4 ms·

This is a good time to point out the non-value of insurance. Insurance companies make money on selling you insurance most of the time. That means, statistical

This is a good time to point out the non-value of insurance. Insurance companies make money on selling you insurance most of the time. That means, statistically speaking, you will give them more money than they give you. Take the few bucks per month and put it in a savings account.

danilocampos 16y ago
I wish I could agree with you. I love to avoid bullshit money traps perpetrated by large companies preying on the fears of consumers, but this is legitimately a good deal. To insure both my own and my girlfriend's laptops (both mid-range MacBook Pros), it costs me about $9 a month. We're talking about $3,200 (USD) in coverage. It would take about 29 years to save up that much (at $9 a month). In the event that my laptop is destroyed/stolen/dropped in a bathtub tomorrow, that savings of $160 since last year isn't going to do me much good. Speaking from experience, the ability to walk into my agent's office, report the loss, and have a check in my mailbox before the end of the week is a truly powerful thing. edit: And, it's worth pointing out, I'm pretty sure that in the space of 29 years, something terrible is going to happen to my laptop. In which case, I've come out ahead.
- nostrademons 16y ago
  I figured the same thing when I got the extended warranty on my first laptop. Laptops are fragile, they die often, it was only like $100 (that's your $9/month for a year...), and if the laptop was broken before the extended warranty ran out (5 years, I think), I'd get a new one, based on current laptop price/performance. I thought this was a great deal, since I thought it quite likely that my first one would die before 5 years and then I could get a much better one at no additional cost. Problem was, when the laptop finally died about 3.5 years later, they made up some bullshit excuse about there being a "liquid spill" on it and refused to honor the extended warranty. (Yeah, Circuit City, no wonder they're out of business...) Anyway, I found the whole experience of trying to convince the service company that yes, my laptop needed servicing so distasteful that I didn't bother with any sort of insurance or extended warranty for my second. And wouldn't you know, it lasted for 5 years, never needed servicing, and can still boot up and run today, though the network's a bit flaky and the battery is basically dead. My point (and presumably webwright's, though I disagree with him in another thread) is that the insurance company has to be making money off this policy somehow - they've got lots of actuaries calculating odds to make sure they come out ahead at the rates they charge. If you think "of course my laptop is going to die within 29 years - I'm bound to come out ahead", I'd suggest reading over your policy very carefully. My guess is that they have some very strict conditions on how it dies, and there's a good chance they won't cover it for many mundane run-of-the-mill failures. Buy insurance because you can't afford to cover the loss otherwise, not because you expect to make a profit on it.
  - danilocampos 16y ago
    I 100% share your cynicism with regard to this world. Yet I am speaking from experience. Here's how it went down last time: "Yeah, so, I dropped it in the sink. I have this paperwork from the Apple store." "Wow, okay. I'll start the claim for you. Someone will give you a call in a few days." A few days pass. I get the call. "You dropped it in the sink?" "Yeah, right into the one bowl in there full of water." "Okay. What did you pay for the replacement? Oh, I see it on the paperwork here. Okay, thanks." A few more days passed. Then I had a check in my mailbox. It helps, I think, that