Insurance against stupid
December 12, 2012 9:05 AM Subscribe
I clearly cannot be trusted with my own valuables. Help me find a lifetime warranty that will cover me in the event of dumbassery.
This morning I was sprinting to cross an intersection before the light changed and my trusty Nexus 7 dropped out of my pocket, falling screen-down onto the pavement. It is, of course, toast. A month after my August wedding, I lost my ring for three weeks. In September, my smartphone was stolen on the subway. Obviously I need to be more mindful with my stuff, but I'm thinking that unless I can turn my mindset around overnight I should be getting loss/theft/damage protection on my small-but-valuable-object purchases as a matter of course.
What is the best, most cost-effective way to do that? Some stores offer extended/expanded warranties, but standing in a checkout line is not the best place to review terms. SquareTrade gets tossed around a lot - do they do all three? I've always been taught to avoid such plans as a waste of money, but I'd have saved a few hundred dollars if I'd ponied up for one on the tablet, and a lot of aggravation if I'd been able to replace the phone with a new one instead of a six-year-old junker.
This morning I was sprinting to cross an intersection before the light changed and my trusty Nexus 7 dropped out of my pocket, falling screen-down onto the pavement. It is, of course, toast. A month after my August wedding, I lost my ring for three weeks. In September, my smartphone was stolen on the subway. Obviously I need to be more mindful with my stuff, but I'm thinking that unless I can turn my mindset around overnight I should be getting loss/theft/damage protection on my small-but-valuable-object purchases as a matter of course.
What is the best, most cost-effective way to do that? Some stores offer extended/expanded warranties, but standing in a checkout line is not the best place to review terms. SquareTrade gets tossed around a lot - do they do all three? I've always been taught to avoid such plans as a waste of money, but I'd have saved a few hundred dollars if I'd ponied up for one on the tablet, and a lot of aggravation if I'd been able to replace the phone with a new one instead of a six-year-old junker.
You know, I am a queen of absent mindedness and I understand where you are coming from. But the best insurance for small electronics and jewelry (both of which I love and accumulate) is careful planning and zippered pockets. Seriously, there is a place in my cafe bag and purse for everything, and ditto when I travel. Only this saves me from ongoing losses and damage. And it is way more cost effective.
posted by bearwife at 9:15 AM on December 12, 2012 [2 favorites]
posted by bearwife at 9:15 AM on December 12, 2012 [2 favorites]
For good jewelry, inquire with your insurance agent about scheduled personal property coverage. You can get this on renters policies, too.
It might be worth inquiring about covering electronics as scheduled items as well, but I'm not sure such coverage is available for smartphones, etc. Cameras can be covered as scheduled items with many insurance companies, though.
posted by Currer Belfry at 9:17 AM on December 12, 2012
It might be worth inquiring about covering electronics as scheduled items as well, but I'm not sure such coverage is available for smartphones, etc. Cameras can be covered as scheduled items with many insurance companies, though.
posted by Currer Belfry at 9:17 AM on December 12, 2012
I've always been taught to avoid such plans as a waste of money, but I'd have saved a few hundred dollars if I'd ponied up for one on the tablet, and a lot of aggravation if I'd been able to replace the phone with a new one instead of a six-year-old junker.
But this is hindsight. You'd have saved money if you'd insured *only* those things, but probably not if you'd insured every single small, valuable possession you have. Since you don't know what you'll lose or break next, it's still a waste of money.
The insurance you need is called a savings account. When you buy something, ask how much the extended warranty costs but don't buy it. Then put that amount in a separate account or budget line labeled "replace recently purchased broken stuff," and use it only for that. You'll come out ahead.
posted by jon1270 at 9:33 AM on December 12, 2012 [11 favorites]
But this is hindsight. You'd have saved money if you'd insured *only* those things, but probably not if you'd insured every single small, valuable possession you have. Since you don't know what you'll lose or break next, it's still a waste of money.
