties

Today it seems that everything comes with the option to purchase a protection plan (extended service plan) or extended warranty. “Would you be interested in a protection plan on your gum sir? It provides for no cost replacement in the event of accidental dropage or premature loss of flavor within the first 45 minutes of chewing?” It’s not quite that bad, but probably not too far off in the future. In addition to the stores themselves trying to up sell you, you can even go to separate companies to purchase extended service plans in case the cashier at Best Buy forgot to sell you one. Some examples are Protect-it and NEW Corp.

I used to categorically deny these offerings. They, like most insurance plans, bank on the fact that consumers will not utilize them. Case in point, I have yet to ever use auto insurance. I’ve been mandated by law to pay for it for more than 20 years and have never gotten anything in return. In fact, when I did have something to repair, the $250.00 cracked windshield didn’t exceed my deductible, so I still paid for it out of pocket and the insurance company gladly accepts my monthly deposits to their coffers. The point is that this is big business and consumers think that they will pay a nominal 5 to 10% of their purchase price “just in case.”

So why did I say “used to” above? I’ve come to realize that for some things and in some cases, it may be worth it for that peace of mind. I recently bought a new phone and was presented with the option for a protection plan and my initial instinct was to deny it. Although I have never busted up my phone, others in my family drop them all the time and they get beat up in their pockets and purses—cameras are another thing that tend to get dropped a bit. So even though I don’t personally need protection on my phone, it could definitely be worth it for other phones. What did make sense though is that you can get your battery replaced for free after 6 months and then every year. If you are disciplined enough, the cost of the protection plan is cheaper than buying $50.00 batteries on the phone you got for free with a 2 year Service Plan.

The point is this: Companies will always try to up sell your peace of mind. Most all products are going to be protected from defects by the manufacturer. Items spontaneously breaking on day 91 as soon as the 90 day warranty expires are rare except anecdotally. I would recommend carefully considering the type of product, the type of use and the behavior of the user. Also be sure to think if you’ll be disciplined enough to take advantage of a protection plan and getting your money’s worth, like in the example of getting replacement consumables like batteries. These plans like any insurance are a use it or lose it proposition, and it is wise to make sure you are not just paying extra because the sales clerk or cashier made it sound good and safe. Now go buy good quality merchandise and take care of it, and I think you’ll find that the vast majority of the time your money is better kept for you rather than an ambiguous protection plan.

For some other funny comics on the subject look here…

Happy shopping.