3 Times You Should Definitely Buy the Extra Insurance—and a Few Times You Can Skip It
How much coverage does your puppy need? Your phone? A diamond ring? Here’s when to check that box—and when it’s OK to pass.
Furry Family Members
Buy it. “It’s heartbreaking to watch families have to decide whether or not they can save their pet’s life because of finances,” says Donnell Hansen, DVM, an oral surgeon at BluePearl Veterinary Partners in Blaine, Minnesota. “Insurance gives you extra resources and helps get rid of the guilt.” Most plans pay 70 to 90 percent of the cost of procedures, which is significant when you’re facing $2,500 for a fractured tooth or upwards of $6,000 for CCL knee surgery. Research policies first, using a site like NerdWallet or ConsumersAdvocate.org. Some plans don’t include wellness visits or vaccines, and none cover preexisting conditions, so it’s best to get insurance when your furry friend is a baby, if possible, for lower rates.
Around the House
Buy it. “A wild party or overflowing sink can cause significant damage to a structure, which can lead to astronomical repair bills that most renters can’t cover out of their own pockets,” says Neil Richardson, a licensed insurance agent at The Zebra, an insurance comparison site. Plus, your liability coverage often includes protection if your dog bites someone or if your housecleaner slips and gets injured, he adds. And your personal items are covered if stolen or destroyed. You’ll have to decide between replacement cost coverage (your policy pays to replace your item with a new version) and actual cash value (your policy gives you the depreciated cost of the item). “The premium for replacement cost coverage is more expensive, but it will generally cover your items at a higher amount,” says Richardson.
Appliance Warranty Extensions
Depends on the item. For major appliances that you want to keep for more than 10 years and that cost more than $500, like refrigerators and washing machines, it makes sense, says Angie Hicks, cofounder of Angie’s List, a site that provides reviews of and info about consumer services. Skip it for TVs and other electronics whose technology changes so quickly you’d probably end up replacing instead of repairing. “As always, understand what the policy covers, if you still have to pay a service fee, and how the repair will be handled,” says Hicks. She also advises buying the extension from the manufacturer, not the store: “It’s easier to get parts that way.”
Hvac and Utility Maintenance Plans
Buy it. “It’s really important to maintain your furnace and air conditioner, because they lose efficiency otherwise, which will hit you in your utility bill,” says Hicks. Also, you’ll often pay less for up-front service fees and will typically get first priority in the repair queue when your system inevitably goes out on the hottest or coldest day of the year.
Depends on the terms. A home warranty is separate from homeowner’s insurance and is often part of the closing deal. The main benefit is that it can keep you from worrying about unexpected and costly repairs, but warranties come with many restrictions, says Hicks. You don’t have a say as to how a particular item is replaced or repaired, and you’re beholden to the warranty company’s standards, schedule, and service person. The company decides if you get a replacement or (more likely) a quick fix that will last the life of the warranty. And it chooses the service provider, whose quality of work you might not be happy with, adds Hicks. Before saying yes to a home warranty, ask to see a list of service workers, estimated service fees, and the typical timeline of repairs.
When You’re Traveling
Depends on your other coverage. Your auto insurance policy should cover rental car damages, meaning you can skip the extra fee, but first call your company to find out about specific exclusions, says Richardson. Also, ask your insurer about your exact travel plan (renting a car in Italy, driving across state lines). “Your regular insurance likely won’t cover everything, and many rental car companies fight for every possible repair,” says Richardson. Credit cards offer some protection as well, but before you rent, ask your credit card company whether you need to pay for the rental car with that card, whether you need to decline the rental company’s insurance entirely, and whether the credit card company offers primary rental insurance (meaning you don’t have to file a claim with your own car insurance) or secondary rental insurance (meaning you have to file a claim with your insurance carrier first, which will likely increase your rate).
Depends on your prepaid expenses. For any trip putting a large amount of money at risk, particularly up-front costs (think group packages and booked cruises), it can be a good idea, says Damian Tysdal of the site Travel Insurance Review. You typically pay between 4 and 8 percent of the total cost of the trip; so if you’re planning a $5,000 vacation, that extra few hundred dollars can give you peace of mind, medical coverage if you’re in a foreign country, and some protection against certain weather disasters, says Fitzgerald. If you booked your trip using a credit card with travel protection or are willing to sacrifice your prepaid expenses, skip it, says Richardson. It’s especially not worth it for smaller costs, like concert tickets, or for last-minute domestic trips—airfare can typically be changed for a fee, and most hotels can be canceled within 48 hours.
When You’re Shopping
Depends on your habits, your device, and your other insurance. Homeowner’s and rental insurance policies should cover theft or accidental damage by a major disaster (like a fire), but your deductible may be higher than the cost of a new phone, and the reimbursement amount may be limited, says Fitzgerald. “Phones are increasing in reliability, so the bigger concern is if it accidentally breaks,” says Daniel Bader, managing editor of Mobile Nations, an online mobile technology resource. Ask yourself, “Am I a perpetual screen shatterer? Do I work around water? Will my kids borrow my device?” If you answer yes to any of these, insurance is probably worth it. Next, consider how robust your phone, case, and screen protector are. Then do a cost analysis to determine if the extra $10 or so a month adds up to more or less than the price of a phone repair. If you purchase a plan, go through the manufacturer (if it offers one), not your carrier. Repairs done through your carrier’s insurance plan can take a few weeks, since the carrier doesn’t have in-house facilities and has less access to inventory.
Don’t open a new policy. Instead, if your piece is worth over $1,500, provide a description and receipt to your homeowner’s or renter’s insurance company for broader protection against theft and loss, says Richardson.
Extended Car Warranties
Skip it. As with a home warranty, the main benefit is not having to worry about unexpected costs, but these warranties don’t always cover all repairs and aren’t transferable if you sell your car within a few years, says Richardson. “Also, you may lose coverage if you don’t do proper maintenance,” he adds. “It’s usually a better deal for the warranty company than you.” When it does makes sense: if your brand of car is known for needing expensive and extensive repairs—but not buying that type of car is the best insurance of all.