Going gadget shopping? How extended warranty fares against insurance on tech
Extended warranties, insurance policies offer protection, but serve different purposes
Dubai: When figuring out whether you need to insure or purchase an extended warranty for your new gadget or tech device, it’s vital to decide between the two based on the costs involved.
But what is the difference between tech insurance and an extended warranty? Knowing that can help you decide between the budget-friendlier alternative of the two.
“When it comes to new tech products, both extended warranties and insurance policies offer protection, but they serve different purposes and come with their own advantages and disadvantages,” explained UK-based tech analyst Mordi McKellum.
When purchasing an insurance policy on any new tech devices, to put it simply, consumers will pay a monthly or annual premium, typically between Dh20 and Dh80 a month. But it’s much more than just that!”
With most insurance programs, you pay month-to-month as long as your coverage continues. If you decide to discontinue your coverage, you can cancel at any time.
If the device is damaged, lost, or stolen, the insurer will be able to repair or replace it for a fraction of the market value by paying a deductible.
Extended or manufacturer's warranty?
An extended warranty is essentially a service contract that extends the manufacturer's warranty beyond its standard period, often for an additional 1 to 3 years for an upfront payment. It typically covers repairs and malfunctions not caused by accidental damage.
“While extended warranties are often tailored to the specific product, which means coverage is more relevant to the tech item in question, there are a few risks to keep in mind,” said UAE-based tech analyst Mark Wally.
“Primarily, many extended warranties are non-transferable, meaning if you sell or give away the device, the warranty won’t follow it. Also, these warranties often have exclusions or conditions that may make it harder to claim a repair or replacement.”
However, on the upside, Wally noted that as the cost of an extended warranty is usually known upfront, and it can often be bundled into the purchase of the product or added at the time of purchase.
“To put it simply, extended warranties covers situations where the device does not fulfill its intended purpose. It’s for that reason, extended warranties do not cover lost or stolen devices, for instance,” added McKellum.
“Similar to a warranty, tech insurance covers electrical and mechanical failures – but that's where the similarities end.”
For instance, cell phone insurance also covers if your phone is lost, stolen or damaged — even liquid damage. Many phone insurance policies offer similar coverage, but it’s important to thoroughly review each provider and policy before making a decision.
“The best policies are cost-effective, with low deductibles, making it easy to file a claim. Factors like discounts, multi-device options, and customer reviews can also be useful when selecting a tech insurance provider,” Wally added.
Many credit cards offer tech insurance
Tech insurance is a built-in benefit offered by many credit cards, including some without an annual fee.
“If you’re paying extra for tech insurance or you don’t have coverage yet, consider getting one of these cards so you can protect your new device from damage or theft for no additional cost,” noted Wally.
“This isn’t just a perk you’ll find with premium credit cards — some cards with no or low annual fees also offer it. This coverage can help you pay for certain repairs.”
However, you will need to file a claim to recover an expenses, typically within 60 days of the incident. Theft claims also typically require a police report to be filed within 48 hours of the theft.
As a general rule, tech insurance offered through a credit card will not cover the loss of the device. If you’re worried that you might simply lose track of your gadget, Wally suggested considering other insurance options that will cover loss in addition to damage and theft.
Verdict: Is it worth it to get tech insurance as opposed to a warranty?
“While you can also buy insurance from your tech’s manufacturer, their plans might come with technical support by phone, in a store, or through online chat. Buying insurance from an independent insurer gives you more flexibility,” added Wally.
“When it comes to tech insurance, as soon as your device is lost, damaged or stolen, you can make a claim on your insurance – no matter how long you've had the policy. The insurance team will undertake necessary checks to ensure that the claim is valid.”
Tech insurance may be worth it if the cost of replacing your device would put a strain on your finances. Moreover, with the price tag on the latest gadgets considerably high, that's not a rare situation. Insurance might help cover you if your tech is lost or stolen, or if it's accidentally damaged.
If you make a claim, your insurance company will try to give you a replacement of the same make and model — but it doesn’t have to. “Most insurance providers cap your claims at two in a 12-month time frame. This can be a problem for the particularly accident-prone,” McKellum added.