I'm going through a real, consumer-facing insurance company instead of an outfit that sells coverage through a retail middleman. Retail extended warranties are, indeed, bullshit, but the distinction here is that I'm buying real insurance, which covers accidents and liquid damage. They also cover my car, my apartment, and a life policy I have to pay off my student loans in case I should meet an untimely end. But they're the real deal and they haven't screwed me yet. I suspect if I made a regular habit of making claims on my policies, it'd be a different story. So far, though, it's all good.
- util 16y ago
  Whether it's worth it also depends on how likely it is the laptop will get stolen. Is P(laptops stolen per month) * $3200 > $9, ie, roughly P(laptops stolen per month) > 0.3%?
  - silencio 16y ago
    Laptop insurance can often cover accidental damage on top of theft and other things that can happen to a laptop. In very limited cases, other insurance policies may offer limited coverage as well. They're all capped with limitations, but for the one time that something disastrous happens, it may be worth it to some for the peace of mind.
- orangecat 16y ago
  And, it's worth pointing out, I'm pretty sure that in the space of 29 years, something terrible is going to happen to my laptop. In which case, I've come out ahead. I'm not sure of that at all. If it's true, the insurance company is run by fools who are guaranteed to lose money. For starters, I'm pretty sure that if it breaks 5 years from now you won't be getting a check for the original inflation-adjusted purchase price.
  - danilocampos 16y ago
    Everyone's such an expert on my policies – you break into my filing cabinet or something? I forget what it's called, but the policy has a provision to protect me for exactly this issue. And, again, I have already made a claim on it once for a boneheaded accident. Everything was great and I didn't get screwed.
nostrademons 16y ago
I used to think that a lot when I was younger, and vowed I'd never pay for insurance. The math certainly checks out. However, the point of insurance isn't to come out with a profit in strict dollar terms, at least not for the customer. It's to protect yourself against differing marginal utilities of money. A dollar when your livelihood is stolen or when you're in the hospital or when a loved one has just passed away is worth a lot more than a dollar that would otherwise get spent at Starbucks. The point of money is to have enough that it'll never become the limiting factor in doing what you want to do (unless you're one of those folks who defines their net worth as a human being by their net worth). As long as you have enough, it's all good, but when you don't have enough, that's bad. It makes sense to trade more money when you have enough for less money when you would otherwise not have enough. Incidentally, many financially-irrational decisions can be explained by this reasoning. Like the lottery. For many people, an extra dollar a day means no practical difference in their standard of living, but an extra few million dollars leads to a massive improvement. Or the financial industry: on the face of it, the financial industry shouldn't exist, because money is a completely fungible quantity and each party has the same yardstick for whether a transaction was a success. However, they don't, really - it makes sense to pay more in interest later if receiving some capital up front lets you capitalize on an opportunity now.
_grrr 16y ago
Generally correct. Insurance only makes sense for losses you absolutely can not afford. For most people this would mean a phone is definitely not worth insuring, a laptop probably not worth insuring, but a house definitely worth insuring. For the super rich it's probably not even worth insuring a house.