The insurance you need is called a savings account. When you buy something, ask how much the extended warranty costs but don't buy it. Then put that amount in a separate account or budget line labeled "replace recently purchased broken stuff," and use it only for that. You'll come out ahead.
posted by jon1270 at 9:33 AM on December 12, 2012 [11 favorites]
For some things, it's probably more cost effective just to build an "insurance account" where you stick the premium each month and wait for disaster to occur. Because like someone mentioned above once you start actually claiming things your price will go up. For things I can't afford to replace - like my engagement ring - I have separate insurance/scheduled insurance. Your homeowners/renters can help with that. Make sure you understand what you're getting - I have my engagement ring and other expensive jewelry on their own policy that will just pay me cash, because my homeowners insurance would replace the diamond with a "similar" diamond and I didn't want that. I'm sure it's the same with electronics - since they can't get exactly the same thing they'd get something "similar" and who knows what they might deem that to be.
Also, check into buying things with American Express. ?
posted by dpx.mfx at 9:35 AM on December 12, 2012 [1 favorite]
Also, check into buying things with American Express. ?
posted by dpx.mfx at 9:35 AM on December 12, 2012 [1 favorite]
Losses have two fundamental characteristics: frequency and severity. This yields four categories:
(1) High frequency, low severity
(2) High frequency, high severity
(3) Low frequency, low severity
(4) Low frequency, high severity.
Categories 1 and 3 are just the cost of doing business or living life. Category one are the kinds of minor losses that happen all the time but can be avoided with care. Category 3 are minor accidents that don't happen often enough to be worth fussing about. Category 2 includes really bad ideas. Category 4 are special cases, rare catastrophes, that are unavoidable and hard to prevent but potentially devastating in their effect. You don't have enough money to pay for these most of the time, but you do have enough money to pay someone else to accept that risk.*
You deal with these kinds of risk in the following ways:
(1) Risk management practices and self-insured retention, i.e., take steps to reduce the frequency and build that cost into your budget.
(2) Don't do that shit.
(3) Self-insured retention.
(4) Insurance products.
Depending on exactly what it is we're talking about, this is a category 1 or 3 risk. It's not a category 4 risk. "Extended warranties," "home warranties," etc. of the sort you're talking about are essentially insurance products for what are ultimately category 1 or 3 risks. You would be much better off taking the money you'd spend on premiums for these programs and putting it into a savings account.
Proof? Homeowners' and renters' insurance policies, which do actually cover things like dropping your phone or losing your wedding ring almost always have deductibles, i.e., a mandatory level of self-insured retention, in the hundreds or thousands of dollars. Zero-deductible policies are sometimes available, if very expensive, but most carriers won't even write them, because first-dollar coverage is considered an "uninsurable risk," i.e., something for which it is impossible to write a viable premium, i.e., a category 1 or 3 risk.
*Note that whether something is "high severity" depends on how much money you've got. A category 4 risk for a marginally employed single mom or a local mom 'n pop might actually be a category 3 for a wealthy businessman or Wal-Mart.
posted by valkyryn at 10:24 AM on December 12, 2012 [10 favorites]
(1) High frequency, low severity
(2) High frequency, high severity
(3) Low frequency, low severity
(4) Low frequency, high severity.
Categories 1 and 3 are just the cost of doing business or living life. Category one are the kinds of minor losses that happen all the time but can be avoided with care. Category 3 are minor accidents that don't happen often enough to be worth fussing about. Category 2 includes really bad ideas. Category 4 are special cases, rare catastrophes, that are unavoidable and hard to prevent but potentially devastating in their effect. You don't have enough money to pay for these most of the time, but you do have enough money to pay someone else to accept that risk.*
You deal with these kinds of risk in the following ways:
(1) Risk management practices and self-insured retention, i.e., take steps to reduce the frequency and build that cost into your budget.
(2) Don't do that shit.
(3) Self-insured retention.
(4) Insurance products.
Depending on exactly what it is we're talking about, this is a category 1 or 3 risk. It's not a category 4 risk. "Extended warranties," "home warranties," etc. of the sort you're talking about are essentially insurance products for what are ultimately category 1 or 3 risks. You would be much better off taking the money you'd spend on premiums for these programs and putting it into a savings account.
Proof? Homeowners' and renters' insurance policies, which do actually cover things like dropping your phone or losing your wedding ring almost always have deductibles, i.e., a mandatory level of self-insured retention, in the hundreds or thousands of dollars. Zero-deductible policies are sometimes available, if very expensive, but most carriers won't even write them, because first-dollar coverage is considered an "uninsurable risk," i.e., something for which it is impossible to write a viable premium, i.e., a category 1 or 3 risk.
