6 ms·

In sum, insurance companies are not selling their product at a loss, and if they are operating efficiently, they aren't selling their product to you at a loss e

by throwaway2048 5y ago

In sum, insurance companies are not selling their product at a loss, and if they are operating efficiently, they aren't selling their product to you at a loss either.

VBprogrammer 5y ago
In fairness, I wouldn't be surprised if many of the people who have these insurance policies fail to claim on them or decide to replace their item when it breaks regardless of the insurance policy. A bit like the gym membership model, 90% of people don't use it at all.
- hackerfromthefu 5y ago
  Also like warranties. e.g. I have a Samsung 970 EVO Plus SSD drive that has just failed, and lost some of my important data. Its got a 5 year warranty and is only a year old. I doubt I will bother to go through the warranty claims hassle, because the end result is not worth it. I would have to send it back to Samsung, with my commercially important data on it locked in the chips, and get back another drive which it seems is not particularly trustworthy to rely on again. I've had 2/5 Samsung SSD drives fail and won't be using them for anything important again, I've just ordered a Hynix to replace it. Another case, I have had a washing machine fail under warranty recently, again about 1 year into a 5 year warranty. It took 7 weeks and many frustrating phone calls before someone came around to actually fix it. Next time I won't bother to get a new washing machine, I will get a second hand one, and when it breaks I will get another second hand one immediately so I don't have the problem of not having a washing machine for sooo long.
  - throwawayboise 5y ago
    If you're at all handy with tools, fixing appliances is normally pretty simple. The parts are readily available and often you don't need more than a few screwdrivers and wrenches to do the job. I've saved thousands of dollars fixing appliances myself vs. discarding them and buying new.
    - sgtnoodle 5y ago
      The door hinge on our refrigerator started cracking after about 1.5 years. It was covered by the credit card warranty, so I tried working with a repair company. They charged $150 to show up and say they couldn't do anything, then quoted $900 to replace the whole door. It was a $1200 refrigerator. I spent an hour and fixed it myself with some aluminum extrusion and a few rivets, then got reimbursed $700 by the credit card company. My sister in law's oven failed with the self cleaning lock activated. It's an in-wall unit so the repair tech could only think to start cutting apart the wall. Instead, I took a hacksaw blade and painstakingly sawed off the lock. Since I was already committed, we then pulled out the unit and bypassed the failed thermal switch long enough to "unlock" the mechanism. That probably saved at least $1200...
    - hackerfromthefu 5y ago
      Yeah my father is a handyman and I did lots of house and other maintenance for quite a few year, in balance to the very mental aspects of software! However for now I'm focusing my creative energy on higher value economic activities and spending spare time on the beach yoga or music instead. Someone else can fix that stuff for now :)
londons_explore 5y ago
The insurance company may have a deal with the repairers, so they're able to get repairs done cheaper than you can. If that's the case, it may be cheaper (on average) to have insurance than not to.
- jjav 5y ago
  To the extent that they get special pricing, the insurance company will be pocketing the difference as extra profit, not passing it on to you.
hgomersall 5y ago
As always the adage "if you can afford to self-insure, you should" applies. There are two reasons you should buy insurance: because you are required to by law, or because the cost of covering replacement or repair would be problematic (either financially or logistically).
- martyvis 5y ago
  The other issue with appliance insurance or extended warranty and the like, it dilutes the obligation of companies to honour consumer guarantees. Certainly in Australia companies have been fined and otherwise penalised for promoting paid extended warranties when they should have been instead offering to make sure they meet the "fit for purpose" obligations
- vanviegen 5y ago
  There is one additional reason: if your circumstances make it likely that you will claim more than others, due to a cause that is not accounted for in the fee calculation.

In sum, insurance companies are not selling their product at a loss, and if they are operating efficiently, they aren't selling their product to you at a loss either.

VBprogrammer 5y ago

In fairness, I wouldn't be surprised if many of the people who have these insurance policies fail to claim on them or decide to replace their item when it breaks regardless of the insurance policy. A bit like the gym membership model, 90% of people don't use it at all.

hackerfromthefu 5y ago
Also like warranties. e.g. I have a Samsung 970 EVO Plus SSD drive that has just failed, and lost some of my important data. Its got a 5 year warranty and is only a year old. I doubt I will bother to go through the warranty claims hassle, because the end result is not worth it. I would have to send it back to Samsung, with my commercially important data on it locked in the chips, and get back another drive which it seems is not particularly trustworthy to rely on again. I've had 2/5 Samsung SSD drives fail and won't be using them for anything important again, I've just ordered a Hynix to replace it. Another case, I have had a washing machine fail under warranty recently, again about 1 year into a 5 year warranty. It took 7 weeks and many frustrating phone calls before someone came around to actually fix it. Next time I won't bother to get a new washing machine, I will get a second hand one, and when it breaks I will get another second hand one immediately so I don't have the problem of not having a washing machine for sooo long.
- throwawayboise 5y ago
  If you're at all handy with tools, fixing appliances is normally pretty simple. The parts are readily available and often you don't need more than a few screwdrivers and wrenches to do the job. I've saved thousands of dollars fixing appliances myself vs. discarding them and buying new.
  - sgtnoodle 5y ago
    The door hinge on our refrigerator started cracking after about 1.5 years. It was covered by the credit card warranty, so I tried working with a repair company. They charged $150 to show up and say they couldn't do anything, then quoted $900 to replace the whole door. It was a $1200 refrigerator. I spent an hour and fixed it myself with some aluminum extrusion and a few rivets, then got reimbursed $700 by the credit card company. My sister in law's oven failed with the self cleaning lock activated. It's an in-wall unit so the repair tech could only think to start cutting apart the wall. Instead, I took a hacksaw blade and painstakingly sawed off the lock. Since I was already committed, we then pulled out the unit and bypassed the failed thermal switch long enough to "unlock" the mechanism. That probably saved at least $1200...
  - hackerfromthefu 5y ago
    Yeah my father is a handyman and I did lots of house and other maintenance for quite a few year, in balance to the very mental aspects of software! However for now I'm focusing my creative energy on higher value economic activities and spending spare time on the beach yoga or music instead. Someone else can fix that stuff for now :)

londons_explore 5y ago

The insurance company may have a deal with the repairers, so they're able to get repairs done cheaper than you can. If that's the case, it may be cheaper (on average) to have insurance than not to.

jjav 5y ago
To the extent that they get special pricing, the insurance company will be pocketing the difference as extra profit, not passing it on to you.

hgomersall 5y ago

As always the adage "if you can afford to self-insure, you should" applies. There are two reasons you should buy insurance: because you are required to by law, or because the cost of covering replacement or repair would be problematic (either financially or logistically).

martyvis 5y ago
The other issue with appliance insurance or extended warranty and the like, it dilutes the obligation of companies to honour consumer guarantees. Certainly in Australia companies have been fined and otherwise penalised for promoting paid extended warranties when they should have been instead offering to make sure they meet the "fit for purpose" obligations
vanviegen 5y ago
There is one additional reason: if your circumstances make it likely that you will claim more than others, due to a cause that is not accounted for in the fee calculation.