So you just bought the latest [insert fancy electronic name here], and you know that it comes with a warranty. But you’ve also heard it’s smart to get an additional protection plan (also known as supplemental insurance) to cover all your devices — and bases. Aren’t they the same?
The short answer is no. Insurance may cover things that a warranty won’t. Let’s break down the different types of insurance and warranties to get a better idea of both — and which one may be the best option for you.
What’s the definition of a warranty?
A warranty, manufacturer’s warranty, mechanical breakdown insurance, appliance warranty, you name it — is a type of guarantee that a manufacturer or warranty company makes regarding the condition of its product that you purchased. Your warranty coverage is essentially a “promise” the manufacturer makes to repair or replace the items (if necessary) for a specific period of time that covers flaws and defects (or anything that occurs from the manufacturer’s design). A well-known example of a product warranty is a car warranty. A car warranty usually covers repairs on a vehicle for a specific period of time or up to a certain milage point.
An extended warranty (also known as a service agreement or service contract) works in the same way. Only this time, you are paying for the extra, agreed-upon length of time covered. Another popular example of this would be an extended car warranty.
What is supplemental insurance?
Supplemental insurance, also known as asset protection or personal property insurance, can be added on for the stuff you own — typically your major, more expensive buys. (Think: laptops, appliances, furniture, your water heater, and even your iPhone.) This coverage is not required like your car insurance, home insurance, or other kind of insurance policy. Rather, it would kick in for instances of accidental damage and normal wear — spills, scratches, cracks, breaks, drops, and the like.
What’s the difference between a warranty and insurance?
Warranties generally come with your purchase.
With most major purchases, like home appliances and expensive electronic devices, your new purchase may come with a warranty. Sometimes called a service warranty, this policy protects your investment if your washer/dryer, dishwasher, oven, fridge, etc. stops working before you would expect it to wear out — but it does not cover instances of accidental damage.
A warranty is usually “free” — or covered in the new price of your item, unless it is an extended warranty. For example, a new smartphone or smartwatch purchase usually also comes with a warranty or device protection, too — in case your phone or watch has a glitch that causes it to malfunction for seemingly no reason. Sometimes, warranties aren’t covered in the cost, but offered when you purchase it to protect your valuable for a specific period of time, designed to give you some peace of mind in case something happens to your cell phone, washer and dryer, or other major purchase.
Say you have a one-year warranty or extended warranty on your oven and it suddenly stops working at the nine-month mark. With a warranty, you can call your warranty company and, depending on the terms, your item will be repaired or, in some cases, replaced at no additional charge to you.
Insurance can be added on to further protect your device.
In terms of your personal property, insurance is usually supplemental and something you purchase to add to your desired level of protection, or provide protection if you made your purchase without a warranty or with a limited warranty.
Both are ways to protect your valuables. Both options are great if you want the peace of mind of additional protection. Depending on the kind of protection you want for your valuable — either for accidental damage or a manufacturer defect — a warranty or insurance (or both) may be right for you. The level of protection will also depend on the kind of asset you want to protect.
In general, warranties cover device malfunction, or incidents in which the device “does not fulfill its intended purpose,” but does not cover damage caused by an accident or mishandling — something caused by a person, intentionally or otherwise. Your warranty provider will have more specific terms, so you’ll know what you’re covered for (or not covered for).
So if your iPhone stops working because it was made improperly (and not because you dropped it in water — but we’re not here to judge), your best bet is a warranty. If you want to protect your stuff against life stuff (submerged in water, the dog ate it, or your toddler put it in the washing machine), it’s a good idea to add some insurance coverage.
Does my homeowners or renters insurance plan cover any of these costs?
Ah, the joys (and expenses) of being a homeowner or renter. A common misconception is that your homeowners insurance or renters insurance policies extend to your belongings — they do, but with limitations. For starters, your insurance won’t cover any damage or malfunction caused by normal wear and tear of, say, your kitchen appliances. Your policies also generally do not cover instances of:
Damage caused by a flood
Other natural disaster
Cosmetic damage, like dents or scratches
But if you’re wondering — what do they cover? Here are some things you can expect to be covered for from your insurance policy:
Weight of ice, snow, or sleet
Water, steam, or frozen plumbing
So how can you get your belongings covered where your homeowners insurance or renters insurance plans lack? Instead of crossing your fingers each time you do a load of laundry that it won’t be your washer’s last, it may be a good financial decision to look into supplemental insurance.
When is it a good idea to buy additional protection for my major purchases?
In short, warranties do not cover as many things as insurance because they only protect against manufacturer defects, not things that could happen to your appliance or electronic in the normal course of its life span.
If you want an extra layer of financial protection for your valuables and don’t want the worry of having to buy a brand-new one before you’re ready, it’s a good idea to add some insurance. There are many options available, and it’s a good idea to shop around.
With your phone plan, you probably know when you’re upgrade-ready, but what if the unexpected happens? Or what about those necessary appliances like refrigerators and ovens — which can cost well over $1,000 to replace? These reality jolts are some of the most expensive household items you’ll ever buy, and oftentimes, happen when you least expect it.
How much should you save per month for emergency repairs?
Repairing or replacing a big appliance can be a major hit to your budget, especially when you’re not prepared for it. Experts agree that you should save 1-2% of your home’s total value every month for emergency repairs. Those experts also agree that few people actually do it, which might lead to resorting to credit cards to get the job done.
And because of the staggering cost of new smartphones, an unexpected disaster that befalls your smartphone can feel catastrophic — just like a household appliance. Given the fact that we know how expensive smartphones and major appliances are, and knowing most people don’t budget for a major expense of repairing or replacing either, what can you do to protect your budget when it comes to large, unexpected purchases?
Additional protection is a good option — but do your research.
Rather than paying to repair or replace new appliances or buy a new smartphone before your plan is upgrade-ready, it may be a good financial decision to look into supplemental insurance you can count on if you need to replace an expensive appliance for a reason not covered by your homeowners insurance or renters insurance — because there are some things that are simply not covered in these plans. (Think: natural disaster damage, avoidable accidents, and cosmetic damage).
This supplemental insurance is typically referred to as personal property coverage, and it covers the stuff you value most. It's usually low-cost and can kick in during situations in which your homeowners or renters insurance does not apply.
A good option is one like Kasasa Care™ because it covers many of your expensive personal items (from electronic devices like your iPhone and laptop, to things like your refrigerator or patio furniture) at an affordable monthly payment, with no contract and ample flexibility. You can choose to get coverage for almost anything you own — no matter the make or model, or if it’s new or used. (Bonus: you can even bundle your items to save!)
What can you cover under an asset protection plan?
Well, just about anything you value. Your at-home exercise equipment, television, computer, drone, and furniture can all be covered under an asset protection plan. (And so much more — check it out here.)
Plus, you have the option to bundle your assets to get even bigger savings — and even more peace of mind. Have a house full of kids constantly on their phones? You can bundle all of your devices, so you don’t have to worry if they all come home with cracked screens. (It happens to the best of us.) Or, similar to a home warranty, you can bundle — you guessed it — your entire home. From appliances to your garbage disposal, a whole home bundle can keep the (usually unexpected) high cost of repairs low.
It is possible to cover your major appliances and expensive electronics both in and out of their original warranties. Shop around, ask questions, and do your research to determine which type of coverage or protection plan will work the best for your needs — and save you the most should the unexpected happen.