*Note that whether something is "high severity" depends on how much money you've got. A category 4 risk for a marginally employed single mom or a local mom 'n pop might actually be a category 3 for a wealthy businessman or Wal-Mart.
posted by valkyryn at 10:24 AM on December 12, 2012 [10 favorites]
Response by poster: But this is hindsight. You'd have saved money if you'd insured *only* those things, but probably not if you'd insured every single small, valuable possession you have. Since you don't know what you'll lose or break next, it's still a waste of money.
If I had insured every single small, valuable possession I carry on a day-to-day basis, I'd have gone three-for-three. This is why I'm reconsidering my position on these things - it's going past "risk" and into "certainty."
posted by Holy Zarquon's Singing Fish at 10:57 AM on December 12, 2012
If I had insured every single small, valuable possession I carry on a day-to-day basis, I'd have gone three-for-three. This is why I'm reconsidering my position on these things - it's going past "risk" and into "certainty."
posted by Holy Zarquon's Singing Fish at 10:57 AM on December 12, 2012
For jewelry I can recommend Jewelers' Mutual. I've had a policy for ten years. If you're anything like me, getting insurance for something will guarantee that you won't need to use it.
posted by bq at 11:05 AM on December 12, 2012 [1 favorite]
posted by bq at 11:05 AM on December 12, 2012 [1 favorite]
Keep in mind that the insurance policies that cover damage (rather than the item breaking on it's own) are typically more expensive. When you get the cheap extended warranty on something at a store, it's not going to do anything if you drop your gadget on the ground and break it. I think the amount you will pay for real insurance on everything will likely be as much as just replacing or repairing the things that break.
If you do get insurance plans for things, make sure you are sure on the deductibles. There's no use insuring a $300 phone if the deductible is going to be $200 and it's going to cost you $100 for the insurance.
posted by markblasco at 1:52 PM on December 12, 2012
If you do get insurance plans for things, make sure you are sure on the deductibles. There's no use insuring a $300 phone if the deductible is going to be $200 and it's going to cost you $100 for the insurance.
posted by markblasco at 1:52 PM on December 12, 2012
If I had insured every single small, valuable possession I carry on a day-to-day basis, I'd have gone three-for-three.
It sounds like you found the ring, so that doesn't count. If you'd filed a loss claim and then found the ring, you'd have had to return whatever payout you'd received, or you'd be guilty of fraud.
As to the other stuff, the kind of insurance policy that you're imagining -- one that's affordable and that meaningfully covers loss and damage to small, fragile items simply doesn't exist. Besides the obvious high risk involved with things that are small (easily lost) and fragile (easily damaged), imagine the perverse incentives they'd be setting up by offering such a policy. You are tired of your obsolete phone? Smash it and say you dropped it -- presto, shiny new phone. You want a second tablet? Say the one you had was stolen -- presto, another one appears. No insurer can stay in business offering that sort of thing, so the most you'll find is maybe a few dishonest companies that imply thy'll cover such losses, and then when you lose or break something they'll point to some fine print and deny the claim.
posted by jon1270 at 3:22 PM on December 12, 2012
It sounds like you found the ring, so that doesn't count. If you'd filed a loss claim and then found the ring, you'd have had to return whatever payout you'd received, or you'd be guilty of fraud.
As to the other stuff, the kind of insurance policy that you're imagining -- one that's affordable and that meaningfully covers loss and damage to small, fragile items simply doesn't exist. Besides the obvious high risk involved with things that are small (easily lost) and fragile (easily damaged), imagine the perverse incentives they'd be setting up by offering such a policy. You are tired of your obsolete phone? Smash it and say you dropped it -- presto, shiny new phone. You want a second tablet? Say the one you had was stolen -- presto, another one appears. No insurer can stay in business offering that sort of thing, so the most you'll find is maybe a few dishonest companies that imply thy'll cover such losses, and then when you lose or break something they'll point to some fine print and deny the claim.
posted by jon1270 at 3:22 PM on December 12, 2012
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If you do buy insurance then once you've claimed a few times, you're going to find your premiums go through the roof I suspect!
posted by pharm at 9:11 AM on December 12, 2012