How Can You Insulate Yourself From The Cost Of Replacing Electronics?

Posted on: 30 July 2015

Today's electronics are smaller and more sophisticated than ever before. And with electronics holding such a central role in most lives -- particularly cell phones, laptop computers, and tablets -- it's important to have both the financial and physical means to replace them quickly when needed. If you're planning the purchase of a new phone or tablet, you may be wondering whether it's worthwhile to purchase an extended warranty, electronic device insurance, or even add the value of the device to your homeowner's insurance policy to protect against loss or theft. Read on to learn more about when you may want to purchase an extended warranty on a new electronic device, as well as when adding this device to your homeowner's or renter's insurance policy is a good idea.

When should you purchase an extended warranty on your new device?

Most manufacturers will offer some type of extended warranty on electronics at or above a certain price point. These warranties usually cover things like manufacturing defects or premature hard drive or battery death -- similar to an automotive warranty that covers "bumper to bumper" repairs for a certain number of years. By purchasing an extended warranty from the manufacturer, you should be able to have your item repaired or replaced for free if it breaks during the warranty period.

In other situations, an extended warranty may be offered by the retailer selling the item. Because these retailers often don't have the ability to repair your device themselves, some will purchase their own warranty from the manufacturer to cover repair, or will simply warrant the device for replacement only. These warranties can be more expensive than manufacturer extended warranties, but may be best if you're purchasing something that is much easier to repair than replace and don't want to spend the time necessary to determine if your item even can be repaired.

Either type of extended warranty can prove a valuable investment if you plan to use this electronic item on a frequent or daily basis (or if you're spending a substantial amount of money). However, before making this purchase, it's important to read the fine print of what is covered by the warranty and weigh the likely scenarios in which you'd need to take advantage of an extended warranty. For example, if the warranty covers replacement, not repair, you may be required to turn in your current device before receiving a new one -- which can be problematic if your hard drive has died and you'd like to retrieve photos or documents before giving it up for good.

When should you insure your device? 

Some manufacturers and retailers offer private insurance that can help protect you against damage to (or the loss or theft of) your device. Unlike an extended warranty, which only covers against product defects and problems not stemming from your use of the device, insurance will cover against user error, loss, breakage, and even theft.

In other cases, you may choose to add your electronic device to your homeowner's or renter's insurance policy. Depending upon the terms of your policy, turning in a claim for an electronic item may be subject to a lower (or no) deductible, making this a cost-effective way to insulate yourself against the price of a brand-new device. 

To exercise this option, you'll want to contact your insurance company. Procedures can vary -- for some companies, a specific rider will need to be added to your policy, while other insurance companies may simply take down the product information or serial number for quick access to the item's value if (or when) a claim is made.