Every time you go out and purchase a major household appliance or piece of technology, you are often pressured to purchase the appliance insurance (or extended warranty) that is offered by the seller. They will give you numerous reasons why you’d be crazy not to buy it but at the end of the day, you have to remember that companies only sell things they expect to make money on. That applies to the appliance you’re buying and it applies to the insurance package they are offering. The company carefully calculates the cost to make sure they will not have to actually pay more on the warranty and repairs than they actually collect.
Appliance insurance is a form of extended warranty that usually covers a longer time period than the manufacturer’s warranty, but also covers some repairs that would not be covered by the manufacturer’s warranty.
So the appliance insurance may cover 3 years as opposed to 1, and also insure against damage caused by you (which manufacturer’s warranties typically exclude). However, the fact is that when offering the appliance insurance the seller knows that most items will need repair either immediately (which is covered by the manufacturer) or after their term expires. So based on their years of selling just this product they can reasonably estimate the likelihood they will actually have to pay, which is usually very low.
Many people who purchase appliance insurance end up considering it a wasted cost, below is a list of some common reasons why you shouldn’t purchase appliance insurance.