Insurance vs Warranty: Which is Better to Protect Valuables?

Whether it’s jewelry, electronics, or even eBikes, the valuables that travel with us on life’s adventures often see the greatest risks. From product failures to theft to accidents, there’s a lot at stake especially given that the average cost of a cell phone is over $500 and a name-brand bike can easily reach into the thousands.

Customers often seek peace of mind when making these purchases. A customer with a loss can create a customer (dis)satisfaction situation that’s difficult to resolve. As retailers, you might consider various solutions to improve customer satisfaction, such as warranty and insurance. What does the warranty really cover, and how does a warranty compare to insurance?

Factory or extended warranties often attempt to address part of these risks by offering free repair or replacement for up to a fixed number of years, but this coverage applies to defects in materials or workmanship and not much else. They typically don’t cover everyday risks, such as theft, accidental breakage, and liability.

Specialized personal insurance for valuables provides targeted protection to safeguard these items against daily risks. These standalone policies combine affordability with focused protection that considers the specific risks each item is subject to. As a bonus, loss claims on these policies won’t affect customers’ future rates.

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Warranty vs. Insurance: Comparing Coverage

Although a warranty is an invaluable sales tool that provides basic assurance for buyers, it offers limited protection for the customer. In effect, most warranties only offer protection for product manufacturing or design defects. Typically, this coverage expires after a year. In some cases, consumers can choose extended warranties and add an additional one or two years to the coverage term.

By comparison, personal insurance for individual products vastly expands protection and safeguards new purchases against common real-world risks.

Some types of items can introduce additional risks, such as liability and injury for eBikes – risks that warranties can’t protect against and homeowners insurance policies won’t cover in many cases (check out our articles around homeowners insurance vs bike insurance or jewelry insurance).

Personal insurance addresses the gaps left by warranties by providing targeted protection designed around the most common types of losses for certain types of valuables, including bikes and eBikes, cell phones and electronics, and jewelry and collectibles.

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Personal Insurance Availability

In most cases, the manufacturer or distributor provides a warranty for their products. However, personal insurance for a specific product can be trickier to source. The existing buying process leaves consumers to their own devices to find coverage or even learn which coverages they should have, and therefore remain unprotected.

But that’s all changed.

Oyster now offers no-cost integration for online and in-store merchants, allowing buyers to purchase affordable personal insurance protection at the time of sale. Buyers benefit from instant coverage, while retailers can create new revenue streams and provide a better customer experience overall.

Most importantly, the customer meets all their needs in one simple process, adding customized protection for their new purchase in just seconds.

Oyster also offers protection for past purchases through merchant channels and direct-to-consumer policies. Consumers can purchase personal insurance coverage for specific items, whether purchased a day ago or a year ago. By comparison, warranty coverage is only available for new purchases. That’s one more big advantage of personal insurance policies compared to warranties.

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Extended Warranty vs. Insurance: Comparing Costs and Value

Typically, standard warranties come at no charge to the customer. Think of a warranty as being value-added. Extended warranties usually have a cost attached that varies depending on the length of the extension or whether the warranty offers additional protections compared to a standard warranty. However, these product add-ons offer less protection than a personal insurance policy, and often cost more than a customizable policy as well.

Personal insurance policies range in cost from just two or three dollars per month to over $10 per month, depending on what you’re insuring and which coverages you need. Rates to insure a $1,000 necklace start at about two dollars per month, whereas rates to insure an eBike start around five dollars per month.

When comparing value, a personal insurance policy delivers an impressive list of benefits and often provides coverage for less than the cost of an extended warranty or product protection program. As an example, product protection for cell phones through one well-known wireless carrier costs more than $15 per month. By comparison, personal insurance coverage for an average-value phone starts at under $5 monthly with Oyster.

Consumers can bind an affordable personal insurance policy at the time of purchase, protecting their investment from day one. Retailers can offer a built-in solution, improving overall customer satisfaction with a protection product that builds trust by putting the customer first. Everyone wins.

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Learn more about how Oyster can help you win customers.