11-12-2007, 03:45 AM
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Premier Member and retired relic
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Join Date: Mar 2005
Location: NORCAL
Posts: 17,181
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That's correct and I'm making that bet based on the fact that I know in this day and age a certain percentage of the gear you buy WILL fail. The cost ratio of the computer i buy based on the cost of the warranty puts me way ahead. You see my computers are not abused and don't cost $1000.00 as you assume. More like 4 to 5 thousand and any cost to repair them usually exceeds the one time $250.00 bucks for the extended warranty i'll pay. My machines usually last about 5 years so if my warranty is for 3 years max that's only $83.00 a year no where near the continious life, auto, health, or other ongoing premium i might pay for other insurance. So as i said your anology dosen't hold water. I have had extended warranties on all my mac gear and one year i save over $600.00 and paid way less than that for the warrantys.  In the end for me it made perfect sense. 
You example for
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Originally Posted by Eric5273
When you buy insurance, or buy an extended warranty, you are basically making a "bet" with the insurance company. If the cost of the insurance or warranty is X dollars, then you are betting that you will end up claiming more than X dollars worth of benefits, while the insurance company is betting that your total claims will be less than X dollars over the life of the policy or warranty. But unless the insurance company is dumb or poorly run, they will win these bets more times than not, thus making a profit - their end goal and the reason why they are in business.
The general rule is that you should only insure what you absolutely cannot afford to lose (as in your examples of life insurance, health insurance, homeowners insurance, etc). Insuring a laptop computer that costs $1000 is not a sound financial move unless you absolutely could not afford to pay to get it fixed if it was broken, because the odds say that the cost of the extended warranty will be more than whatever repair costs you will have. Most people who buy the warranty (or any kind of insurance) will pay more to the insurance company than they receive back in claims, and of course the total money paid for all claims will be less than the total money paid to the insurance company for these extended warranties.
Now if you are someone who tends to be very abusive to your laptop, and thus you expect to have more problems than the average customer, then maybe the warranty will be a good idea for you. But if you are an average user, I would say it is not a sound investment.
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