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Warranty vs. insurance: What’s the difference?

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 to cover all your devices — and bases. Aren’t they the same?

 

The short answer is no. Protection plans may cover things that a warranty won’t. Let’s break down the different types of protection plans 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 mileage 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 are protection plans?

 

Protection plans, like personal property protection and electronics protection, can be added on for the stuff you own — typically your major, more expensive buys. (Think: laptops, appliances, furniture, 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 protection plan?

 

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. They are 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.

 

Protection plans can be added on to further protect your belongings.

In terms of your personal property and electronics, protection plans are 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 protection plan (or both) may be right for you. The level of protection will also depend on the kind of asset you want to protect.

 

You also might be thinking — what about my homeowners or renters insurance coverage? Wouldn’t that kick in if something happened to my belongings? 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

  • Earthquake

  • Hurricane

  • Other natural disaster

  • Avoidable accidents

  • Cosmetic damage, like dents or scratches

 

 

What can you cover under a protection plan?

 

Well, just about anything you value. This personal property protection plan covers major appliances, furniture, exercise equipment, patio furniture, and more. Or, check out this electronics protection plan for all your can’t-live-without devices.

 

Plus, you have the option to bundle your stuff to score 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 personal property 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.

 

 

Tags: Protection, Care, Personal Property Protection, Electronics Protection

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