danilocampos 16y ago

I wish I could agree with you. I love to avoid bullshit money traps perpetrated by large companies preying on the fears of consumers, but this is legitimately a good deal. To insure both my own and my girlfriend's laptops (both mid-range MacBook Pros), it costs me about $9 a month. We're talking about $3,200 (USD) in coverage. It would take about 29 years to save up that much (at $9 a month). In the event that my laptop is destroyed/stolen/dropped in a bathtub tomorrow, that savings of $160 since last year isn't going to do me much good. Speaking from experience, the ability to walk into my agent's office, report the loss, and have a check in my mailbox before the end of the week is a truly powerful thing. edit: And, it's worth pointing out, I'm pretty sure that in the space of 29 years, something terrible is going to happen to my laptop. In which case, I've come out ahead.

nostrademons 16y ago
I figured the same thing when I got the extended warranty on my first laptop. Laptops are fragile, they die often, it was only like $100 (that's your $9/month for a year...), and if the laptop was broken before the extended warranty ran out (5 years, I think), I'd get a new one, based on current laptop price/performance. I thought this was a great deal, since I thought it quite likely that my first one would die before 5 years and then I could get a much better one at no additional cost. Problem was, when the laptop finally died about 3.5 years later, they made up some bullshit excuse about there being a "liquid spill" on it and refused to honor the extended warranty. (Yeah, Circuit City, no wonder they're out of business...) Anyway, I found the whole experience of trying to convince the service company that yes, my laptop needed servicing so distasteful that I didn't bother with any sort of insurance or extended warranty for my second. And wouldn't you know, it lasted for 5 years, never needed servicing, and can still boot up and run today, though the network's a bit flaky and the battery is basically dead. My point (and presumably webwright's, though I disagree with him in another thread) is that the insurance company has to be making money off this policy somehow - they've got lots of actuaries calculating odds to make sure they come out ahead at the rates they charge. If you think "of course my laptop is going to die within 29 years - I'm bound to come out ahead", I'd suggest reading over your policy very carefully. My guess is that they have some very strict conditions on how it dies, and there's a good chance they won't cover it for many mundane run-of-the-mill failures. Buy insurance because you can't afford to cover the loss otherwise, not because you expect to make a profit on it.
- danilocampos 16y ago
  I 100% share your cynicism with regard to this world. Yet I am speaking from experience. Here's how it went down last time: "Yeah, so, I dropped it in the sink. I have this paperwork from the Apple store." "Wow, okay. I'll start the claim for you. Someone will give you a call in a few days." A few days pass. I get the call. "You dropped it in the sink?" "Yeah, right into the one bowl in there full of water." "Okay. What did you pay for the replacement? Oh, I see it on the paperwork here. Okay, thanks." A few more days passed. Then I had a check in my mailbox. It helps, I think, that I'm going through a real, consumer-facing insurance company instead of an outfit that sells coverage through a retail middleman. Retail extended warranties are, indeed, bullshit, but the distinction here is that I'm buying real insurance, which covers accidents and liquid damage. They also cover my car, my apartment, and a life policy I have to pay off my student loans in case I should meet an untimely end. But they're the real deal and they haven't screwed me yet. I suspect if I made a regular habit of making claims on my policies, it'd be a different story. So far, though, it's all good.
util 16y ago
Whether it's worth it also depends on how likely it is the laptop will get stolen. Is P(laptops stolen per month) * $3200 > $9, ie, roughly P(laptops stolen per month) > 0.3%?
- silencio 16y ago
  Laptop insurance can often cover accidental damage on top of theft and other things that can happen to a laptop. In very limited cases, other insurance policies may offer limited coverage as well. They're all capped with limitations, but for the one time that something disastrous happens, it may be worth it to some for the peace of mind.
orangecat 16y ago
And, it's worth pointing out, I'm pretty sure that in the space of 29 years, something terrible is going to happen to my laptop. In which case, I've come out ahead. I'm not sure of that at all. If it's true, the insurance company is run by fools who are guaranteed to lose money. For starters, I'm pretty sure that if it breaks 5 years from now you won't be getting a check for the original inflation-adjusted purchase price.
- danilocampos 16y ago
  Everyone's such an expert on my policies – you break into my filing cabinet or something? I forget what it's called, but the policy has a provision to protect me for exactly this issue. And, again, I have already made a claim on it once for a boneheaded accident. Everything was great and I didn't get screwed.

nostrademons 16y ago

I used to think that a lot when I was younger, and vowed I'd never pay for insurance. The math certainly checks out. However, the point of insurance isn't to come out with a profit in strict dollar terms, at least not for the customer. It's to protect yourself against differing marginal utilities of money. A dollar when your livelihood is stolen or when you're in the hospital or when a loved one has just passed away is worth a lot more than a dollar that would otherwise get spent at Starbucks. The point of money is to have enough that it'll never become the limiting factor in doing what you want to do (unless you're one of those folks who defines their net worth as a human being by their net worth). As long as you have enough, it's all good, but when you don't have enough, that's bad. It makes sense to trade more money when you have enough for less money when you would otherwise not have enough. Incidentally, many financially-irrational decisions can be explained by this reasoning. Like the lottery. For many people, an extra dollar a day means no practical difference in their standard of living, but an extra few million dollars leads to a massive improvement. Or the financial industry: on the face of it, the financial industry shouldn't exist, because money is a completely fungible quantity and each party has the same yardstick for whether a transaction was a success. However, they don't, really - it makes sense to pay more in interest later if receiving some capital up front lets you capitalize on an opportunity now.

_grrr 16y ago

Generally correct. Insurance only makes sense for losses you absolutely can not afford. For most people this would mean a phone is definitely not worth insuring, a laptop probably not worth insuring, but a house definitely worth insuring. For the super rich it's probably not even worth insuring a house.